GUARANTEE

GUARANTEE

This Guarantee (this “ Guarantee ”) is made and entered into as of May 21, 2009, from PRINCIPAL FINANCIAL SERVICES, INC., a corporation duly organized and existing under the laws of the State of Iowa, as guarantor (herein called the “ Guarantor ,” which term includes any successor hereunder), to THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association incorporated and existing under the laws of the United States of America, as trustee (the “ Trustee ,” as further defined in the Indenture hereinafter referred to). Defined terms used herein without definition shall have the meanings given to them in the Senior Indenture, dated as of May 21, 2009 among Principal Financial Group, Inc., a Delaware corporation (the “ Company ,” as further defined in the Indenture hereinafter referred to), the Guarantor and the Trustee, as supplemented by the First Supplemental Indenture, dated as of May 21, 2009, among the Company, the Guarantor and the Trustee with respect to the Securities as defined below (the “ Indenture ”).

RECITALS

The Guarantor is a wholly-owned subsidiary of the Company and has duly authorized the execution and delivery of this Guarantee to provide for the guarantee by the Guarantor for the benefit of the Holders of the Company’s 7.875% Senior Notes due 2014 (the “ Securities ”) issued pursuant to the Indenture.

For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed as follows for the equal and ratable benefit of the Holders of the Securities:

ARTICLE I

REPRESENTATIONS AND WARRANTIES OF GUARANTOR

SECTION 1.1         Guarantor Representations and Warranties .

The Guarantor does hereby represent and warrant that it is a corporation duly incorporated and in good standing under the laws of the State of Iowa, has the power to enter into and perform this Guarantee and to own its corporate property and assets, has duly authorized the execution and delivery of this Guarantee by proper corporate action and neither this Guarantee, the authorization, execution, delivery and performance hereof, the performance of the agreements herein contained nor the consummation of the transactions herein contemplated will violate in any material respect any provision of law, any order of any court or agency of government or any agreement, indenture or other instrument to which the Guarantor is a party or by which it or its property is bound, or in

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any material respect be in conflict with or result in a breach of or constitute a default under any indenture, agreement or other instrument or any provision of its certificate of incorporation, bylaws or any requirement of law. This Guarantee constitutes the legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, except as the enforceability hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general equitable principles.

ARTICLE II

GUARANTEE OF OBLIGATIONS

SECTION 2.1         Obligations Guaranteed .

Subject to the provisions of this Article 2, the Guarantor hereby unconditionally guarantees ( a ) to each Holder of a Security authenticated and delivered by the Trustee or Authenticating Agent, ( i ) the full and prompt payment of the principal of, and premium, if any, and interest on, and any Redemption Price with respect to, such Security, when, where and as the same shall become due and payable, whether at the stated maturity thereof, by acceleration, call for redemption or otherwise in accordance with the terms of such Security and the Indenture and ( ii ) the full and prompt payment of interest on the overdue principal and interest, if any, on such Security, at the rate specified in such Security and to the extent lawful and ( b ) to the Trustee the full and prompt payment upon written demand therefor of all amounts due to it in accordance with the terms of the Indenture (collectively the “ Guaranteed Obligation ”). If for any reason the Company shall fail punctually to pay any such Guaranteed Obligation, the Guarantor hereby agrees to cause any such Guaranteed Obligation to be made punctually when, where and as the same shall become due and payable, whether at the stated maturity thereof, by acceleration, call for redemption or otherwise. All payments by the Guarantor hereunder shall be paid in lawful money of the United States of America.  This Guarantee is unsecured and ranks equally in right of payment with all of the Guarantor’s existing and future senior indebtedness.

SECTION 2.2         Obligations Unconditional .

The obligations of the Guarantor under this Guarantee shall be absolute, unconditional and irrevocable and shall constitute a continuing guarantee of payment and not of collectability. Such obligations shall remain in full force and effect until this Guarantee shall terminate in accordance with the provisions of Section 5.1 hereof, and, to the maximum extent permitted by applicable law, such obligations shall not be affected, modified, released or impaired by any state of facts or the happening from time to time of any event, including, without limitation, any of the following, whether or not with notice to, or the consent of, the Guarantor:

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(a)           the waiver, compromise, settlement, release or termination of any or all of the obligations, covenants or agreements of the Company contained in the Securities or the Indenture, or of the payment, performance or observance thereof;

(b)           the failure to give notice to the Guarantor of the occurrence of any default or an Event of Default under the terms and provisions of the Securities or the Indenture;

(c)           the assignment or purported assignment of any of the obligations, covenants and agreements contained in this Guarantee;

(d)           the extension of the time for payment of any principal of, premium, if any, or interest on, or any Redemption Price with respect to, the Securities or of the time for performance of any obligations, covenants or agreements under or arising out of the Securities or the Indenture or the extension or the renewal of any thereof;

(e)           the modification or amendment (whether material or otherwise) of any obligation, covenant or agreement set forth in the Securities or the Indenture;

(f)            the taking or the omission to take any of the actions referred to in this Guarantee or in the Indenture;

(g)           any failure, omission or delay on the part of, or the inability of, the Trustee or the Holders of the Securities to enforce, assert or exercise any right, power or remedy conferred on the Trustee, such Holders or any other person in this Guarantee or in the Indenture for any reason;

(h)           the voluntary or involuntary liquidation, dissolution, merger, consolidation, sale or other disposition of all or substantially all the assets, marshaling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition with creditors or readjustment of, or other similar proceedings affecting the Company or any or all of its assets, or any allegation or contest of the validity of the Securities or the Indenture or the disaffirmance of the Securities or the Indenture in any such proceeding; it being specifically understood, consented and agreed to that this Guarantee shall remain and continue in full force and effect and shall be enforceable against the Guarantor to the same extent and with the same force and effect as if such proceedings had not been instituted, and it is the intent and purpose of this Guarantee that the Guarantor shall and does hereby waive, to the maximum extent permitted by applicable law, all rights and benefits which might accrue to the Guarantor by reason of any such proceedings;

(i)            any event or action that would, in the absence of this clause, result in the release or discharge by operation of law of the Guarantor from the performance or observance of any obligation, covenant or agreement contained in this Guarantee;

(j)            the default or failure of the Guarantor fully to perform any of its obligations set forth in this Guarantee;

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(k)           the release, substitution or replacement of any security pledged for the benefit of the Holders of the Securities under the Indenture;

(l)            the disposition by the Company of any or all of its interest in any capital stock of the Guarantor, or any change, restructuring or termination of the corporate structure, ownership, corporate existence or any rights or franchises of the Guarantor;

(m)          any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a surety or a guarantor; or

(n)           any other occurrence whatsoever, whether similar or dissimilar to the foregoing.

SECTION 2.3         No Waiver or Set-Off .

The Guarantor agrees that, to the maximum extent permitted by law, (a)  no act of commission or omission of any kind or at any time on the part of the Trustee or any Holder of the Securities, or their successors and assigns, in respect of any matter whatsoever shall in any way impair the rights of the Trustee or such Holders to enforce any right, power or benefit under this Guarantee, and (b)  no set-off, counterclaim, reduction, or diminution of any obligation, or any defense of any kind or nature (other than performance), which the Guarantor or the Company has or may have against the Trustee or such Holders or any assignee or successor thereof shall be available hereunder to the Guarantor.

SECTION 2.4         Waiver of Notice; Expenses .

The Guarantor hereby expressly waives notice from the Trustee or the Holders of the Securities of their acceptance and reliance on this Guarantee. The Guarantor further waives, to the maximum extent permitted by law, any right