1. HELP TRANSFER THE RISK OF A LOAN Business Loan Protection Coverage Disability insurance coverage for business owners that helps protect your institution, too

2. Agenda The need for protection against the threat of a disability The loan protection coverage* your customers need: How it works Ideal characteristics of customers Types of loans covered The process for obtaining coverage * Available through the Business Loan Protection rider; available on the HH702 and HH789 Overhead Expense insurance policy for an additional cost.

3. Did you know? Only 50% of small businesses that applied for financing in early 2014 received funds. 1 1 Nerdwallet.com, 6 Reasons Businesses Are Rejected for Small Business Loans, May 2015. 2 Social Security Administration Fact Sheet, April 2014. 1 in 4 of today’s 20-year olds will become disabled before retiring. 2

4. When disability strikes, it affects the business, too Healthy and working Revenue Profit Expenses Disabled and not working Debt Business

5. Business Loan Protection Available as a rider on Principal Life’s Overhead Expense policy 1 for an additional cost. Reimburses the business owner for a business-related loan obligation in the event of a disability The owner may choose to assign the benefits directly to your institution >> Benefits are sent on the first loan payment date after the elimination period is satisfied. 2 1 Available on the HH 702 and HH 789 Overhead Expense insurance policy for an additional cost. Not available in all states. Not approved in California. 2 Continue during the borrower’s Continuous Disability but not beyond the Business Loan Protection Termination Date

6. Advantages of Business Loan Protection For You Helps your institution manage risk – transfers the risk of the loan obligation to Principal Life. Helps ensure you continue to receive loan payments in the event of a borrower’s total disability. May help you extend loans to additional borrowers For Your Borrowers Helps them keep the doors of their business open Creates goodwill among their customers, employees, stakeholders and creditors May help them uphold their financial obligation and maintain their credit rating Your institution takes on no additional cost or paperwork. Simply refer borrowers to your local representative.

7. How Business Loan Protection Works Borrower pays premiums for loan protection Upon total disability, Principal Life provides payment for the loan obligation Loan obligation risk transfers to Principal Life Principal Life Insurance Company Financial Institution Borrower Financial institution issues small business loan Borrower makes loan payments

8. Details about the sales process 1.Borrower seeks a business-related loan from your financial institution. 2.Upon receiving the loan application, refer the borrower to your local Principal Life representative to apply for business loan protection. 3.Local representative works with the borrower to obtain coverage. 4.If your customer is approved, an Overhead Expense insurance policy with the Business Loan Protection rider is issued to your customer (with final delivery requirements) 5.In order for your financial institution to receive loan payment benefits directly at time of total disability, the owner of the policy assigns benefits to your financial institution.

9. The process for obtaining coverage Assess Borrower EligibilityApplication SubmissionUnderwritingPolicy Delivery

10. Ideal borrower characteristics In good health 1 Client age: Between 18 - 60 Income: At least $15,000/year (as indicated on federal tax returns) Number of owners in the business: –Fee-for-service professionals (e.g., dentists, attorneys, CPAs, others with specialized education and licensing) – maximum of 8 owners –Other small business owners – maximum of 4 owners Do not have other income-producing non-owners who could keep the business afloat and earn money. 1 The presence of certain health conditions may result in coverage being declined, such as: Bipolar disorder, cancer, cirrhosis, chronic fatigue, emphysema, fibromyalgia, type 1 diabetes, kidney disease, heart attack, hepatitis C, multiple sclerosis, pancreatitis, rheumatoid arthritis and systemic lupus Assess Borrower Eligibility

11. Loan Criteria Ideal loan amount Total: $2 million or less Monthly payment: $20,000 or less For greater loan amounts, Business Loan Protection can help protect a portion of the loan Loan duration 1 : At least 3 years Assess Borrower Eligibility TIP If you require life insurance on any business-related loans, those borrowers should often have disability protection as well. 1 Or years remaining on the loan.

12. Loan Criteria TYPE Term Variable Rate 1 Balloon 2 Commercial Mortgage Lease-Financing Loan Loans for working capital or increase in inventory PURPOSE Purchase of new or existing business Expensive equipment, building or land (for the business) Business expansion or renovations Increase in working capital Other business-related obligations 1 Variable interest rate loans can result in fluctuations in the monthly loan payment. They eligible monthly Business Loan Protection amount is calculated using the lowest interest rate stipulated in the loan agreement. | 2 Balloon loans are written for a specific number of years, with a balloon payment at the end of the period. These loans may be amortized over a longer period of time. The Business Loan Protection rider covers the amount of the payment for the contractual time period as stated in the loan agreement (minimum of three years) rather than the amortized payment over the longer time period. Assess Borrower Eligibility

13. Loan Documentation If your borrower proceeds with applying for Business Loan Protection coverage, provide the following information. Loan specifics Duration of the loan Amount of the loan Type of loan issued Loan number Loan officer contact information Application Submission

14. Policy Issue When the loan has not yet closed:When the loan has already closed: Provide a dated commitment letter or email or promissory note. Include: Borrower name Lender name Name and title of loan officer or other lender contact Loan amount and duration −Total amount −Monthly payment amount Initial payment date Loan purpose Expiration date of the letter/note/offer Provide a copy of the dated executed loan agreement signed by all parties. Include: Borrower name Lender name Loan number Loan amount and duration −Total amount −Monthly payment amount Initial payment date Loan purpose Application Submission

15. Principal Life reviews documentation Principal Life reviews the submitted documentation, evaluating borrower on: –Occupation classes and duties –Financial information –Medical information Determines if loan meets eligibility parameters Underwriting

16. Issuing the policy If the client is approved by underwriting, a policy may be extended to the client The Overhead Expense policy with the Business Loan Protection rider is put inforce when Principal Life receives all final delivery requirements. Policy Delivery

17. Best Practices Talk to clients about the importance of protecting their loan obligation. Provide clients with informational material and/or your representative’s contact information. Help provide loan documentation as needed for the insurance application and issue process. Keep in mind: If you’re requiring life insurance for a loan, disability protection is often needed too.

18. Disability Insurance has limitations and exclusions. For costs and coverage details, contact your Principal Life Representative. Policy and rider descriptions are not intended to cover all restrictions, conditions or limitations. Refer to policies and riders for full details. Policies and riders are subject to state availability. Some riders are subject to an additional premium. This information 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. 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. Insurance issued by Principal Life Insurance Company, a member of the Principal Financial Group ®, Des Moines, IA 50392, www.principal.comwww.principal.com DI8869-02 | HH702, HH777, HH789 | 11/2015 | © 2015 Principal Financial Services, Inc. Questions?