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Principal Lifetime Income SolutionsSM.

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Presentation on theme: "Principal Lifetime Income SolutionsSM."— Presentation transcript:

1 Principal Lifetime Income SolutionsSM

2 Use the arrow keys at the bottom to move through the course.
Please Note: To complete this course you must view every slide AND complete and submit the attestation at the end of the course. Use the arrow keys at the bottom to move through the course.

3 Agenda Profile of Principal Lifetime Income Solutions client
Principal Lifetime Income Solutions — a lower-cost variable annuity with a straightforward product design Product features Guaranteed Minimum Withdrawal Benefit (GMWB) rider Investment options Why variable annuities? [Introduction] Today, we’ll discuss the following… [Read Slide] Guarantees based on the claims-paying ability of Principal Life Insurance Company.

4 Principal Lifetime Income Solutions
Client Profile In or near retirement and wants to stay invested in the market Concerned about outliving his or her savings Interested in guaranteed income for life Willing to take more investment risk in exchange for potential investment growth Interested in beneficiary protection What are the typical characteristics of a variable annuity client? [Read slide]

5 Principal Lifetime Income Solutions
Product Overview Single or multiple premiums Minimum initial premium (nonqualified: $15,000; qualified: $5,000) Minimum additional premiums (nonqualified and qualified: $2,000) Maximum premium (nonqualified and qualified: $2 million*) Issue age: 55 – 80 Mortality and expense fee: 1.25% Administration charge: 0.15% Seven-year surrender charge scale by deposit: 6% — 6% — 6% — 5% — 4% — 3% — 2% — 0% Sold by prospectus The next few slides provide a high-level overview of one of our variable annuity solutions — Principal Lifetime Income Solutions. [Read Slide] * A premium over $2 million requires prior home office approval.

6 Principal Lifetime Income Solutions
Liquidity Free withdrawal amount is the greater of: 10% of premium payments (less any withdrawals since the last anniversary) or the Earnings on the contract Waiver of Surrender Charge rider — automatic rider that waives surrender charges due to disability, confinement to a health care facility and terminal illness* Surrender charges waived at death or annuitization Now, let’s take some time to dig a little deeper into the product features. [Read Slide] * There is a one-year waiting period before the rider can be exercised. State variations may apply.

7 Principal Lifetime Income Solutions
Death Benefit Death benefit is the greater of the: Accumulated value Premium payments minus any withdrawals, or The highest seventh-anniversary accumulated value (7, 14, 21, etc.), plus any premium payments and less any withdrawals made after that anniversary Read slide.

8 Principal Lifetime Income Solutions
GMWB Overview Automatically issued with contract Provides clients income for life regardless of contract’s accumulated value Clients can start and stop withdrawals Available for Single Life or Joint Life* Now, let’s focus on the guaranteed minimum withdrawal benefit rider, or the GMWB rider. [Read Slide] *If Joint Life is elected, the joint owners must be natural persons and must be legally married.

9 Principal Lifetime Income Solutions
GMWB Overview Tiered For Life percentage (higher for older ages) Bonus: 5% bonus on first and second contract anniversaries Step-Up: automatic every contract anniversary Annual cost: 1.05% Based on For Life Withdrawal Benefit Base (maximum charge: 1.65%) Single Life and Joint Life available for same cost Read Slide.

10 GMWB For Life Withdrawal Percentages
Principal Lifetime Income Solutions GMWB For Life Withdrawal Percentages Age at First Withdrawal Single Life Withdrawal Percentage* Joint Life Withdrawal Percentage** 55 – 59 3.75% 3.25% 60 – 64 4.50% 4.00% 65+ 5.00% *Withdrawal percentages based on age at time of first withdrawal. **Joint Life percentage is lower because the payout period can be considerably longer on a Joint Life election. Based on younger covered life at time of first withdrawal.

11 GMWB For Life Withdrawals
Principal Lifetime Income Solutions GMWB For Life Withdrawals Joint Life tiered percentage is 0.50% lower than Single Life Client does not need to elect Joint Life or Single Life until the time of first withdrawal Withdrawal percentages are locked in at time of first withdrawal and do not change for the life of the contract (based on the younger covered life) Withdrawals greater than the applicable For Life percentage will be treated as excess withdrawals Read Slide.

12 GMWB Joint Life Unique Features
Principal Lifetime Income Solutions GMWB Joint Life Unique Features Not available to non-natural owners Spouse must be primary beneficiary Spouse must be legally married Prior to withdrawals, eligible spouse changes can be made due to divorce or marriage (no changes after withdrawals begin) Only one spousal continuation allowed for this rider [Read slide]

13 Principal Lifetime Income Solutions
GMWB Bonus 5% bonus given on first and second contract anniversaries Automatically applied to the Withdrawal Benefit Base on the contract anniversary if a withdrawal has not been taken Once a withdrawal is taken, client is no longer eligible for the bonus Bonuses are not included in the contract’s accumulated value [Read slide]

14 Principal Lifetime Income Solutions
GMWB Step-Up Automatic annual step-up Guaranteed withdrawal amount automatically resets to match any growth in the contract’s accumulated value If the accumulated value on the contract anniversary is greater than the Withdrawal Benefit Base, the Withdrawal Benefit Base will automatically step up to the contract’s accumulated value Available each year to the later of age 80 or 10 years after contract date If the rider fee increases, rider fee will remain the same if client opts out of eligibility of future step-ups [Read slide]

15 GMWB Investment Options
Principal Lifetime Income Solutions GMWB Investment Options GMWB rider offers the following investment options to choose from: 100% Diversified Growth Managed Volatility Account* 100% Diversified Balanced Managed Volatility Account* 100% Diversified Income Account* *Clients may only allocate money to one of the three Diversified Accounts at one time. These funds use indexes and a fund-of-funds investment approach. Clients can create their own portfolio by allocating a percentage into one of the Diversified Accounts and a percentage into the Fixed Account. [Read slide] Asset allocation does not guarantee a profit or protect against a loss. Investing in real estate, small-cap, international and high-yield investment options involves additional risk. The Principal Variable Contracts Diversified Growth Managed Volatility Account , Diversified Balanced Managed Volatility Account and Diversified Income Account indirectly bear a pro-rata share of the management fees incurred by the underlying funds in which they invest.

16 What Happens to GMWB at Death
Principal Lifetime Income Solutions What Happens to GMWB at Death At death of the owner (or first owner if joint owners) Beneficiary can take the death benefit or if spouse beneficiary, may continue the contract with or without the GMWB rider If withdrawals have started and Single Life elected, the GMWB rider terminates at death If withdrawals have started and Joint Life elected, surviving spouse continues contract with GMWB rider (if eligible) If withdrawals have not started, surviving spouse can continue the contract with the GMWB rider with Single Life only It’s important to understand what happens at the owner’s death. Let’s take a look at what happens at the death of the first owner, and also how it works if the beneficiary is the spouse. Read Slide

17 GMWB Required Minimum Distribution (RMD) Program
Principal Lifetime Income Solutions GMWB Required Minimum Distribution (RMD) Program Withdrawals taken to satisfy RMD will not be treated as excess withdrawals as long as the RMD program for GMWB rider guidelines are followed Must elect one of the scheduled withdrawal options: RMD For Life/RMD — withdrawals are greater of For Life and RMD Modes available: monthly, quarterly, semiannual and annual Can change mode only on contract anniversary Unscheduled withdrawals are not allowed with the program* [Read slide] *If client takes an unscheduled withdrawal, he or she is no longer eligible for the program. He or she can join the program again on the next contract anniversary.

18 Why Variable Annuities?
Principal Lifetime Income Solutions Why Variable Annuities? Long-term savings Provides a way to save tax deferred for retirement Provide guaranteed income for life Ensure continuing income for spouses Growth potential Provide a guaranteed death benefit for beneficiaries Death benefit passes outside of probate

19 While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. Principal Lifetime Income SolutionsSM issued by Principal Life Insurance Company and distributed through Principal Securities, Inc., , member SIPC and/or independent broker/dealers. Securities sold by a Principal Securities Registered Representative are offered through Principal Securities. Principal Life and Principal Securities are members of the Principal Financial Group®, Des Moines, IA 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. Contract SF 749 | Rider SF 930 PD | © 2016 Principal Financial Services, Inc. | t ty | 06/2016 For Registered Representative Information Only


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