1. Get Started with Income Protection
Individual Disability Insurance

2. This publication is intended to provide accurate and authoritative information in regard to the subject matter covered.  The accuracy of the information is not guaranteed and 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.
These testimonials may not be representative of other clients’ experiences. It does not imply or guarantee benefits. Jon Montpas is a stockholder of Principal and former employee of Principal. Bruce Hentschel is an employee and stockholder of Principal. Sherron and James Williams and Nancy Thomas have not been paid for their testimonials.
Please remember to abide by the company’s policy on disclosure of compensation. You can obtain more information, as well as a sample disclosure form at
Disability insurance has exclusions and limitations.  For costs and complete details of the coverage, contact your Principal Life financial 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® .
Disability insurance from Principal® is issued by Principal Life Insurance Company, Des Moines, IA
For financial professional use only. Not for use in sales situations.

3. We need to start the conversation with today’s consumers.
They value …
Yet, they …protect
Source: 2014 Disability Awareness Study, Council for Disability Awareness . Viewed 3/2016. Most recent available.
For financial professional use only. Not for use in sales situations.

4. Don’t take it from us, listen to real claimants:
If James had no coverage, we probably wouldn’t be in our house and would be closing the law firm. My kids would need financial aid to stay in school.”
Sherron Williams, Wife of Principal Claimant James Williams, Attorney
“I thought income protection would be a wise thing to purchase because you never know what’s going to happen in life.”
Nancy Thomas, Teacher – Principal Claimant
For financial professional use only. Not for use in sales situations.

5. Our claimants are among the lucky few who have income protection.
Fact: Only 1 in 4 households in the US have disability insurance.
2015 Insurance Barometer Study, Life Happens and LIMRA, viewed 09/15
For financial professional use only. Not for use in sales situations.

6. Paying for everyday expenses and saving for the future!
Help your customers understand the value of their income and all it provides:
Paying for everyday expenses and saving for the future!
For financial professional use only. Not for use in sales situations.

7. Financial security starts with protecting their income.
For financial professional use only. Not for use in sales situations.

8. Individual Disability Income (DI) Insurance
For financial professional use only. Not for use in sales situations.

9. Individual DI Insurance
Objective | Replace income lost when a disability prevents an individual from working and earning an income.
BENEFITS | Helps people:
Maintain current lifestyle without draining savings or business profits
Continue saving for retirement and future dreams
Provide for his/her family
For financial professional use only. Not for use in sales situations.

10. Ideal consumer for income protection
Ages 22 to 50 (solutions available for those 18 to 60).
Earning over $40,000/year.
Rely on their income.
Healthy and working in a professional-type occupation.
Helps you connect with others (Bonus: You may be able to discount their Principal DI coverage).
Have other risk protection or financial solutions with you.
For financial professional use only. Not for use in sales situations.

11. Five questions clients will ask
About an Individual DI policy 1
When do I receive my benefits? 2
How long do I receive benefits? 3
How much coverage can I purchase? 4
How do I qualify for benefits? 5
How much will the coverage cost me?
Typically clients will ask you 5 questions that are directly related to the five main elements of an Individual DI policy which are.
Elimination period
Benefit period
Benefit amount
Definition of disability and
Policy cost
For financial professional use only. Not for use in sales situations.

12. 1 When Do I Receive My Benefits? After the Elimination Period
Definition
Waiting period before benefits begin
Clients receive benefits after incurring a qualifying disability and satisfying the policy’s elimination period. As a rule, the shorter
the elimination period, the more expensive a policy will be. It’s important for clients to understand that benefits are typically not paid until the end of the month following the elimination period.
Most people choose either a 90-day or a 180-day elimination period. Benefits are paid approximately 30 days after the end of a policy’s elimination period – so for a 90 day elimination period, benefits would be payable after the 120th day.
Clients should look at what assets and savings are available to help fill the gap until benefits begin; this helps determine the best elimination period for them. It is also necessary to coordinate the policy’s elimination period to be after the conclusion of any available short-term group disability benefits.
For financial professional use only. Not for use in sales situations.

13. 2 How long do I receive benefits?
For the duration of the Benefit Period
Definition
Length of time benefits are paid
The benefit period is the length of time benefits are paid. The shortest benefit period is usually two years. A five year benefit period is fairly common. Most people purchase coverage that lasts until age 65. However, as individuals begin to delay retirement and work longer, they may even want to consider a benefit period to age 67 or to age 70. As a rule, the longer the benefit period, the more expensive the policy will be.
A client should buy the longest benefit period they can afford. Principal Life offers: 2 years, 5 years, To Age 65, To Age 67 and To Age 70 benefit periods.
• Coverage may be adjusted for a longer benefit period in the future. Additional underwriting requirements may be required.
For financial professional use only. Not for use in sales situations.

14. 3 How much can I purchase? Depends on the eligible Benefit Amount
Definition
The amount of disability benefit received each month
The maximum benefit amount is how much an insured would receive each month from the policy in the event of a disability. The maximum benefit amount available depends on a variety of factors, including income, occupation and other disability coverage. The most appropriate benefit amount allows for a certain standard of living, but still provides an incentive to return to work.
For financial professional use only. Not for use in sales situations.

15. Catastrophic Disability Presumptive Disability Capital Sum Disability4
How do I qualify for benefits?
Depends on policy terms
Total Disability
Residual Disability
Catastrophic Disability
The policy can pay a number of ways.
Presumptive Disability
Capital Sum Disability
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16. Qualifying for benefits
During the Your Occupation Period, the client is unable to perform the substantial and material duties of his/her occupation and is not working.
Total
Disability
Client is not totally disabled, but solely due to an injury or sickness, is unable to work at full capacity in his/her “your occupation” or is working in another occupation, and loses at least 20% of your prior earnings. (Provides a portion of benefits1)
A summary definition of Total Disability – During the Your Occupation Period, the client is unable to perform the substantial and material duties of his/her occupation and is not working. After the Your Occupation Period, the client must be unable to work in any occupation he/she is reasonably suited to by education, training or experience. With a Principal Life DI insurance policy, Your Occupation is the standard definition of disability and is built into the base policy.
Residual Disability – (cost rider): If client is residually disabled (under the terms of this rider) and loses at least 20% of prior earnings, client receives a benefit that is proportionate to loss of earnings. A residual disability is when client is not totally disabled, but solely due to an injury or sickness, he/she is able to perform some, but not all of the substantial and material duties of his/her “you occupation”, unable to work full time in his/her “your occupation”, or are working in another occupation.
Residual Disability
1 – Cost rider; state variation/wording apply.
For financial professional use only. Not for use in sales situations.

17. Catastrophic Disability
Qualifying for benefits
Client loses the ability to perform two or more Activities of Daily Living, becomes cognitively impaired or presumptively disabled. (Provides an additional monthly benefit1)
Catastrophic Disability
Activities of Daily Living: Bathing, continence, dressing, eating/feeding, toileting or transferring
Cognitively Disabled: Loss of brain function
Presumptively Disabled: Total loss of use: Power of speech, hearing in both ears, sight of both eyes, or both hands, both feet, or one hand and one foot
Catastrophic disability. This provision pays an additional monthly benefit to the policy’s monthly benefit when the insured:
Cannot perform two or more activities of daily living.
Is cognitively impaired – meaning the loss of brain function.
Or becomes presumptively disabled, which means the total loss of use of:
Power of speech
Hearing in both ears
Sight of both eyes – or-
Loss of use of both hands, both feet, or one hand and one foot.
1 – Cost rider; state variation/wording apply.
For financial professional use only. Not for use in sales situations.

18. Presumptive Disability Capital Sum Disability
Qualifying for benefits
Total loss of use, without the possibility of recovery, of: the power of speech, hearing in both ears, sight in both eyes, both hands, both feet, or one hand and one foot. (Expedites full disability benefit.)
Presumptive Disability
Total and irrecoverable loss of use, without any possibility of recovery, of the sight in one eye or the use of a hand or foot. (Provides additional lump sum benefit)
Capital Sum Disability
Presumptive Disability – (no-cost rider): Helps expedite benefit payments for serious disabling impairments. Client will receive full disability benefit if he/she incurs the total loss of use, without the possibility of recovery, of: the power of speech, hearing in both ears, sight in both eyes, both hands, both feet, or one hand and one foot. Benefits start to accrue when the presumptive disability occurs and continue to be paid as long as the loss continues, regardless of client’s ability to work or earn an income. Benefits are payable to the end of the benefit period as long as the loss continues. On certain policies (excludes GSI), if the benefit period is To Age 65, To Age 67 or To Age 70, the benefit is extended to lifetime.
Capital Sum – (no-cost rider): Delivers an extra benefit for serious impairment. If client has a total and irrecoverable loss of use, without any possibility of recovery, of the sight in one eye or the use of a hand or foot, this rider provides a one-time lump sum benefit of 12 times client’s maximum monthly benefit. This benefit is payable in addition to any other benefit of the policy client qualifies to receive.
For financial professional use only. Not for use in sales situations.

19. Costs 1 to 3% of annual income $5
How much will it cost?
Depends on a Variety of Factors
AVERAGE
Costs 1 to 3% of annual income $
Age
Gender
Tobacco use
Occupation
Policy terms
Finally, the last consideration for an individual DI insurance policy is the cost. In general, the average annual cost of a policy should be about one to three percent of an individual’s annual salary.
It’s also important to note that individual DI insurance policies from Principal Life can be adjusted in the future as needs and budgets change based on underwriting approval or in some cases benefit amounts can be increased automatically with future benefit increase riders (Benefit Update and/or Future Benefit increase).
For financial professional use only. Not for use in sales situations.

20. They need your help getting started
Lets review some tips for offering coverage.
For financial professional use only. Not for use in sales situations.

21. 1 2 Talk about it 3 4 Talk about it Talk about the need
Talk about the features and benefits 4
Talk about the affordability
Follow these steps when offering DI:
First, you simply need to talk about it.
Then, talk about the need for income protection.
Next, talk about the benefits of coverage – what’s in it for them.
Finally, talk about how affordable premiums can be.
For financial professional use only. Not for use in sales situations.

22. Make it relatable Your due diligence It’s up to you
Change your phrasing
The personal touch
Less is more
Don’t just wing it
Do your due diligence – you don’t always have to sell disability insurance, but you need to talk to clients about it. Do you want to get a call from a client in the middle of the night asking what type of policy they have for a disability?
It’s up to you – you need to ask people about disability insurance. Avoid talk of “disabilities” – talk about income protection or being too sick or hurt to work.
The personal touch – be participative and personal in your approach. Make the need real and use real-life stories Less is more – Let clients talk and listen to them. Have a conversation – don’t preach
Don’t Just Wing-It – practice your approach and conversation transition ahead of time.
For financial professional use only. Not for use in sales situations.

23. Make it relatable Mental Checklist “Mental checklist”
Ask the client to imagine if they woke up in the hospital tomorrow. Tell them to consider the mental checklist that would run through their mind:
They probably have health insurance to pays the doctors and hospital
And they probably have life insurance in they die
But what if they survive, and are too sick or hurt to work?
If their checklist doesn’t include disability insurance then you need to talk.
The best case scenario is to have everything on the checklist covered so that you can focus on getting better.
For financial professional use only. Not for use in sales situations.

24. Have them consider what they would do if they no longer had an income
Savings? Retirement Accounts? Emergency Funds?
Family and friends?
Social Security Disability?
Loans from a bank or credit cards?

25. Talk about the features and benefits
Monthly benefits that could add up to millions over a lifetime
Guaranteed, non-renewable coverage to age 65
Tax-free benefits, when premiums are paid with after-tax dollars
Portable coverage
Second, highlight the benefits of the product
Keep it simple, talk in laymen’s terms.
Always use the proposal. Have it ready to go and work off it.
Explain that the policy is non-cancelable and guaranteed renewable to age 65. Principal Life cannot cancel the policy or change the premium rate, as long as premiums are paid.
Benefits are tax-free when premiums are paid with after-tax dollars
Policy is portable. Goes with client even if he/she changes employers.
USE THE PROPOSAL
For financial professional use only. Not for use in sales situations.

26. Sales idea Which option would you choose? OPTION A OPTION B
Annual Income
$100,000 $0
$98,000
$60,000
Ask clients which option they would prefer. Option A or B. In option A, they receive their full income while working, but during a disability, they receive nothing. In option B, they take a slight pay cut while working, but receive a substantial increase in the amount of income they receive while disabled.
Working, before taxes
Disabled, no insurance
Working, less
DI insurance
premium,
before taxes
Disabled
with a DI policy,
after taxes
For financial professional use only. Not for use in sales situations.

27. It doesn’t need to be expensive
Premiums are a few pennies on the dollar
Discounts are often available
Typically costs less than other common expenses
Finally, let’s talk bottom line – the cost. Here are some points to remind clients of:
DI premiums typically cost 1-3% of their gross income for a benefit that could pay out millions if a client becomes too sick or hurt to work. Plus, there may be discounts available. Ask your clients these questions to see if they are comfortable in committing:
Do you feel like this is something you can commit to?
Do you want to move forward with the application?
Is the premium jumping off the page at you?
For financial professional use only. Not for use in sales situations.

28. Structuring Coverage Lower Premium Richer Benefits Elimination Period
Fit your clients’ needs and budget
Lower Premium
Richer Benefits
Elimination Period
Increase the length
Decrease the length
Benefit Period
Your Occupation Period
Monthly Benefit Amount
Lower the amount
Increase the amount
Vary the length of time or the amount of benefits provided to achieve the right balance of coverage and premium for your clients. This chart shows modifications you can make to policy components to either lower premiums or provide richer benefits. TIP: Provide 3 different coverage level options and give your clients the power to choose.
For financial professional use only. Not for use in sales situations.

29. Comprehensive Coverage1,2
Sample Premiums
Comprehensive Coverage1,2
Moderate Coverage1,3
Basic Coverage4
Monthly Benefit
$2,450
$1,850
$1,500
Total Monthly Premium
Male: $89
Female: $154
Male: $57
Female: $99
Male: $20
Female: $35
Finally, the last consideration for an individual DI insurance policy is the cost. In general, the average annual cost of a policy should be about one to three percent of an individual’s annual salary. To show how a Principal Life policy can be designed to meet budget needs, here are three different benefit designs. Each showcases a different level of income protection at a different cost. Any benefits received are typically provided income-tax free when premiums are paid with after-tax dollar.
It’s also important to note that individual DI insurance policies from Principal Life can be adjusted in the future as needs and budgets change based on underwriting approval or in some case benefit amounts can be increased automatically with future benefit increase riders (Benefit Update and/or Future Benefit increase).
Assumptions: Michigan resident, HH 750 policy, $40,000/annual income, 4A occupation class, non-tobacco, age 35.
190 day Elimination Period, To Age 65 Benefit and Your Occupation Period, Total Disability Covered2Residual Disability Covered, Cost of Living Adjustment Rider; both are cost riders
3Short-Term Disability Benefit rider (12-month duration)
4180-day Elimination Period, 5 year Benefit and Your Occupation Period, Total Disability Covered
For financial professional use only. Not for use in sales situations.

30. Next steps
For financial professional use only. Not for use in sales situations.

31. Offer an Income Protection Review
Many clients don’t know what coverage they have or the amount of their benefits…if any
Ask clients to send you any copies of their existing policies or policy information
We can review policies with you to identify coverage gaps
For financial professional use only. Not for use in sales situations.

32. You’ll need this information for a personalized proposal
Name
Gender
Date of birth
Occupation and job duties
Salary
State of residence
Tobacco use
Known medical issues
Desired amount of income replacement benefit
Any known existing disability coverage
For financial professional use only. Not for use in sales situations.

33. DI8631-2 | 05/2016 | © 2016 Principal Financial Services, Inc.
Thank you
DI | 05/2016 | © 2016 Principal Financial Services, Inc.
For financial professional use only. Not for use in sales situations.