Help Employers Offer Income Protection Multi-Life Individual Disability Insurance Presenter’s name The presenter’s title goes on this line For producer information only. Not for use in sales situations.

This information is provided with the understanding that Principal® is not rendering legal, accounting, or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. Insurance issued by Principal Life Insurance Company a member of the Principal Financial Group®, Des Moines, IA 50392, www.principal.com. No part of this presentation may be reproduced or used in any form or by any means, electronic or mechanical, including photocopying or recording, or by any information storage and retrieval system, without prior written permission from the Principal Financial Group. Principal, Principal and symbol design and Principal Financial Group are trademarks and service marks of Principal Financial Services, Inc., a member of the Principal Financial Group. Not a Deposit | Not FDIC or NCUA Insured | No Bank or Credit Union Guarantee | May Lose Value | Not Insured by any Federal Government Agency For financial professional use only. Not for use with consumers or the public.

Multi-Life Advantages 1 Flexible design options 2 Affordable coverage – with discounts 3 Easy to implement For financial professional use only. Not for use with consumers or the public.

Why offer multi-life solutions Triple Advantages Employer Employees You Helps attract and retain a quality workforce A valuable benefit that helps protect income Portable policy and discounts Sell multiple policies at once – increasing compensation potential For financial professional use only. Not for use with consumers or the public.

The value of the Multi-Life Discount When 3 or more employees with a common employer purchase any Individual Disability Insurance from Principal Life. No formal employer involvement required. Age Multi-life 25 $18/month 35 $26/month 45 $38/month Sample Premium $1,000 Monthly Benefit Assumptions: Michigan resident, To Age 65 Your Occupation and Benefit periods, 90-day Elimination Period, Residual and Recovery Benefit rider, 5A occupation class, non-tobacco 20% multi-life discount. 1 – Based on gender neutral rates. For financial professional use only. Not for use with consumers or the public.

Getting started in the market Review your existing block of business and ask for referrals. Prospect with local businesses; employees can be in multiple locations. Who to target Small- to medium-size businesses Professional and grey collar occupations Banking, engineering, accounting, law, veterinary medicine, architecture, etc. Voluntary benefits Business with up to 250 eligible lives Annual incomes of $35,000 or more Employer-paid benefits Business with 10 to 30 participating lives Annual incomes of $375,000 or more For financial professional use only. Not for use with consumers or the public.

Opening doors with employers Design review Discuss goals of client’s benefit program Review the current benefit offering Look for gaps in coverage No benefits in place Group disability benefits only Executives and key employees under-protected Retirement savings unprotected For financial professional use only. Not for use with consumers or the public.

Offering DI as an employee benefit Program Benefits Discounts Fully Underwritten Up to max issue and participation limits 20%: 3 or more lives required1 Simplified Multi-Life Up to $6,000/month Standard Issue (GSI) Based on census and participating lives 20%: 10-49 lives2 25%: 50-99 lives 30%: 100+ lives Fallback GSI Initially up to max issue and participation limits Fallback GSI offer based on census and participating lives 20%: 8-49 lives2 You can also offer DI as an employee benefit – part of a formal employee benefit program. Principal Life offers four primary multi-life program options: Fully underwritten, Simplified Multi-Life, Standard Issue (also known as GSI) and Fallback GSI. All of these options provide a discount when minimum lives thresholds are met. The programs all start with at least a 20 discount. As the number of lives in the group increase, greater discounts may be available. Plus, the multi-life discounts can be combined with other discounts like Select Occupation or Mental Nervous Substance Abuse Disorders Limitation rider for even greater savings. Any of these programs could be offered on an employer-paid or voluntary basis, or a combination of both. Who pays the premium? Employer, employee or a combination. 1Greater discount may be available based on number of lives. 2 25 or more lives required for physicians For financial professional use only. Not for use with consumers or the public.

Fully Underwritten Multi-Life 20% Multi-Life Discount Full underwriting reviews conducted, providing the opportunity for the maximum level of benefits For groups with 3+ lives | All occupation classes When employees need greater than $6,000 in monthly benefits Individual DI benefits: Up to $20,000/month; participating up to $30,000/month1 All riders available The fully underwritten multi-life discount is available when three or more individuals with a common employer purchase any Individual Disability Insurance policy from Principal Life Insurance Company. Offering this discount does not require employer involvement. The 20% discount is based on unisex rates for Individual DI insurance policies, providing even greater savings. And the policy is portable, so it goes with the individual should he or she change jobs. 1Additional guidelines apply For financial professional use only. Not for use with consumers or the public.

Simplified Multi-Life Program 20% Multi-Life Discount Streamlined underwriting; no routine medical requirements1 or income documentation (up to $150,000/year;2 may request census) For groups with 3+ lives | All occupation classes When employees need monthly benefits below $6,000 Individual DI benefits: Up to $6,000/month Accelerated turnaround once the application and TeleApp interview are completed and received All riders available including Benefit Update With the Simplified Multi-Life program, a quick and easy application process and a streamlined underwriting process provides an underwriting decision in 48 hours. The Simplified program features no routine medical or financial documentation required. It’s an easy way to make a multi-life sale and an easy way for an employer to provide employees with an additional disability benefit option. ------------------------------------------------------------------------------------ Disclaimers: Routine medical requirements may be required if a significant medical condition is reported by MIB and not verified in part A or B (TeleApp) of the application, or any other disability coverage has been issued or applied for on a non-medical basis. Applications could be rated, ridered or declined. This is not a guaranteed issue program. Subject to minimum premiums, I & P limits, and current underwriting guidelines. Financial documentation may be required for certain multi-life cases. For Simplified OE, no financials required beyond information provided on part A of the application and OE supplement. Financials are required for Simplified DBO. For Single-Life cases, the cover page and Field Office Report must accompany the application along with the OE and/or DBO Supplement and DBO financials. For Multi-Life cases, underwriting approval is required prior to application submission. Submit a complete census for each eligible group and include information on any Group LTD or other disability insurance programs in-force. Once approved, a copy of the offer letter and Field Office Report must accompany the application. 1 - No blood, urine, exams, EKGs or APSs required unless a significant medical condition is reported by MIB, significant medical information is obtained from the TeleApp or other available information, or any other disability coverage has been issued or applied for on a non-medical basis. Applications could be rated, ridered or declined based on all underwriting information available; this is not a guaranteed issue program. Urine/HIV test is required in Maine. Subject to Issue & Participation limits and minimum premium requirement. Simplified single-life DI is not available in California; APS and financials are required for all DI applications (except multi-life DI cases of 3 lives or more). | 2 - Financial documentation may be required for certain occupations regardless of income earned. For financial professional use only. Not for use with consumers or the public.

Standard Issue (GSI) Up to 30% Discount For larger cases; no routine medical requirements or individual financials (just employee census) Minimum lives:1 10 for employer-paid cases; 15 (with 20% participating) for employee-paid cases 3A occupation class or higher Individual DI benefits: Based on census and participating lives (typically up to $7,500/month) Standard coverage for approved group Cost of Living Adjustment (COLA) and Conditionally Renewable rider available; others available with underwriting approval Guaranteed standard issue cases provide standard coverage for an entire group. No routine medical requirements or individual financials are needed. It is available to 3A occupation classes or higher and when there are at least 5 participating lives. There are few key components that are critical to successfully placing a GSI case. First, you should be ready to think creatively and be flexible to structure an ideal GSI solution for the employer. Second, you must have two things from the employer: Commitment and access to employees. Third, you need involvement and support from the company’s HR Director for assistance with census development, communication to employees and coordinating enrollment meetings. 1 5 lives when Principal Life Group LTD coverage is sold; 25+ lives required for physician groups For financial professional use only. Not for use with consumers or the public.

Fallback GSI Up to 30% Discount For larger cases; maximum benefits available with safety net GSI offer if employee does not meet underwriting guidelines Minimum lives:1 8 for employer-paid cases; 15 (with 20% participating) for employee-paid cases 3A occupation class or higher Individual DI benefits: Up to $20,000/month; participating up to $30,000/month1 Fallback GSI benefits: Based on census and participating lives All riders available for fully underwritten. COLA and Conditionally Renewable riders available for Fallback GSI; others available with underwriting approval 1 5 lives when Principal Life Group LTD coverage is sold; 25+ lives required for physician groups For financial professional use only. Not for use with consumers or the public.

Successful Enrollment The multi-life sale is a two-step process Selling it to the employer Selling it to the employee Employee communication is key Promote the offering in print and electronically Present at group kick-off meetings Hold one-on-one consultations Follow up with employees Establish a process for reaching newly eligible employees All Cases Take advantage of marketing materials and communication materials from Principal Life Larger Cases Customized proposals, pre-filled applications and enrollment kits available For financial professional use only. Not for use with consumers or the public.

Design Considerations For financial professional use only. Not for use with consumers or the public.

Supplement group disability insurance Group long-term disability coverage is a always a great start to income protection, but in many cases, it’s just not enough. Let’s go through this slide to see why. First, when employees are healthy and working, they receive their full paycheck. And chances are, they make full use of it, covering their mortgage, groceries, and utilities while also saving for retirement or other rainy day funds. If an illness or injury prevents them from working, their group LTD policy would kick in. Most group LTD policies replace 60 percent of income (up to a set monthly cap). $5,000 is a common monthly benefit cap. So, right off the bat, employees take a pay cut, but when you factor in taxes, the amount they take home drops even further. For just a few pennies on the dollar, a supplemental individual DI insurance policy helps clients replace a greater portion of their incomes. Chart based on $6,250 gross monthly income ($75,000 annual), with 60% group long-term disability program, assuming a 30% tax bracket for federal, state and FICA. For financial professional use only. Not for use with consumers or the public.

Executive Coverage Gaps Group LTD monthly benefit caps can create an income replacement gap for highly compensated employees. Income Group LTD Monthly Benefit Income Replacement % $100,000 $5,000 60% $150,000 40% $200,000 30% $250,000 24% Group LTD benefits replace a percentage of income (often 60 percent before taxes) up to a maximum monthly benefit cap, typically $5,000. Depending on the annual salary, the monthly benefit cap can create an income replacement gap. Plus, group LTD coverage often does not cover bonus or incentive income, and benefits are taxable. Assumptions: 60% Group LTD benefit with a monthly cap of $5,000, before tax figures Individual DI Insurance can help fill the gap, replacing a greater percentage of income. For financial professional use only. Not for use with consumers or the public.

Structure LTD and DI for affordability Lower the group LTD maximum monthly benefit Benefit cap doesn’t affect most employees Provide supplemental DI for highly compensated Change the group LTD definition of income Cover base salaries only with group LTD Supplement with DI to cover bonuses/commission Vary the max monthly benefit by employee class Different benefit amounts for different classes can lower the overall cost of group coverage The following strategies can help employers afford Individual DI coverage for their employees: • Lower the group LTD maximum monthly benefit — The monthly group LTD benefit most employees receive is not affected by the maximum monthly benefit cap. However, for highly compensated employees, the benefit cap could result in a lower income replacement percentage. Reducing the group LTD maximum monthly benefit can free-up benefit dollars that could be used to purchase Individual DI coverage for those highly compensated employees. • Change the group LTD definition of income — Update the group program to cover base salaries only and then supplement it with fully underwritten Individual DI insurance to cover bonus and/or commission income. (Does not apply to business owners) • Vary the maximum monthly benefit by employee class — Providing different benefit amounts for different classes of employees can lower the overall cost of the group LTD program. For financial professional use only. Not for use with consumers or the public.

Protecting Retirement Savings DI Retirement Security pays monthly benefits to a trust to be accessed as retirement income. For financial professional use only. Not for use with consumers or the public.

Thank you DI8944-1 | 02/2017 | © 2017 Principal Financial Services, Inc. For financial professional use only. Not for use with consumers or the public.