Document:

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                                                                     EXHIBIT 4.8

GLOBAL FUNDING AGREEMENT

Principal Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0001
(515) 247-5111

In consideration of the payment made by, or at the direction of,

                   [NAME OF INITIAL FUNDING AGREEMENT HOLDER]

                            (the "Agreement Holder")

of the Net Deposit, as described below, Principal Life Insurance Company
("Principal Life") agrees to make payments to the person or persons entitled to
them, subject to the provisions of this global funding agreement (this
"Agreement").

This Agreement is delivered in and subject to the laws of the State of Iowa.

This Agreement is issued and accepted subject to all the terms set out in it.

This Agreement is executed by Principal Life at its Corporate Center to take
effect as of the __ day of (MONTH, YEAR), which is referred to as the Effective
Date, subject to the receipt by Principal Life or its designee of the Net
Deposit (as set forth in Section 1).

     Senior Vice President and                 Chairman, President and
     Corporate Secretary                       Chief Executive Officer

                    ----------------------------------------
                                    Registrar

                    ----------------------------------------
                                      Date

                        GLOBAL FUNDING AGREEMENT NO. {#}

                 RESTRICTIONS REGARDING THE TRANSFER OR SALE OF
       THIS FUNDING AGREEMENT OR ANY INTEREST HEREIN ARE SET FORTH HEREIN

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GLOBAL FUNDING AGREEMENT                                           No. ________

         This Agreement is issued in connection with the issuance by the Trust
(specified in the Annex) of Secured Notes (the "Notes") which are identified in
the annex hereto (the "Annex") and which are being issued by the Trust pursuant
to the Prospectus dated ___, 2003, the Prospectus Supplement dated ______, 2003,
as from time to time amended or supplemented, and the Pricing Supplement
applicable to the Notes (the "Pricing Supplement"). Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the Notes.
Where used in this Agreement, the term "Notes" shall mean the Notes secured by
this Agreement as the same exist on the Effective Date, without giving effect to
any amendments or modifications to said Notes effected or made after any such
Effective Date unless such amendments or modifications to said Notes have been
consented to in writing by Principal Life.

1.       DEPOSIT

         Principal Life agrees to accept, and the Agreement Holder agrees to pay
         or cause to be paid to Principal Life, for value on the Effective Date,
         the Net Deposit (as specified in the Annex). All funds received by
         Principal Life under this Agreement shall become the exclusive property
         of Principal Life and remain a part of Principal Life's general account
         without any duty or requirement of segregation or separate investment.

         This Agreement shall become effective only upon the receipt by
         Principal Life or its designee of the Net Deposit.

2.       FUND

         Upon receipt of the Net Deposit, Principal Life will establish, under
         this Agreement, a bookkeeping account in the name of the Agreement
         Holder, which will evidence Principal Life's obligations under this
         Agreement.

         [NOTE: If the related Notes are NOT Discount Notes, insert the
         following as the second paragraph of this Section 2: The Deposit deemed
         received (as specified in the Annex), (i) less any withdrawals to make
         payments hereunder (other than Additional Amounts (as defined in the
         Annex), if applicable) and (ii) plus any interest accrued and premium,
         if any, pursuant to Section 6, will be referred to as the "Fund".]

         [NOTE: If the related Notes are Discount Notes, insert the following as
         the second paragraph of this Section 2: The Deposit deemed received (as
         specified in the Annex), (i) less any withdrawals to make payments
         hereunder (other than Additional Amounts (as defined in the Annex), if
         applicable), (ii) plus any accrual of Discount (determined in
         accordance with the terms of the Notes) and (iii) plus, if applicable,
         any interest accrued and premium, if any, pursuant to Section 6, will
         be referred to as the "Fund".]

         Principal Life is neither a trustee nor a fiduciary with respect to the
         Fund.

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2A.      PURCHASE OF NOTES BY PRINCIPAL LIFE.

         Principal Life may purchase some or all of the Notes in the open market
         or otherwise at any time, and from time to time. Simultaneously, upon
         such purchase, (1) the purchased Notes shall, by their terms become
         mandatorily redeemable by the Trust as specified in the related Pricing
         Supplement, Prospectus Supplement and/or Prospectus and (2) the Fund
         under this Agreement shall be permanently reduced by the same
         percentage as the principal amount of the Notes so redeemed bears to
         the sum of (i) the aggregate principal amount of all Notes issued and
         outstanding immediately prior to such redemption and (ii) the principal
         amount of the Trust Beneficial Interest related to such Notes. If
         Principal Life, in its sole discretion, engages in such open market or
         other purchases, then the Trust, the Indenture Trustee in respect of
         such Notes, and Principal Life shall take such actions (including, in
         the case of Principal Life, making the payment(s) necessary to effect
         the Trust's redemption of such Notes) as may be necessary or desirable
         to effect the cancellation of such Notes by the Trust.

3.       ENTIRE AGREEMENT

         This Agreement and the Annex attached hereto constitute the entire
         Agreement.

4.       REPRESENTATIONS

         (a)      Each party hereto represents and warrants to the other that as
                  of the date hereof:

                  (i)      it has the power to enter into this Agreement and to
                           consummate the transactions contemplated hereby;

                  (ii)     this Agreement has been duly authorized, executed and
                           delivered, this Agreement constitutes a legal, valid
                           and binding obligation of each party hereto, and this
                           Agreement is enforceable in accordance with the terms
                           hereof, subject to applicable bankruptcy, insolvency
                           and similar laws affecting creditors' rights, and
                           subject as to enforceability to general principles of
                           equity, regardless of whether enforcement is sought
                           in a proceeding in equity or at law; and

                  (iii)    the execution and delivery of this Agreement and the
                           performance of obligations hereunder do not and will
                           not constitute or result in a default, breach or
                           violation of the terms or provisions of its
                           certificate, articles or charter of incorporation,
                           declaration of trust, by-laws or any agreement,
                           instrument, mortgage, judgment, injunction or order
                           applicable to it or any of its property.

         (b)      The Trust further represents and warrants to Principal Life
                  that:

                  (i)      (a) it is a person other than a natural person and is
                           purchasing this Agreement for the purpose of
                           providing collateral security for securities
                           registered with the United States Securities and
                           Exchange Commission; (b) it is a person authorized by
                           a state or foreign country to engage in an

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                           insurance business or a subsidiary of such business;
                           or (c) this Agreement is being purchased for the
                           purpose of funding any of the following: (1) benefits
                           under an employee benefit plan as defined in the
                           federal Employee Retirement Income Security Act of
                           1974, 29 U.S.C. Section 1001 et seq., maintained in
                           the United States or in a foreign country; (2)
                           activities of an organization exempt from taxation
                           pursuant to section 501(c) of the Internal Revenue
                           Code, or any similar organization in any foreign
                           country; (3) a program of the United States
                           government, another state government or political
                           subdivision of such state, or of a foreign country,
                           or any agency or instrumentality of any such
                           government, political subdivision, or foreign
                           country; (4) an agreement providing for periodic
                           payments in satisfaction of a claim; or (5) a program
                           of an institution which has assets in excess of USD
                           25,000,000.

                  (ii)     it has been informed and understands that transfer is
                           restricted by the terms of this Agreement; and

                  (iii)    it (a) is solely responsible for determining whether
                           this Agreement is suitable for the purpose intended;
                           (b) has carefully read this Agreement (including the
                           Annex) before signing this Agreement; (c) has had a
                           reasonable opportunity to make such inquiries as it
                           deemed necessary prior to signing this Agreement; and
                           (d) has received or had access to such additional
                           information as it deemed necessary in connection with
                           its decision to sign this Agreement.

         In performing its obligations hereunder Principal Life is not acting as
         a fiduciary, agent or other representative for the Agreement Holder or
         anyone else. All representations and warranties made by the Agreement
         Holder and Principal Life in this Agreement shall be considered to have
         been relied upon by the other in connection with the execution hereof.

5.       ASSIGNMENT OF AGREEMENT

         The following conditions must be satisfied in order to effectuate any
         assignment of this Agreement:

         (i)      This Agreement may only be transferred through a book entry
                  system maintained by Principal Life, or an agent designated by
                  it, within the meaning of Temporary Treasury Regulations
                  Section 5f.103-1(c) and Treasury Regulations Section
                  1.871-14(c)(1)(i).

         (ii)     The Agreement Holder, and any assignee, must comply with
                  applicable securities laws.

         (iii)    Principal Life has consented in writing to the proposed
                  assignment, such consent not to be unreasonably withheld.

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         (iv)     Principal Life shall have received from the proposed assignee
                  a duly executed certificate containing, in substance, the
                  information, representations, warranties, acknowledgments and
                  agreements set forth in this Agreement.

         Any attempted sale, transfer, anticipation, assignment, hypothecation,
         or alienation not in accordance with this Section 5 shall be void and
         of no effect. Until such time, if any, as Principal Life has consented
         in writing to a proposed assignment, Principal Life shall not be
         obligated to make any payments to or at the direction of anyone other
         than the person shown on Principal Life's books and records as the
         Agreement Holder. Once the foregoing conditions have been satisfied
         with respect to an assignment, the assignee or its successor shall be
         deemed to be the sole Agreement Holder for all purposes of this
         Agreement and Principal Life shall promptly amend its records to
         reflect the assignee's status as Agreement Holder.

6.       PAYMENTS TO THE AGREEMENT HOLDER

         Principal Life shall pay to, or at the direction of, the Agreement
         Holder by the date (the "Due Date") on which any payment becomes due in
         respect of the Notes secured by this Agreement (and in any event such
         period of time prior to the Due Date as shall be necessary to ensure
         that the Trust can fulfill its obligation to make payment in full of
         all amounts due and payable under the Notes on the Due Date), an amount
         in the currency or currencies in which the Notes are denominated as
         specified in the Notes equal to the sum of (i) the amount of principal
         and/or (as the case may be) interest and/or (as the case may be)
         premium falling due in respect of the Notes on such Due Date (the
         "Notes Component") and (ii) the amount of any payments owed by the
         Trust in respect of the Trust Beneficial Interest falling due on such
         date (the "Beneficial Interest Component"). In the event that Principal
         Life fails to make payment of any such amount on or prior to the Due
         Date, Principal Life shall pay to or at the direction of the Agreement
         Holder, on demand by the Agreement Holder, (i) if the failure relates
         to the Notes Component, an amount in the currency specified in the
         Notes equal to the amount of default interest (or other amount) which
         becomes due and payable by the Trust in accordance with the Notes as a
         consequence of any delay in the Trust making the relevant payment of
         principal, interest or premium (as the case may be to the holders of
         the of Notes and (ii) if the failure relates to the Beneficial Interest
         Component, such amount or default interest, if any, determined in the
         same manner as default interest on the Notes Component.

         Interest shall accrue on the Fund in the same amount and pursuant to
         the same terms as interest accrues on the Notes secured by this
         Agreement and on the Trust Beneficial Interest related to the Notes.

         If any amount is withdrawn from the Fund in order to make a payment
         under this Section 6, interest will cease to be credited with regard to
         such amount as of the end of the day immediately preceding the date on
         which such withdrawal is made.

         All payments made by Principal Life to the Agreement Holder hereunder
         shall be paid in same-day, freely transferable funds to such account as
         has been specified for such purpose by the Agreement Holder.

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         Notwithstanding anything to the contrary in this Section 6, if
         Principal Life shall, with respect to any scheduled amount due and
         payable under any of the Notes, comply in all respects with the
         requirements of this Section 6, but an event of default has occurred
         with respect to the Notes and as a result payments with respect to the
         Notes have been accelerated, otherwise than by reason of any default
         under this Agreement by Principal Life, no Event of Default (as defined
         below) under this Funding Agreement shall be deemed to have occurred,
         no payments with respect to this Agreement shall be accelerated and
         Principal Life will remain obligated to make payments under this
         Agreement as if no event of default had occurred with respect to the
         Notes.

7.       TERMINATION OF AGREEMENT

         Subject to the provisions of the following paragraph and the Annex,
         this Agreement shall terminate and cease to be of any further force or
         effect on the day and at the time upon which all amounts have been
         withdrawn from the Fund pursuant to this Agreement.

         Upon the occurrence of any of the following events (each, an "Event of
         Default") and following a written demand by the Agreement Holder,
         Principal Life shall pay to, or at the direction of, the Agreement
         Holder all amounts that the Trust is required to pay in such event
         under the Notes and the Trust Beneficial Interest:

         (i)      Principal Life's failure to make any payment of interest,
                  premium (if applicable), installment payments (if applicable)
                  or Additional Amounts (if and as specified in the Annex) in
                  accordance with this Agreement, if such failure to pay is not
                  corrected within seven (7) Business Days after such payment
                  becomes due and payable; or

         (ii)     Principal Life's failure to make any payment of principal
                  (other than any installment payment) in accordance with this
                  Agreement, if such failure to pay is not corrected within one
                  (1) Business Day after such payment becomes due and payable;
                  or

         (iii)    if Principal Life (a) is dissolved (other than pursuant to a
                  consolidation, amalgamation or merger in which the resulting
                  entity assumes its obligations); (b) becomes insolvent or is
                  unable to pay its debts or fails or admits in writing its
                  inability generally to pay its debts as they become due; (c)
                  makes a general assignment, arrangement or composition with or
                  for the benefit of its creditors; (d) institutes or has
                  instituted against it an administrative or legal proceeding
                  seeking a judgment of insolvency or bankruptcy or any other
                  relief under any supervision, rehabilitation, liquidation,
                  bankruptcy or insolvency law or other similar law affecting
                  creditors' rights, or a petition is presented for its
                  winding-up or liquidation, and, in the case of any such
                  proceeding or petition instituted or presented against it,
                  such proceeding or petition (1) results in a judgment of
                  insolvency or bankruptcy or the entry of an order for relief
                  or the making of an order for its rehabilitation, winding-up
                  or liquidation or (2) is not dismissed, discharged, stayed or
                  restrained in each case within 60 days of the institution or
                  presentation thereof; (e) has a resolution passed for its
                  rehabilitation, winding-up,

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                  official management or liquidation (other than pursuant to a
                  consolidation, amalgamation or merger in which the resulting
                  entity assumes the obligations of Principal Life); (f) seeks
                  or becomes subject to the appointment of an administrator,
                  supervisor, rehabilitator, provisional liquidator,
                  conservator, receiver, trustee, custodian or other similar
                  official for it or for all or substantially all its assets;
                  (g) has a secured party take possession of all or
                  substantially all its assets or has a distress, execution,
                  attachment, sequestration or other legal process levied,
                  enforced or sued on or against all or substantially all its
                  assets and such secured party maintains possession, or any
                  such process is not dismissed, discharged, stayed or
                  restrained, in each case within 60 days thereafter; (h) causes
                  or is subject to any event with respect to it which, under the
                  applicable laws of any jurisdiction, has an analogous effect
                  to any of the events specified in clauses (a) to (g)
                  (inclusive); or (i) takes any action in furtherance of, or
                  indicating its consent to, approval of, or acquiescence in,
                  any of the foregoing acts.

         Notwithstanding anything to the contrary in this Section 7, if an event
         described in clause (iii) above occurs, this Agreement will
         automatically terminate and the amount of the Fund will be immediately
         due and payable by Principal Life to the Agreement Holder, or the
         account specified by the Agreement Holder.

         Principal Life will promptly notify the Agreement Holder and the Rating
         Agencies in writing of the occurrence of any of (i) through (iii)
         above.

8.       WITHHOLDING; ADDITIONAL AMOUNTS

         All amounts due in respect of this Agreement will be made without
         withholding or deduction for or on account of any present or future
         taxes, duties, levies, assessments or other governmental charges of
         whatever nature imposed or levied by or on behalf of any governmental
         authority in the United States unless the withholding or deduction is
         required by law, regulation or official interpretation thereof. Unless
         otherwise specified in the Annex, Principal Life will not pay any
         additional amounts to the Agreement Holder in the event that any
         withholding or deduction is so required by law, regulation or official
         interpretation thereof, and the imposition of a requirement to make any
         such withholding or deduction will not give rise to an Event of Default
         or any independent right or obligation to redeem this Agreement.

9.       CURRENCY

         Except as may be specifically noted in the Annex, the Net Deposit and
         all payments under Section 6 of this Agreement shall be made using the
         currency or currencies as specified in the Notes.

9A.      TAX TREATMENT

         Principal Life and the Agreement Holder agree that this Agreement shall
         be disregarded for U.S. Federal income tax purposes. Principal Life and
         the Agreement Holder further agree that if this Agreement is not so
         disregarded, it will and is intended to be treated as a debt obligation
         of Principal Life issued in registered form within the meaning of
         Treasury

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         Regulations Section 1.871-14(c)(1)(i), except to the extent provided in
         Treasury Regulations Section 1.163-5T (or any subsequent similar
         regulation).

10.      AMENDMENT AND MODIFICATION

         This Agreement may be amended or modified in whole or in part, at any
         time and from time to time, for any period or periods (a) by mutual
         written agreement by such officers of Principal Life, the Agreement
         Holder and, where such Agreement Holder is the Indenture Trustee upon
         an assignment by way of security of this Agreement by the Trust, the
         Trust and (b) without the consent of any other person affected thereby.

11.      NOTICE

         Except as otherwise provided herein, all notices given pursuant to this
         Agreement shall be in writing, and shall either be delivered, mailed or
         telecopied to the locations listed below or at such other address or to
         the attention of such other persons as such party shall have designated
         for such purpose in a written notice complying as to delivery with the
         terms of this Section 11. Each such notice shall be effective (i) if
         given by telecopy, when transmitted to the applicable number so
         specified in this Section 11 (if required herein, such notice shall
         also be sent by mail, with first class postage prepaid), (ii) if given
         by mail, three days after deposit in the mails with first class postage
         prepaid, or (iii) if given by any other means, when actually delivered
         at such address.

         If to Principal Life:

                      Principal Life Insurance Company
                      711 High Street
                      Des Moines, Iowa 50392-0001
                      Attention:     General Counsel
                      Telephone:    (515) 247-5111
                      Telecopy:      (515) 248-3011

                      Principal Life Insurance Company
                      711 High Street
                      Des Moines, Iowa 50392-0001
                      Attention:     [TITLE]
                      Telephone:
                      Telecopy:

         If to the Agreement Holder:

                      [NOTICE DETAILS]

         with a copy to:

                      [NAME OF INDENTURE TRUSTEE]
                      [ADDRESS]

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                      Attention:
                      Telephone:
                      Telecopy:

12       BUSINESS DAY

         For purposes of this Agreement, "Business Day" means any day that is a
         Business Day as specified in the Notes or the Indenture.

13.      BUSINESS DAY CONVENTION

         If the date on which any payment is due to be made under this Agreement
         shall occur on a day on which is not a Business Day, such payment shall
         be made in accordance with the Business Day Convention as specified in
         the Notes or the Indenture.

14.      JURISDICTION

         The parties to this Agreement hereby consent to the non-exclusive
         jurisdiction of any State or Federal Court of competent jurisdiction
         located within the State of New York, in the Borough of Manhattan, in
         connection with any actions or proceedings arising directly or
         indirectly from this Agreement.

15.      WAIVER

         The obligations of Principal Life or the Agreement Holder under this
         Agreement may be waived only in writing by the party to this Agreement
         whose interests are adversely affected by such waiver. No failure or
         delay, on the part of the party adversely affected, in exercising any
         right or remedy hereunder shall operate as a waiver thereof.

16.      TAX REDEMPTION.

         If a Tax Event (defined below) occurs, Principal Life will have the
         right to redeem this Agreement by giving not less than 35 and no more
         than 60 days prior written notice to the Agreement Holder and by paying
         to the Agreement Holder an amount equal to the Fund. The term "Tax
         Event" means that Principal Life shall have received an opinion of
         independent legal counsel stating in effect that as a result of (a) any
         amendment to, or change (including any announced prospective change)
         in, the laws (or any regulations thereunder) of the United States or
         any political subdivision or taxing authority thereof or therein or (b)
         any amendment to, or change in, an interpretation or application of any
         such laws or regulations by any governmental authority in the United
         States, which amendment or change is enacted, promulgated, issued or
         announced on or after the Effective Date of this Agreement, there is
         more than an insubstantial risk that (i) the Trust is, or will be
         within 90 days of the date thereof, subject to U.S. federal income tax
         with respect to interest accrued or received on this Agreement or (ii)
         the Trust is, or will be within 90 days of the date thereof, subject to
         more than a de minimis amount of taxes, duties or other governmental
         charges.

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                                      ANNEX

This Annex will become effective as of the Effective Date, subject to the
requirements of Section 1.

[Trust:

Net Deposit:               The Net Deposit is _____.

Deposit:                   Regardless of the amount of the Net Deposit, the
                           Deposit is deemed to be __. [For discount notes, this
                           amount equals (i) the sum of the face amount of the
                           Notes and the Trust Beneficial Interest multiplied by
                           (ii) the issue price of the Notes.]

Bank and Account:

Title of Notes:

[Additional Amounts:       [To be included only if Notes provide for Additional
                           Amounts.] All payments by Principal Life to the
                           Agreement Holder under the terms of this Agreement
                           (including any payment of redemption amounts) will be
                           made free and clear of and without withholding or
                           deduction for or on account of any present or future
                           taxes, duties, levies, assessments or other
                           governmental charges of whatever nature imposed or
                           levied by or on behalf of the United States or any
                           political subdivision thereof or any authority or
                           agency therein or thereof (each, a "Governmental
                           Authority") (collectively, "United States taxes")
                           unless the withholding or deduction of such United
                           States taxes is required by law. If any such
                           withholding or deduction is required, or if any such
                           withholding or deduction is required under any Notes,
                           Principal Life will pay, or cause to be paid,
                           additional amounts ("Additional Amounts") to the
                           Agreement Holder to compensate for any withholding or
                           deduction for or on account of any present or future
                           United States taxes of whatever nature imposed or
                           levied by or on behalf of any Governmental Authority,
                           so that the net amount received by (1) the Agreement
                           Holder under Sections 6 or 7 of this Agreement, as
                           applicable, or (2) the holder of any such Notes,
                           after giving effect to such withholding or deduction,
                           whether or not currently payable, will equal the
                           amount that would have been received under this
                           Agreement or any such Notes were no such deduction or
                           withholding required, provided that Principal Life
                           shall not be required to make any payment of any
                           Additional Amount for or on account of (i) any tax,
                           duty, levy, assessment or other governmental charge
                           imposed which would not have been imposed but for the
                           Agreement Holder or beneficial owner (as determined
                           for U.S.

                                       A-1

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                           federal income tax purposes) of this Agreement or the
                           holder or beneficial owner of any such Notes
                           ("Noteholder") (a) having any present or former
                           connection with the United States, including, without
                           limitation, being or having been a citizen or
                           resident thereof, or being or having been present
                           therein, incorporated therein, engaged in a trade or
                           business therein or having (or having had) a
                           permanent establishment or principal office therein,
                           or (b) being or having been a controlled foreign
                           corporation, a personal holding company, a passive
                           foreign investment company, a corporation that has
                           accumulated earnings to avoid U.S. federal income tax
                           or a private foundation or other tax-exempt
                           organization, or (c) being or having been an actual
                           or constructive "10% shareholder" of Principal Life
                           as described in Section 871(h)(3) of the Internal
                           Revenue Code of 1986, as amended (the "Code"), or (d)
                           being a bank for U.S. federal income tax purposes
                           whose receipt of interest in respect of this
                           Agreement is described in Section 881(c)(3)(A) of the
                           Code, or (e) being subject to withholding as of the
                           date of becoming either a beneficial owner (as
                           determined for U.S. federal income tax purposes) of
                           this Agreement or a Noteholder; (ii) any tax, duty,
                           levy, assessment or other governmental charge which
                           would not have been imposed but for the presentation
                           of this Agreement or any Notes or evidence of
                           beneficial ownership of this Agreement (where
                           presentation is required) for payment on a date more
                           than 30 days after the date on which such payment
                           becomes due and payable or the date on which payment
                           is duly provided for, whichever occurs later; except
                           to the extent that the Agreement Holder, beneficial
                           owner (as determined for U.S. federal income tax
                           purposes) of this Agreement or a Noteholder would
                           have been entitled to Additional Amounts had this
                           Agreement or any Notes or evidence of beneficial
                           ownership of this Agreement been presented on the
                           last day of such 30 day period; (iii) any tax, duty,
                           levy, assessment or other governmental charge which
                           is imposed or withheld solely by reason of the
                           failure of the Agreement Holder, beneficial owner (as
                           determined for U.S. federal income tax purposes) of
                           this Agreement, or a Noteholder to comply with
                           certification, identification or information
                           reporting requirements concerning the nationality,
                           residence, identity or connection with the United
                           States of the Agreement Holder, beneficial owner (as
                           determined for U.S. federal income tax purposes) of
                           this Agreement or a Noteholder, if compliance is
                           required by statute, by regulation of the United
                           States Treasury Department, judicial or
                           administrative interpretation, other law or by an
                           applicable income tax treaty to which the United
                           States is a party as a condition to exemption from
                           such tax, duty, levy, assessment or other
                           governmental charge; (iv) any inheritance, gift,
                           estate, personal property, sales, transfer or similar
                           tax, duty,

                                      A-2
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                           levy, assessment or similar governmental charge; (v)
                           any tax, duty, levy, assessment or other governmental
                           charge that is payable otherwise than by withholding
                           from payments in respect of either this Agreement or
                           any Note; (vi) any tax, duty, levy, assessment or
                           other governmental charge that would not have been
                           imposed or withheld but for the treatment of payments
                           in respect of this Agreement as contingent interest
                           described in Section 871(h)(4) of the Code; (vii) any
                           tax, duty, levy, assessment or other governmental
                           charge that would not have been imposed or withheld
                           but for an election by the Agreement Holder, a
                           beneficial owner (as determined for U.S. federal
                           income tax purposes) of this Agreement or a
                           Noteholder the effect of which is to make the payment
                           in respect of this Agreement subject to U.S. federal
                           income tax; (viii) any tax, duty, levy, assessment or
                           other governmental charge resulting from a European
                           Union Directive; or (ix) any combination of items
                           (i), (ii), (iii), (iv), (v), (vi), (vii) or (viii).

                           If Principal Life is required, or based on an opinion
                           of independent legal counsel selected by Principal
                           Life a material probability exists that it will be
                           required, to withhold or deduct for or on account of
                           any United States taxes with respect to any payment
                           under this Agreement as described in the immediately
                           preceding paragraph, or with respect to any payment
                           under any related contract between Principal Life and
                           the Agreement Holder, pursuant to (a) any amendment
                           to, or change (including any announced prospective
                           change) in, the laws (or any regulations thereunder)
                           of the United States or any political subdivision or
                           taxing authority thereof or therein or (b) any
                           amendment to, or change in, an interpretation or
                           application of any such laws or regulations by any
                           governmental authority in the United States, which
                           amendment or change is enacted, promulgated, issued
                           or announced on or after the Effective Date of this
                           Agreement, then Principal Life may redeem this
                           Agreement by giving not less than 30 and no more than
                           75 days prior written notice to the Agreement Holder
                           and by paying to the Agreement Holder on the date
                           specified in such notice the Fund balance.]

[Survivor's Option:        Unless this Agreement has been declared due and
                           payable prior to the Maturity Date of the related
                           Notes by reason of any Event of Default, or has been
                           previously redeemed or otherwise repaid, the
                           Agreement Holder may request repayment of this
                           Agreement upon the valid exercise of the Survivor's
                           Option in the Notes by the Representative of the
                           deceased Beneficial Owner of such Notes (a
                           "Survivor's Option").]

                                      A-3

<PAGE>

                           Except as provided below, upon the tender to and
                           acceptance by Principal Life of this Agreement (or
                           portion thereof) securing the Notes as to which the
                           Survivor's Option has been exercised, Principal Life
                           shall repay to the Agreement Holder the amount of the
                           Fund equal to (i) 100% of the principal amount of the
                           Notes as to which the Survivor's Option has been
                           validly exercised and accepted, plus accrued and
                           unpaid interest on such amount to the date of
                           repayment, or (ii) in the case of Discount Notes, the
                           Issue Price of the Notes as to which the Survivor's
                           Option has been validly exercised and accepted, plus
                           accrued discount and any accrued and unpaid interest
                           on such amount to the date of repayment. However,
                           Principal Life shall not be obligated to repay:

                           o        more than the greater of $2,000,000 or 2% of
                                    the aggregate deposit for all funding
                                    agreement contracts securing all outstanding
                                    notes issued under the Principal(R) Life
                                    CoreNotes(sm) program as of the end of the
                                    most recent calendar year;

                           o        more than $250,000 in aggregate deposit of
                                    funding agreement contracts securing
                                    outstanding notes issued under the
                                    Principal(R) Life CoreNotes(sm) program as
                                    to which the Survivor's Option has been
                                    exercised on behalf of any single beneficial
                                    owner in any calendar year; or

                           o        more than o % of the Deposit under this
                                    Agreement which secures the related Notes,
                                    as of the later of the end of the most
                                    recent calendar year.

                           Principal Life shall not make repayments pursuant to
                           the Agreement Holder's request for repayment upon
                           exercise of the Survivor's Option in amounts that are
                           less than $1,000, and, in the event that the
                           limitations described in the preceding sentence would
                           result in the partial repayment of this Agreement,
                           the principal amount of this Agreement remaining
                           outstanding after repayment must be at least $1,000
                           (the minimum authorized denomination of this
                           Agreement). A request for repayment by the Agreement
                           Holder upon an otherwise valid election to exercise
                           the Survivor's Option may not be withdrawn.

                           This Agreement (or portion thereof) accepted for
                           repayment shall be repaid on the first Interest
                           Payment Date for the related Notes that occurs 20 or
                           more calendar days after the date of such acceptance.

                           In order to obtain repayment of this Agreement (or
                           portion thereof) upon exercise of the Survivor's
                           Option, the Agreement Holder must provide to
                           Principal Life (i) a written request for repayment
                           signed

                                      A-4

<PAGE>

                           by the Agreement Holder, and (ii) any additional
                           information Principal Life requires to evidence
                           satisfaction of any conditions to the repayment of
                           this Agreement (or portion thereof).]

                                      A-5

<PAGE>

PRINCIPAL LIFE INSURANCE COMPANY

By:
   --------------------------------------

Name:
     ------------------------------------

Title:
      -----------------------------------

[NAME OF TRUST]

By:
   --------------------------------------

Name:
     ------------------------------------

Title:
      -----------------------------------<PAGE>

                                                                     EXHIBIT 4.9

                                    GUARANTEE

         FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged,
and in connection with that certain funding agreement (the "Funding Agreement"),
entered into by and between Principal Life Insurance Company, an Iowa insurance
company ("Principal Life"), and Principal Life Income Fundings Trust o - o, a
New York common law trust (the "Trust"), relating to the notes (the "Notes")
issued by the Trust, Principal Financial Group, Inc., a Delaware corporation and
the indirect parent company of Principal Life (the "Guarantor"), hereby
furnishes to the Trust its full and unconditional guarantee of the Guaranteed
Amounts (as hereinafter defined) as follows:

         1. GUARANTEE.

                  (a) The Guarantor hereby fully, irrevocably, absolutely and
unconditionally guarantees, as a guarantee of payment and not merely as a
guarantee of collection, immediate payment when due to the Trust any payments
required to be made by Principal Life to the Trust under the Funding Agreement
which shall become due and payable regardless of whether such payment is due at
maturity, on an interest payment date or as a result of redemption or otherwise
(the "Scheduled Payments") but shall be unpaid by Principal Life (the
"Guaranteed Amounts"). Notwithstanding anything to the contrary contained
herein, in no event shall the Guaranteed Amounts exceed the Deposit (as defined
in the Funding Agreement) of the Funding Agreement, plus accrued but unpaid
interest and any other amounts due and owing under the Funding Agreement, less
any amounts paid by Principal Life to the Trust.

                  (b) In the event that Principal Life fails to make a Scheduled
Payment in full when due (the "Payment Notice Date"), then the Trust or
Citibank, N.A., as indenture trustee for the benefit of the holders of the Notes
(the "Indenture Trustee"), pursuant to the indenture (the "Indenture") between
the Trust and the Indenture Trustee, may present the Guarantor with notice
(each, a "Payment Notice") of such failure in writing on or after the Payment
Notice Date. The Payment Notice shall identify (1) the Funding Agreement, (2)
the Trust, (3) the Payment Notice Date and (4) the amount of the Scheduled
Payments not paid by Principal Life to the Trust as of the Payment Notice Date.
Upon receipt of such Payment Notice, the Guarantor will immediately pay the
Guaranteed Amounts pursuant to Section 7.

                  (c) In the event that, after receipt of a Payment Notice from
the Trust, the Guarantor fails to make immediate payment to the Trust or the
Indenture Trustee of the Guaranteed Amounts, then the Trust and the Indenture
Trustee may enforce the obligations of the Guarantor under this Guarantee,
including by immediately bringing suit directly against the Guarantor (without
first bringing suit against Principal Life) for the Guaranteed Amounts not paid
to the Trust as of the Payment Notice Date.

                  (d) This Guarantee is an unsecured, unsubordinated and
contingent obligation of the Guarantor and ranks equally with all other
unsecured and unsubordinated obligations of the Guarantor.

                                       i
<PAGE>

         2. TERMINATION. This Guarantee is a continuing and irrevocable
guarantee of the Guaranteed Amounts now or hereafter existing and shall
terminate and be of no further force and effect with respect to the Funding
Agreement and the Notes upon the full payment of the Scheduled Payments or upon
the earlier extinguishment of the obligations of Principal Life under the
Funding Agreement.

         3. AMENDMENTS. Subject to the trust agreement relating to the Trust and
the Indenture, no provision of this Guarantee may be waived, amended,
supplemented or modified, except by a written instrument executed by the Trust
and the Guarantor.

         4. ASSIGNMENT; GOVERNING LAW. This Guarantee shall inure to the benefit
of the Trust and its successors, assigns and pledgees. This Guarantee shall be
governed by, and construed in accordance with, the laws of the State of New York
without regard to conflict of law principles.

         5. NOTICES. All notices given pursuant to this Guarantee shall be in
writing, and shall either be delivered, mailed or telecopied to the locations
listed below or at such other address or to the attention of such other persons
as such party shall have designated for such purpose in a written notice
complying as to delivery with the terms of this Section 5. Each such notice
shall be effective (i) if given by telecopy, when transmitted to the applicable
number so specified in this Section 5 (such notice shall also be sent by mail,
with first class postage prepaid), (ii) if given by mail, three days after
deposit in the mails with first class postage prepaid, or (iii) if given by any
other means, when actually delivered at such address.

         If to the Guarantor:

         Principal Financial Group, Inc.
         711 High Street
         Des Moines, Iowa  50392-0001
         Attention:  o
         Telephone:  o
         Facsimile:  o

         If to the Trust:

         Principal Life Income Fundings Trust (followed by the number of the
         Trust specified in this Guarantee)
         c/o U.S. Bank Trust National Association
         100 Wall Street, 16th Floor
         New York, New York 10005
         Attention: Adam Berman
         Telephone: (212) 361-2458
         Facsimile: (212) 509-3384

<PAGE>

         With a copy to:

         Citibank, N.A.
         Citibank Agency and Trust
         111 Wall Street, 14th Floor, Zone 3
         New York, New York 10005
         Attention: Nancy Forte
         Telephone:  (212) 657-7403
         Facsimile:  (212) 657-3862

         6. REPRESENTATIONS AND WARRANTIES. The Guarantor represents and
warrants that: (i) it is duly organized and in good standing under the laws of
the jurisdiction of its organization and has full capacity and right to make and
perform this Guarantee, and all necessary authority has been obtained; (ii) this
Guarantee constitutes a legal, valid and binding obligation of the Guarantor
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and general principles
of equity, regardless of whether enforcement is sought in a proceeding in equity
or at law; (iii) the making and performance of this Guarantee does not and will
not violate the provisions of any applicable law, regulation or order, and does
not and will not result in the breach of, or constitute a default under, any
material agreement, instrument or document to which it is a party or by which it
or any of its property may be bound or affected, except to the extent disclosed
in the registration statement registering the issuance of this Guarantee and the
Funding Agreement, as amended, supplemented or modified from time to time (the
"Registration Statement"), and to the extent that any such violation, breach or
default does not result in a material adverse effect on the Guarantor; and (iv)
all consents, approvals, licenses and authorizations of, and filings and
registrations with, any governmental authority required under applicable law and
regulations for the making and performance of this Guarantee have been obtained
or made and are in full force and effect, except to the extent disclosed in the
Registration Statement and to the extent that the failure to acquire any such
consent, approval, license, authorization, filing or registration does not
result in a material adverse effect on the Guarantor.

         7. NOTICE OF, AND CONSENT TO, SECURITY INTEREST. The Trust hereby
notifies the Guarantor that it has granted to the Indenture Trustee, on behalf
of the holders of the Notes, a security interest in the Collateral (as defined
in the Indenture), including, but not limited to, any and all payment to be made
by the Guarantor to the Trust under this Guarantee. The Trust hereby notifies
the Guarantor that it has collaterally assigned to the Indenture Trustee, for
the benefit of the holders of the Notes, this Guarantee. The Guarantor, by
executing this Guarantee, hereby (i) affirms that it has made or simultaneously
will make changes to its books and records to reflect such security interest and
collateral assignment, (ii) consents to the security interest granted, and
collateral assignment made, by the Trust to the Indenture Trustee of this
Guarantee, (iii) agrees to make all payments due under this Guarantee to the
Collection Account (as defined in the Indenture) or any other account designated
in writing to the Guarantor by the Indenture Trustee and (iv) agrees to comply
with all orders of the Indenture Trustee with respect to this Guarantee without
any further consent from the Trust.

<PAGE>

         8. WAIVER OF JURY TRIAL; FINAL AGREEMENT. TO THE EXTENT ALLOWED BY
APPLICABLE LAW, THE GUARANTOR WAIVES TRIAL BY JURY WITH RESPECT TO ANY ACTION,
CLAIM, SUIT OR PROCEEDING ON OR ARISING OUT OF THIS GUARANTEE. THIS GUARANTEE
REPRESENTS THE FINAL AGREEMENT BETWEEN THE GUARANTOR AND THE TRUST AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS AMONG SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH
PARTIES.

                             PRINCIPAL FINANCIAL GROUP, INC.

                             By:
                                 -----------------------------------------------

                             Name:
                                   ---------------------------------------------

                             Title:
                                    --------------------------------------------

                             Date: The Effective Date (as defined in the Funding
                                    Agreement)

Acknowledged and Agreed:

THE PRINCIPAL LIFE INCOME FUNDINGS
TRUST DESIGNATED IN THIS GUARANTEE

By:
    -----------------------------------------------

Name:
      ---------------------------------------------

Title:
       --------------------------------------------

Date: The Effective Date (as defined in the Funding
         Agreement)

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