e424b5
 

             
Pricing Supplement Dated
  June 9, 2006   Filed pursuant to Rule 424(b)(5)
(To Prospectus dated February 16, 2006, and
   Registration Statement Nos.   333-129763
Prospectus Supplement dated February 16, 2006)
      and 333-129763-01
 
            
      CUSIP: 74254PMJ8
       
       

(PRINCIPAL FINANCIAL GROUP LOGO)

Principal Life Insurance Company
Secured Medium-Term Notes (that are also Asset-Backed Securities)
Issued Through and Obligations of
Principal Life Income Fundings Trust 21 (the “Trust” and the “Issuing Entity”)

The description of this pricing supplement of the particular terms of the Secured Medium-Term Notes offered hereby, and the Funding Agreement (specified below) issued by Principal Life Insurance Company (“Principal Life”) to the Trust, the payment obligations of which are fully and unconditionally guaranteed by the Guarantee (specified below) issued by Principal Financial Group, Inc. to the Trust, supplements the description of the general terms and provisions of the notes, the funding agreements and the guarantees set forth in the accompanying prospectus and prospectus supplement, to which reference is hereby made.

1. The Notes

                     
Principal Amount:
   $ 150,000,000     Purchasing Agent(s) Discount:   0.296%    
 
                    
Issue Price:
     100%     Original Issue Date:   June 16, 2006
 
                    
Net Proceeds to the Trust:
  $ 149,556,000     Stated Maturity Date:   June 16, 2016
 
                    
                     
Specified Currency:
   U.S. Dollars
 
                    
Interest Payment Dates:
  March 16, June 16, September 16 and December 16 of each year
 
                    
Initial Interest Payment Date:
  September 16, 2006
 
                    
Regular Record Date:
  15 calendar days prior to the Interest Payments Date
 
                    
Type of Interest Rate:
   o Fixed Rate   x Floating Rate      
 
                    
Fixed Rate Notes:
   o Yes x No.   If, Yes,
 
                    
Interest Rate:
                    
 
                    
Floating Rate Notes:
   x Yes o No.   If, Yes,
 
                    
Regular Floating Rate Notes:
   x Yes   o No.   If, Yes,
Interest Rate: 3-Month LIBOR + .20%
                    
Interest Rate Basis(es): See below
                    
 
                    
Floating Rate/Fixed Rate Note:
  o Yes   x No.   If, Yes,
Floating Interest Rate:
    
Interest Rate Basis(es):
    
Fixed Interest Rate:
    
Fixed Rate Commencement Date:
   
 
                    

1

 

             
Inverse Floating Rate Note:
  o Yes   x No.   If, Yes,
Fixed Interest Rate:
    
Floating Interest Rate:
    
Interest Rate Basis(es):
    
 
                    
Initial Interest Rate:
   3-Month LIBOR + .20% determined on the second London Banking Day preceding the
Original Issue Date
 
                    
Initial Interest Reset Date:
   September 16, 2006

             
Interest Rate Basis(es). Check all that apply:
       
 
   o CD Rate   o Commercial Paper Rate    
 
   o CMT Rate   o Eleventh District Cost of Funds Rate    
 
   o Constant Maturity Swap Rate   o Federal Funds Open Rate    
 
   x LIBOR   o Federal Funds Rate    
 
   o EURIBOR   o Treasury Rate    
 
   o Prime Rate   o Other (See Attached)    
 
            
If LIBOR:
   o LIBOR Reuters   x LIBOR Moneyline Telerate Page 3750    
 
        LIBOR Currency: U.S. Dollars        
 
            
If CMT Rate:
            
Designated CMT Telerate Page:
        
If 7052:
   o Weekly Average   o Monthly Average    
Designated CMT Maturity Index:
        
 
            
Index Maturity:
   3-Month        
 
            
Spread (+/-):
   +.20%        
 
            
Spread Multiplier:
   Not applicable        
 
            
Interest Reset Date(s):
   Each Interest Payment Date        
 
            
Interest Rate Determination Date(s):
   The second London Banking Day preceding the related Interest Reset Date
 
            
Maximum Interest Rate, if any:
   Not applicable        
 
            
Minimum Interest Rate, if any:
   Not applicable        
             
Calculation Agent:
  Citibank, N.A.    
 
            
Exchange Rate Agent:
   Not applicable        
Computation of Interest (not applicable unless different than as specified in the prospectus and prospectus supplement):
Day Count Convention (not applicable unless different than as specified in the prospectus and prospectus supplement):
 
            
Amortizing Notes:
  o Yes   x No.   If, Yes,
Amortizing Schedule:
            
Additional/Other Terms
            
 
            
Discount Note:
  o Yes   x No.   If, Yes,
Total Amount of Discount:
            
Initial Accrual Period of Discount:
            
Additional/Other Terms:
            
 
            
Redemption Provisions:
  o Yes   x No.   If, Yes,
Initial Redemption Date:
            
Initial Redemption Percentage:
            
Annual Redemption Percentage Reduction (if any):
            
Redemption:
  o In whole only and not in part    
  o May be in whole or in part    
Additional/Other Terms:
            
 
            

2

 

             
Repayment:
  o Yes   x No.   If, Yes,
Repayment Date(s):
            
Repayment Price:
            
Repayment:
  o In whole only and not in part    
  o May be in whole or in part    
Additional/Other Terms:
            
 
            
Sinking Fund (not applicable unless specified):
  
 
            
Additional Amounts to Be Paid for Withholding Tax (not applicable unless specified):
 
            
Securities Exchange Listing:
  o Yes   x No.   If Yes, Name of Exchange:
 
            
Authorized Denominations:
  $1,000        

Ratings:

     The Notes issued under the Program are rated AA by Standard & Poor’s Rating Services, a division of The McGraw-Hill
     Companies, Inc. (“S&P”). Principal Life expects the Notes to be rated Aa2 by Moody’s Investors Service, Inc. (“Moody’s”).
             
Purchasing Agent(s) Purchasing Notes as Principal:
  x Yes   o No.   If, Yes:
         
Purchasing Agent(s)
   Principal Amount
Citigroup Global Markets Inc.
   $ 150,000,000  
 
    
 		  
Total:
   $ 150,000,000  
             
Purchasing Agent(s) Acting as Agent:
  o Yes   x No.   If, Yes:
         
Purchasing Agent(s)
   Principal Amount
 
                             
 
    
 		  
Total:
                                  
                     
State of Organization of the Trust:
New York                
 
                    
Additional/Other Terms:
Notwithstanding anything in the Prospectus or the Prospectus Supplement to the contrary, the Indenture
Trustee with respect to the Notes will be Law Debenture Trust Company of New York.
 
                    
Special Tax Considerations:
 
                    
2. The Funding Agreement
                  
 
                    
Funding Agreement Issuer:
Principal Life Insurance Company            
 
                    
Funding Agreement No.:
7-08001                
 
                    
Deposit Amount:
  $150,000,015
 
                    
Net Deposit:
$149,556,000
 
                    
Effective Date:
June 16, 2006
 
                    
Stated Maturity Date:
June 16, 2016
 
                    
Specified Currency:
   U.S. Dollars
 
                    
Interest Payment Dates:
  March 16, June 16, September 16 and December 16 of each year
 
                    
Initial Interest Payment Date:
  September 16, 2006
 
                    
Type of Interest Rate:
   o Fixed Rate   x Floating Rate      
 
                    
Fixed Rate Funding Agreement:
   o Yes x No.   If, Yes,
 
                    
Interest Rate:
    
 
                    

3

 

                     
Floating Rate Funding Agreement:
   x Yes o No.   If, Yes,
 
                    
Regular Floating Rate Funding Agreement:
   x Yes   o No.   If, Yes,
Interest Rate:
   3-Month LIBOR + . 20%
Interest Rate Basis(es):
   See below 
 
                    
Floating Rate/Fixed Rate Funding Agreement:
  o Yes   x No.   If, Yes,
Floating Interest Rate:
    
Interest Rate Basis(es):
    
Fixed Interest Rate:
        
Fixed Rate Commencement Date:
   
 
                    
Inverse Floating Rate Funding Agreement:
  o Yes   x No.   If, Yes,
Fixed Interest Rate:
    
Floating Interest Rate:
    
Interest Rate Basis(es):
    
 
                    
Initial Interest Rate, if any:
   3-Month LIBOR + .20% determined on the second London Banking Day preceding the
Original Issue Date 
 
                    
Initial Interest Reset Date:
   September 16, 2006
             
Interest Rate Basis(es). Check all that apply:
       
 
   o CD Rate   o Commercial Paper Rate    
 
   o CMT Rate   o Eleventh District Cost of Funds Rate    
 
   o Constant Maturity Swap Rate   o Federal Funds Open Rate    
 
   x LIBOR   o Federal Funds Rate    
 
   o EURIBOR   o Treasury Rate    
 
   o Prime Rate   o Other (See Attached)    
 
            
If LIBOR:
   o LIBOR Reuters Page   x LIBOR Moneyline Telerate Page 3750    
 
        LIBOR Currency:        
 
            
If CMT Rate:
            
Designated CMT Telerate Page:
        
If 7052:
   o Weekly Average   o Monthly Average    
Designated CMT Maturity Index:
        

             
Index Maturity:
   3-Month
 
            
Spread (+/-):
   +.20%
 
            
Spread Multiplier:
   Not applicable
 
            
Interest Reset Date(s):
   Each Interest Payment Date
 
            
Interest Rate Determination Date(s):
   The second London Banking Day preceding the related Interest Reset Date
 
            
Maximum Interest Rate, if any:
   Not applicable
 
            
Minimum Interest Rate, if any:
   Not applicable
 
            
Calculation of Interest (not applicable unless different than as specified in the prospectus and prospectus supplement):
Day Count Convention (not applicable unless different than as specified in the prospectus and prospectus supplement):
 
            
Amortizing Funding Agreement:
  o Yes   x No.   If Yes,
Amortizing Schedule
            
Additional/Other Terms
            
 
            
Discount Funding Agreement:
  o Yes   x No.   If, Yes,
Total Amount of Discount:
            
Initial Accrual Period of Discount:
            
Additional/Other Terms:
            
 
            

4

 

             
Redemption Provisions:
  o Yes   x No.   If, Yes,
Initial Redemption Date:
            
Initial Redemption Percentage:
            
Annual Redemption Percentage Reduction (if any):
            
Redemption:
  o In whole only and not in part    
  o May be in whole or in part    
Additional Other Terms:
            
 
            
Repayment:
  o Yes   x No.   If, Yes,
Repayment Date(s):
            
Repayment Price:
            
Repayment:
  o In whole only and not in part    
  o May be in whole or in part    
Additional/Other Terms:
            
 
            
Sinking Fund (not applicable unless specified):
  
 
            
Additional Amounts to Be Paid For Withholding Tax (not applicable unless specified):

Ratings:

The Funding Agreement issued under the Program is rated AA by S&P.
Principal Life expects the Funding Agreement to be rated Aa2 by Moody’s.
     
Additional/Other Terms if any:
   
 
    
Special Tax Considerations:
   
 
    
3. The Guarantee
    
 
    
Guarantee Issuer:
  Principal Financial Group, Inc.
 
    
Effective Date:
  June 16, 2006
 
    
Additional/Other Terms:
   

5