Does your business have the right protection? Individual disability insurance Presenter name Presenter title

Disability insurance from Principal® is issued by Principal Life Insurance Company, Des Moines, IA 50392-0002. DI Retirement Security is issued as a non-cancelable, guaranteed renewable, individual Disability Income insurance policy. It is not a pension or retirement program or a substitute for such a program. DI Retirement Security is not available for anyone who is over insured based on Principal Life’s current issue and participation guidelines. It may not be available or the benefit amount may be reduced for certain occupations if there is existing DI coverage with lifetime benefits. Additional underwriting guidelines may apply. 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. Disability insurance has limitations and exclusions. For costs and coverage details, contact your Principal representative. 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 Principal®. Not a deposit | Not FDIC or NCUA insured | No bank or credit union guarantee | May lose value | Not insured by any Federal government agency 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.

Top financial priorities from business owners like you Protecting their business Protecting their income Yet, less than a third of owners have solutions in place. Source: 2015 Principal Financial Group® Business Owner Survey, conducted by Harris Interactive.

Individual disability insurance can help

Know the facts Common misconceptions about disability insurance: That happens to other people. Not me. My business can run without me. I’d rather put my money into growing my business. Maybe you’ve done research online or talked to friends, family or other business owners about disability insurance. If so, you may have come across some common misconceptions like these: “That happens to other people. Not me.” -Most disabilities are caused by illnesses, such as cancer, heart conditions and strokes. Although we can’t predict the future and what our health will be, we can protect ourselves. “My business can run without me.” -While that may be true for some, many businesses rely on the owner to keep it running. “I’d rather put my money into growing my business.” -It doesn’t have to be an either/or situation. Disability insurance can be customized to fit your budget. There are discounts available, and you can set up coverage on a tax-advantaged basis. 8

Chances of a disability lasting 3 months or longer (before age 65) Likelihood of disability Chances of a disability lasting 3 months or longer (before age 65) Age One owner Two owners Three owners 27 45.3% 70.% 83.6% 37 40.4% 64.5% 78.8% 47 32.8% 54.8% 69.6% 57 19.6% 35.4% 48.1% This slide shows the likelihood of a disability lasting three months or longer in a group for various ages and number of owners in a business. Let’s assume you and your partner are both 37 years old. The chance of one of you becoming disabled is 64.5 percent. As the numbers indicate, the odds aren’t in your favor. Source: Commissioner’s Individual Disability Table A, Equally Weighted, All Occupation Classes, Unisex

Solutions that put you in control

How our solutions can help In the event of a disability, our products can help: Pay everyday living expenses and maintain your lifestyle Continue to save for retirement Provide a well-rounded benefit package Pay business expenses, like rent and salaries Ease the transition of the business to another owner

Individual Disability Income insurance

Individual DI insurance A disability policy from Principal®: Stays with you even if you change jobs Can’t be canceled, unless you stop paying for coverage Guarantees your cost for coverage will not change until age 65 Can be designed to meet your budget and needs Works well on its own or with other solutions you may have Individual disability insurance helps you deal with these realities. Having your own policy puts you in the driver’s seat of securing your financial foundation. A disability policy from Principal: ›› Stays with you even if you change jobs ›› Can’t be cancelled, unless you stop paying for coverage ›› Guarantees your cost for coverage will not change until age 65 ›› Can be designed to meet your budget and needs ›› Works well on its own or with other solutions you may have in place, such as disability coverage from your employer 10

Are group benefits enough? Adding an individual disability insurance policy to group LTD coverage helps add an additional layer of income protection. Plus, a 20% Multi-Life discount for DI insurance may be available* While employer-paid benefits are valuable, the typical group long-term disability (LTD) benefit is only about 60% of regular income. And that benefit is usually taxable. An individual Disability Income insurance policy can help cover a greater percentage of income. . Chart based on $6,250 gross monthly income ($75,000 annually), with 60% group LTD program, assuming a 30% tax bracket for federal, state and FICA. *Three or more employees with a common employer must purchase coverage: based on gender-neutral rates.

DI Retirement Security

Helping protect retirement dreams Impact of a permanent disability on retirement savings at age 40 Just look at how retirement savings can be impacted if the employee were permanently disabled at 40 and could no longer contribute to retirement. Over 25 years, there’s a 1.2 million dollar loss of savings. Not many can sustain a $1.2million dollar loss to their retirement plan and still enjoy the retirement they were hoping for. The DI Retirement Security product pays disability benefits to a trust on the employee’s behalf to access for retirement income in the future. Assumptions: $2,000/month contributions beginning at age 30, 5% rate of return and age 65 retirement. Potential loss due to disability at age 40 without continued contributions to retirement savings.

The trust invests the benefits (after a risk assessment is conducted) How it works Before a disability, DI insurance premiums are paid to Principal. Insured Principal At the end of the benefit period, trust assets are distributed Disability occurs, benefits are paid to an irrevocable trust Irrevocable Trust If you become disabled, Principal pays disability insurance benefits directly to an irrevocable trust. These benefits are income tax-free when premiums are paid with after-tax dollars. The trust invests the benefits on the employee’s behalf into one of six asset allocation models (based on investment style and risk tolerance) until the end of the benefit period. At the end of the benefit period, trust assets are distributed. Investment earnings in the trust are taxable annually. The trust invests the benefits (after a risk assessment is conducted) For more on trust investment options: www.principal.com/bankerstrust

Overhead Expense insurance

Overhead Expense insurance Covering your business expenses if you’re too sick or hurt to work Fixed business expenses are reimbursed Cost of coverage is tax-deductible Don’t have to rely on creditors to keep the doors open

Examples of covered business expenses Replacement salary Lease for building, furniture and equipment Utilities, office supplies and insurance premiums Much more

Disability Buy-Out insurance

Keep your business investment intact If you’re permanently disabled, Disability Buy-Out insurance can help ease the transition to another owner by funding a buy-sell agreement. Complimentary services offer a great starting point. Principal® experts can help you lay the groundwork for business plans with: Informal business valuations Buy-sell reviews

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