SUPPLEMENT DATED JULY 25, 2013

TO THE PROSPECTUS FOR

PRINCIPAL FREEDOM VARIABLE ANNUITY 2

DATED MAY 1, 2013

This supplement updates information in the prospectus dated May 1, 2013, for Principal Freedom Variable Annuity 2, which is issued by Principal Life Insurance Company. This supplement should be read in its entirety and kept together with your prospectus for future reference. Certain terms used in this supplement have special meanings. If a term is not defined in this supplement, it has the meaning given to it in the prospectus.

TABLE OF SEPARATE ACCOUNT DIVISIONS

MidCap Division

Effective August 16, 2013, this division will be closed as an investment option for new contracts sold under this prospectus. The fund closing applies to contracts for which the application is signed on or after that date. If you own a contract for which the application was signed prior to that date, you may continue to allocate net premiums to this division in accordance with your contract’s prospectus.