1. Protect retirement savings
DI Retirement Security
Presenter’s name
The presenter’s title goes on this line
Date

2. DI9201-02 | 12/2016 | © 2016 Principal Financial Services Inc.
Disability insurance from Principal® is issued by Principal Life Insurance Company, Des Moines, IA
Disability insurance has limitations and exclusions. For costs and coverage details, contact your Principal representative.
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 disability 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. Customers should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.
This is a general summary only; additional guidelines and state variations apply.
Principal’s sales programs, like DI Retirement Security, along with our service, support and competitive products, give you a strong foundation for building IDI sales success!
DI | 12/2016 | © 2016 Principal Financial Services Inc.

3. The risk of a disability
1 in 4 of today’s 20-year olds will become disabled before retiring.1
The #1 reason for an unexpected early retirement is health problems.2
1Social Security Administration Fact Sheet, June 2016.
2Employee Benefit Research Institute 2015 Retirement Confidence Survey underwritten by the Principal Financial Group®. 3

4. How would a disability affect your clients?
If your clients became too sick or hurt to work, could they…
Continue to pay their regular expenses?
Maintain their lifestyle?
Contribute to their qualified retirement plans?
Receive any employer match on those contributions?
Contribute to Social Security?
Many individuals have not really thought about the full effect disability could have on their finances. It impacts more than just their paychecks. A disability could affect their retirement savings as well.
It’s hard enough to prepare for retirement without incurring a disability. If your client is too sick or hurt to work, what would happen to their retirement plans and dreams if they could no longer:
Contribute to a 401(k) plan?
Receive an employer match on those contributions (if available)? OR
Contribute to Social Security?
Not having these options available could dramatically impact the funds a client would have at retirement. Plus, without an income, some may even need to dip into their retirement savings to cover everyday expenses.
DI Retirement Security can help you build your business with clients or prospects who are serious about retirement and understand the importance of protecting their income and assets.
This policy allows your clients to continue saving for retirement in the event of a qualifying disability and helps make it possible for them to still have the future retirement lifestyle they’ve been working toward.

5. Managing those disability risks
Individual Disability Income insurance
Helps replace a portion of income in the event of a disability
DI Retirement Security
Helps continue retirement savings contributions in the event of a disability 1 2

6. About DI Retirement Security
Pays individual Disability Income benefits to a trust to be accessed as retirement income.

7. How it works Principal Life Client Premium Irrevocable Trust
Benefits paid out during retirement
Benefits deposited and invested
This slide shows how this program works. Before a disability, premiums are paid to Principal. Upon a disability, Principal pays DI Retirement Security benefits directly to an irrevocable trust. The trust then invests the benefits on the insured’s behalf into 1 of 6 different asset allocation models. The client chooses which model the trust invests in by taking a risk tolerance questionnaire. At the end of the benefit period, the trust distributes the assets.

8. The impact on retirement savings
Let’s look at what happens to retirement savings when a disability prevents someone from working. Without an income, there’s no money for contributions. The lost contributions plus the lost growth potential lead to a pretty significant gap in accrued savings. In this example, a disability starts at age 40. Assuming just a modest 5% rate of return on the investment, that’s a $1.2 million loss.
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.

9. Retirement completion

10. Key features and product details

11. About the investment options
Asset allocation models (based on risk tolerance):
Balanced Allocation, Growth Allocation, Aggressive Growth Allocation and Conservative Allocation
Class C shares
Additional investment options are available:
Annuity
Mutual Funds
View models:

12. Program guidelines Minimum annual income to qualify: $76,000
Maximum benefit amount:1
$4,550/month individual pay2
$5,850/month employer pay2
Minimum benefit amount: $1,000/month
Investment management fees are assessed on the mutual funds in which the trust invests
Available for single-life or multi-life cases
Occupation classes: All
DI Retirement Security benefits are over and above Principal’s current issue and participation limits for disability income insurance. DI Retirement Security can be offered as either an employer-paid or employee-paid program.
Maximum benefit amount:1
$4,550/month employee-pay2 $5,850/month employer-pay2
The benefit amounts are not tied to the client’s retirement contributions. Work with your clients to select the benefit level that is right for them. The minimum annual income to qualify is just $76,000.
1 For 2017; maximum amount subject to change based on annual IRS defined contribution.
2 Includes a $50 monthly trust administration fee.

13. Program guidelines Issue ages: 18-60 (all occupation classes)
Elimination periods: 180 or 365 days
Benefit periods: To Age 65 and To Age 67
Your Occupation periods: 2 year, 5 year, To Age 65, To Age 67
Available riders: Future Benefit Increase, Cost of Living Adjustment, and Mental/Nervous Substance Abuse Disorder Limitation (MNSA)1
Discounts:2 10% Affiliation, 10% Association, 20% Multi-Life, 10% MNSA rider, 10% Select Occupation
Here are additional features of DI Retirement Security.
Issue ages: (all occupation classes)
Elimination periods: 180 or 365 days
Benefit periods: To Age 65 and To Age 67
Your Occupation periods: 2 year, 5 year, To Age 65, To Age 67
Available riders: Future Benefit Increase, Cost of Living Adjustment, and Mental/Nervous Substance Abuse Disorder Limitation (MNSA)1
Available discounts:2 Select Occupation – 10%, Multi-Life – 20% to 30%, Association – 10%, MNSA – 10%
1The MNSA rider is required for single-life policies in CA, FL, LA, and NV. It is not available for single-life cases in any other states except when elected through association cases or when certain riders are placed on a policy for select occupations. For multi-life cases, the rider is required in CA and optional in all other states. The rider is not available in VT. The discount is up to 5% in TX. 2Not all discounts can be stacked together and may not be available in all states.

14. Underwriting guidelines
DI Retirement Security only
Underwriting decision based on the TeleApp and application
No other medical underwriting requirements requested
Combination DI + DI Retirement Security
Underwriting decision based on full medical and financial underwriting guidelines
If DI Retirement Security is underwritten as a stand-alone policy, with no other disability coverage inforce or applied for with Principal at the time of application, the underwriting decision is based on the TeleApp interview and application. No other medical underwriting requirements are requested.
If a traditional IDI policy is applied for at the time of the DI Retirement Security application, full medical and financial underwriting guidelines apply.

15. Underwriting guidelines
DI Retirement Security is not available for:
Individuals who are over-insured based on Principal Life’s current Issue and Participation guidelines.
If client has Individual DI coverage with lifetime benefits:
DIRS may not be available, or
Amount may be reduced
DI Retirement Security is not available for:
Individuals who are over-insured based on Principal’s current issue and participation guidelines.
If there is existing individual disability insurance coverage with lifetime benefits, certain occupations are subject to a combined benefit maximum
3A-M and 4A-M occupation classes who have existing DI policies with lifetime benefits or a lifetime benefit rider are only eligible for a combined benefit of $10,000/month between the DIRS benefit and their existing lifetime benefits.

16. Three ways to access trust assets
At the end of the benefit period
In the event of certain financial hardships1, such as:
Extraordinary medical expenses not covered by insurance
Payment of post-secondary education and related fees
Inability to make payments on principal residence
If the client has not been eligible to receive benefits for 12 consecutive months
At the end of the benefit period (age 65 or 67), the client can begin receiving trust assets as retirement income.
Upon Banker’s Trust approval, a client may access trust assets in the event of certain financial hardships. These hardships could include:
Extraordinary medical or health care expenses (not covered by insurance)
Payment of post-secondary education and related education fees
Inability to make payments for a principal residence
If clients recover from the disability and stop receiving benefits, they can access accumulated trust assets after being off claim for 12 consecutive months.
Remaining assets in a client’s trust go to his or her estate if the client dies while receiving benefits.
1Upon Banker’s Trust approval.

17. Taxability
Benefits
Tax-free if premiums are paid by individual with after-tax dollars.
Taxable if premiums are paid by an employer.
Trust earnings
Taxable annually to the client unless benefits are invested in a tax-deferred annuity.
Clients receive an annual 1099 form from the trust administrator.
Clients do not need to pay additional taxes on distributed funds that have already been taxed.
If a client’s disability is approved:
On an annual basis, the client receives a 1099 form from Banker’s Trust Company. The 1099 form includes interest, dividends and capital gain distribution information. Your client will also receive quarterly statements of principal and income transactions within the trust.
At age 65 or 67, the trust begins distributing accumulated assets to your client per the trust agreement. Clients will not need to pay additional taxes on distributed funds that have already been taxed.

18. Forms needed at application time
State-specific individual disability insurance application
DI Retirement Security supplemental form
Signed Trust Agreement
Financial and underwriting requirements, as requested by underwriting
The forms listed here are needed at the time of application.
State-specific individual disability insurance application
DI Retirement Security supplemental form
Signed Trust Agreement
Financial and underwriting requirements, as requested by underwriting
Application is based on the state in which the client will be signing the application in.

19. Getting started — target market
Earn at least $76,000 annually
Already have income protection coverage
Currently saving for retirement (no documentation required)
Majority of policies sold to 3A and above occupations, such as:
Corporate executives, accountants/CPAs, attorneys, business owners, engineers and medical professionals
Clients working 20+ hours per week
The ideal clients for DI Retirement Security sales are individuals who earn at least $76,000 a year and are committed to saving for retirement. They may already have disability insurance or may be planning to purchase an individual DI policy.
The majority of DI Retirement Security policies are sold to 3A and above occupation classes.

20. Five sales tips 1 2 3 4 5 Sell DI and DI Retirement Security together
Enhance employee benefit packages 3
Talk to clients who are maxing out their 401(k)s 4
Talk to clients who have met their DI issue limits  5
Discuss it during investment reviews
First, Sell DI insurance and DI Retirement Security together Use the Alternate DI Retirement Security report from the Principal illustration system to showcase the need for and affordability of both products. Point out that the client only needs to undergo underwriting once, with limited additional paperwork, to obtain both coverages.
As we get close to fourth quarter and wrapping up the year, this can be an ideal time to sell DI Retirement Security. Talk to clients who recently purchased individual DI coverage from you in the past 90 days. They can apply for DI Retirement Security without going through underwriting again.
Using DI Retirement Security with traditional disability insurance provides your clients with ongoing benefits!
It’s a combination sale. Not only are you able to help protect your client’s most important asset – their ability to earn an income – you’re helping protect their retirement dreams as well!
As shown in this chart, if clients become disabled at 45, they would:
Begin receiving benefits from the traditional DI policy
AT THE SAME TIME, the DI Retirement Security benefits would start being paid into a Trust to help them continue saving for retirement.
At the end of the benefit period (either age 65 or age 67), when traditional benefits stop paying, DI Retirement Security benefits would start – providing ongoing benefits! As indicated earlier, the benefits would continue until the funds diminish or the insured’s death. At death, any remaining funds are paid to the insured’s estate.
Two. Talk with employer clients about providing an additional employee benefit to enhance benefit packages
If you’ve sold a company a 401(k) or other retirement plan, suggest they offer another valued benefit – DI Retirement Security – to help employees prepare for the future. By offering a retirement plan, plus DI Retirement Security, employers can provide employees with a truly comprehensive retirement solution. Plus, when three or more individuals purchase coverage, they receive Principal’s 20 percent Multi-Life discount (based on unisex rates).
Three. Approach clients who are contributing the maximum to their 401(k) Contributing the maximum amount to a 401(k) is a strong signal that clients find saving for retirement very important. These clients often already believe in financial security and preparedness for the future. They are usually quick to understand the value of protecting their ability to save for retirement from a disability and make excellent prospects for DI Retirement Security.
Take advantage of Principal materials to provide them with a visual aid that illustrates just how much could be at risk if their retirement contributions were disrupted by a disability.
Approach clients who are at their maximum issue limits for individual DI You may have clients that are maxed out on the amount of individual DI insurance they are eligible for. These clients may obtain additional coverage by purchasing DI Retirement Security.
Whenever you pair individual DI insurance and DI Retirement Security, you provide your clients with the opportunity to receive ongoing benefits throughout their working years and in retirement. I’ll go into a little more detail about this on the next slide.
Four. Approach clients who are at their maximum issue limits for individual DI You may have clients that are maxed out on the amount of individual DI insurance they are eligible for. These clients may obtain additional coverage by purchasing DI Retirement Security.
Five. During investment reviews, discuss the importance of DI Retirement Security
Given the recent market volatility, many are clients are likely paying closer attention to their investments. As you help them review their current retirement goals and plans, discuss the importance of disability protection. After the meeting, follow-up with additional sales literature on DI Retirement Security. Principal has s, videos and brochures available to help showcase the importance of retirement savings protection.

21. Case study Overview Sales approach Solution
Client had just established a $12 million employer-sponsored 401(k) plan
Sales approach
Emphasized the importance of continuing retirements savings
Solution
Voluntary DI Retirement Security program (standard issue; multi-life discount)
Compensation1
$7,510 annual premiums
$3,755 FYCs
$1,502 renewals
After closing a $12 million employer-sponsored 401(k) plan, the producer asked the company CEO what would happen to his 401(k) contributions if an injury or illness made it impossible for him to work. The answer was simple: his contributions would stop. After explaining DI Retirement Security could help address this gap, the CEO wanted to purchase a policy for himself and also make it available to his employees on a voluntary basis.  
After the producer had the CEO’s buy-in, the producer spoke with employees about purchasing voluntary DI Retirement Security to help protect their retirement contributions in the event of a qualifying disability. With 12 employees enrolling in the DI Retirement Security solution, they were able to participate in the Guaranteed Standard Issue (GSI) sales program and received a 20% Multi-Life discount and 10% Mental/Nervous and Substance Abuse Disorder discount. 
The producer
The case generated $7,510 in first year premium, equating to approximately $3,455 in first year commission. There is potential to earn an additional $1,502 in renewal commissions over the next five years.
1Series 700 compensation – 50% FYCs, no annual coverage increases, 100% persistency, renewals based on 5 year projection.

22. Sample monthly rates $2,000 monthly benefit Age Male Female 25 $30 $48
$35
$64 35
$42
$71 40
$53
$84 45
$66
$91
You might be surprised to learn how affordable DI Retirement Security can be. These rates assumes a monthly benefit of $2,000. The Multi-Life discount makes the coverage even more affordable.
Assumptions: Michigan resident, $2,000/month benefit, 180-day elimination period, To age 65 Benefit Period and Your Occupation Period, 5A occupation class, non-tobacco. Sample rates are for illustrative purposes only.

23. DI9201-02 | 12/2016 | © 2016 Principal Financial Services Inc.
Thank you
DI | 12/2016 | © 2016 Principal Financial Services Inc.