1. Principal SERP Select SM Principal Financial Group ® For financial professional use only. Not for distribution to the public. Presentation Date/Time/Location

2. Producer name, designations Presented by Producer title If JD, use this disclosure: *JD is an educational degree and the holder does not provide legal services on behalf of the companies of the Principal Financial Group ®. For financial professional use only. Not for distribution to the public.

3. Agenda The All Encompassing Business Solution The Tax Reality The Principal SERP Select Solution For financial professional use only. Not for distribution to the public.

4. Business Owner & Executive Solutions For financial professional use only. Not for distribution to the public.

5. Business Life Insurance Solutions For financial professional use only. Not for distribution to the public. Business Owner & Executive Solutions Nonqualified Deferred Compensation Employee Stock Ownership Plans (ESOP) Key person Buy sell – exit planning Executive bonus Estate planning Principal SERP Select Elective and supplemental deferred compensation Comprehensive ESOP support Coordinate with BOES on related funding of solutions Management of repurchase obligation All retail life (variable and fixed) Protection and retirement income Variable corporate-owned life insurance (COLI) Retirement income All retail life (variable and fixed) and variable COLI Protection and retirement income Coordinated case by caseComprehensive sales support Administration (BMA) – no fee Administration - for a feePolicy administration (BMA)- no fee ESOP plan administration (ESOP platform) – fee-based

6. The BOES Platform For financial professional use only. Not for distribution to the public. MarketingSalesService Priorities checklist Complimentary informal business valuation Complimentary buy-sell review Retirement gap calculator Key person calculator Access to Advanced Solutions staff for technical support Point-of-sale assistance More than 30 unique plan designs Customized proposals showing multiple financing options Products and underwriting for the business market (including GI/SI on all permanent products) Business Market Administration (BMA) – comprehensive plan- level services Annual employee and employer reporting Online access Economic benefit and 101(j) reporting More than 30 plan types, more than 10,000 plans on the books, serving more than 22,000 participants

7. The All Encompassing Business Solution The Tax Reality The Principal SERP Select Solution For financial professional use only. Not for distribution to the public.

8. Personal Income Tax Rules for 2016 Married Filing Jointly Incomes Below $231,450 Incomes $231,451 - $413,350 Incomes $413,351 - $466,950 Incomes $466,951+ Top Ordinary Income Tax Bracket 28%33%35%39.6% Top Qualified Dividends Rate 15% 20% Top Long-Term Capital Gains Rate 15% 20% Net Investment Income Tax 0% Tax of 3.8% may apply to investment income when personal income exceeds $250,000 for Married/filing jointly. Top FICA – OASDI Rate up to $118,500 2 6.2% Top FICA – Hospital Insurance (HI) Rate 3 1.45% Additional.9% tax applies when personal income exceeds $250,000, resulting in 2.35% tax rate. Limits on Itemized Deductions 4 No Yes Personal Exemption Phase-Out 4 No Yes For financial professional use only. Not for distribution to the public. ASSUMPTIONS 1 Net Investment Income Tax applies to the lesser of the taxpayer’s investment income or modified Adjusted Gross Income in excess of applicable threshold. 2 Increase was not imposed by the American Taxpayer Relief Act of 2012. The extension was not renewed. 3 Hospital insurance portion of FICA taxes applies to all earned income. The additional 0.9% HI tax was imposed as part of health care reform, not the American Taxpayer Relief act of 2012. 4 Based on Adjusted Gross Income.

9. Income Subject to Increased Taxes (Using Married Filing Jointly) $1 FICA $83,800 AMT $250,000 Net Investment Income Tax $311,300 Phase out of Itemized Deductions and Personal Exemptions Begins $466,951 Tax Bracket Reached $466,951 Tax Rate on Capital Gain & Dividends Increases $12,400 Trusts reach top bracket For financial professional use only. Not for distribution to the public.

10. But What Is the Tax Rate for Corporations? 15% Federal up to $50,000 Gradual increase to 35% State rate varies For financial professional use only. Not for distribution to the public.

11. Other Challenges Facing Employers War for talent continues –Employers facing increased regulatory and tax costs need to do more with less –Need to attract, retain, and reward key employees has grown Qualified plan limitations limit savings abilities of high earners For financial professional use only. Not for distribution to the public.

12. The All Encompassing Business Solution The Tax Reality The Principal SERP Select Solution For financial professional use only. Not for distribution to the public.

13. The Opportunity Principal SERP Select A simple, yet flexible nonqualified defined contribution plan Designed for the growing business market. Provides benefits to both the business and the owner. For financial professional use only. Not for distribution to the public.

14. The Business Can Benefit Helps recruit, reward, retain key employees Owner selects participants and the contribution amounts Enables them to compete with larger companies for talent Complimentary administrative services makes it a cost-efficient solution For financial professional use only. Not for distribution to the public.

15. The C corporation Owner Can Benefit No need to rely solely on income from the business in retirement Designed to help owners of C corporations diversify their retirement income For financial professional use only. Not for distribution to the public.

16. What is Principal SERP Select? A simplified defined contribution deferred compensation program Informally financed with employer contributions Aimed at companies wanting to benefit one to five key employees Enables company to provide plan with tax advantages to attract, retain, and reward key employees Enables company to provide personal tax deferral to owners of C corporations Utilizes retail life insurance products to informally finance the plan –Product design to help maximize retirement income potential –High early cash value versions available No fees for administrative services For financial professional use only. Not for distribution to the public.

17. Benefits for Key Employees Simple and easy-to-understand plan design Employer contributions to the plan don’t increase taxable income In retirement, it provides employees with additional retirement income. Flexibility: No Age 59 ½; No age 70 restrictions During working years, the plan may provide a tax-free death benefit to the family For financial professional use only. Not for distribution to the public.

18. Benefits for Employers Cost-effective tool to attract, retain, and reward key employees Can pick and choose; control vesting Plan generally provides tax free key person protection to the company. Easy implementation and administration – at no cost to you or the employer Clear legal and regulatory environment: IRC 409A Employer receives a tax deduction when the benefit is paid For financial professional use only. Not for distribution to the public.

19. Client Company Characteristics Business entity –C corporation Available for owners and key employees –S corporation, LLC Available for key employees if owner(s) are willing to bear increased tax consequences Business continuity Financial stability (Profitable, good cash flow, long history) One to five potential participants in higher tax brackets Annual contributions of $25,000 to $150,000 Not appropriate for not-for-profit organizations; any organization subject to 457(f); nor S corporation, LLC, & Partnership owners For financial professional use only. Not for distribution to the public.

20. 50-year-old key employee Plan contribution - $50,000/year for 15 years Product utilized: Principal UL Accumulation II SM Death benefit of $500,000 + payable to employee’s family in all years Key person insurance of $500,000 payable to company in all years Accumulated account is distributed over 10 years in retirement A growth rate of 3% is assumed on the liability/promise to pay Marginal tax bracket in working years: 50% As any individual’s effective tax rate in retirement is subject to numerous variables; the impact of this plan design may be seen under different assumptions Sample Case Assumptions For financial professional use only. Not for distribution to the public.

21. Example Plan Impact Effective Retirement Tax Rate (for key employee) With Principal SERP Select (Payout Annually for 10 years) Without Principal SERP Select (Assumes they received cash bonuses & saved on after-tax basis at 3%) 15%$94,265$45,353 20%$88,720$45,068 30%$77,630$44,501 For financial professional use only. Not for distribution to the public. Based on assumptions on previous slide.

22. Concept Overview Employer and executive enter into an agreement –Unfunded/Unvested SERP plan - Employer promises a benefit to key employee to be paid at retirement or over a 3-, 5-, or 10-year window. Optional agreement: Endorsement split dollar - Key employee names a beneficiary of the life insurance to be paid in event of death prior to benefit period. At retirement –Benefit is paid in cash and/or through policy transfer For financial professional use only. Not for distribution to the public.

23. Life Insurance Company How It Works For financial professional use only. Not for distribution to the public.

24. Employer determines key employees to be covered. Employer enters into plan agreement with employee. Employer purchases, owns and is beneficiary of life insurance policy. Employer pays non-deductible premium into life insurance policy. Employee names a beneficiary for pre-retirement survivor income benefits. (Optional) Employer files a one-page ERISA notice with the Department of Labor. Employee receives retirement income from employer cash flow, policy values, or both. Should employee die before retirement, employer may pay survivor income from life insurance policy death benefit. Alternately, all or a portion of the death benefit may be endorsed to the employee’s family and they will be paid directly by the insurance company. How to Implement For financial professional use only. Not for distribution to the public.

25. The Complete NQ Supplemental Retirement Platform from The Principal Bonus Plans –Principal S Owner Plus SM –Principal LLC Bonus SM –Principal Executive Bonus Plus SM Simplified Deferred Compensation Plans –Principal SERP Select –Principal ® Select Reward Plan For financial professional use only. Not for distribution to the public. Full-Service Deferred Compensation Plans –Executive Nonqualified “Excess” Plan SM –Executive Nonqualified Defined Benefit Plan

26. Additional Resources - Retirement Income Gap Calculator InputsOutput For financial professional use only. Not for distribution to the public.

27. Retirement Income Gap Calculator For financial professional use only. Not for distribution to the public.

28. Complimentary Plan-Level Administrative Services Dedicated home office executive benefits administrator Consolidated plan-level reports Individualized participant annual benefit statements Consolidated billing services Economic benefit amounts (if applicable) Accessibility via toll-free number and www.principal.com For financial professional use only. Not for distribution to the public.

29. How does this compare to Principal Executive Bonus Plus? Principal SERP Select SM –Executive benefits from plan contribution - no income tax until benefit is paid –Corporation books a liability –Ultimate control/golden handcuffs –Plan is informally financed with COLI –Employer contributions are made with after-tax dollars –Provides deferred tax-deduction for employer –IRC Section 409A compliance required –No administrative service fees Principal Executive Bonus Plus –Executive owns the asset –Company gets a current tax deduction for employer contributions –Executive pays income tax on employer contributions –Distributions are tax-advantaged as life insurance is used to finance the benefit –Limited employer control/golden handcuffs –No administrative service fees For financial professional use only. Not for distribution to the public.

30. How does this compare to our traditional nonqualified platform? Principal SERP Select –Variable or fixed –Retail products only –Simplified plan design –No administrative service fees –Focus is tax planning opportunities for small numbers of owners/key employees –No deferrals –No qualified plan integration Principal Nonqualified Deferred Compensation (Excess) –Variable COLI product –COLI product/mutual funds/unfinanced –Flexible plan design –Administrative service fees apply –Focus is part of employee benefit/retirement income planning for key employees –Deferrals allowed –May be integrated with qualified plan For financial professional use only. Not for distribution to the public.

31. Questions? For financial professional use only. Not for distribution to the public.

32. The subject matter in this communication is provided with the understanding that The 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 National Life Insurance Co (except in NY) and Principal Life Insurance Co. Plan administrative services offered by Principal Life. Securities offered through Princor Financial Services Corp., 800-247-1737, Member SIPC and/or independent broker/dealers. Principal National, Principal Life, and Princor® are members of the Principal Financial Group®, Des Moines, IA 50392. 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. Copyright ©2015 Principal Financial Services, Inc. BB11096-01 ǀ 11/2015 ǀ t1511060375