1. Income Protection Restoration Plan
For the Leadership Staff of
ABC Corporation

2. Income is the foundation of a solid financial plan
The Need
Income is the foundation of a solid financial plan
Individual Disability Income insurance is the foundation to a solid financial plan.
How solid is you and your employees’ financial foundation?

3. How are Senior Leaders Compensated?
Salary
Bonus or Commissions
Pension
Health/employee benefits/flexible spending account
Technology – computers, tablets, phones
Perks – golf & health club memberships, Costco, etc.

4. The Need What is your executive’s earnings potential?
Potential Earnings to Age 65
(with 5% annual salary increases)
Annual Income $100,000
Age 35
$6,644,000
Age 40
$4,773,000
Age 45
$3,307,000
Age 50
2,158,000
Annual Income $250,000
Age 35
$16,610,000
Age 40
$11,932,000
Age 45
$8,266,000
Age 50
$5,395,000
Annual Income $500,000
Age 35
$33,219,000
Age 40
$23,864,000
Age 45
$16,533,00
Age 50
$10,789,000

5. The Need Disability plays no favorites.
The causes of disability may surprise you! Here’s a breakdown (by percentage of claims) of some typical reasons an individual may become disabled*:
* Source: Principal Life Disability Insurance claims incurred as of March The above is for illustration purposes only and is not intended as an inclusive representation of all claims.

6. Average length of Individual Disability claim
31.6
Average length of Individual Disability claim
months¹
52% of our claims last longer than five years
¹2012 Gen Re, U.S. Individual DI Risk Survey (Council for Disability Awareness) 7

7. Odds of Incurring A Disability of 90 Days or Longer
Need for Individual Disability Insurance
Odds of Incurring A Disability of 90 Days or Longer
Average Age
Number of people in group 1 2 3 4 5 6 25
58%
82%
92%
97%
99% 30
54%
79%
90%
96%
98% 35
50%
75%
88%
94% 40
45%
70%
84%
91%
95% 45
40%
64%
78%
87% 50
33%
55%
80%
86% 55
25%
43%
57%
68%
The statistics are real. As these numbers show, the odds of a disability are greater than most people probably imagine, especially in a group setting.
According to the Commissioner’s Individual Disability A table, at the age of 35, one person in a group has a 50% chance of incurring a disability. The more individuals in a group (or the more employees within a company), the greater likelihood someone will become disabled and cannot work.
For example, if you have just 3 employees at an average age of 45, there is a 78% chance one of those employees will have an injury or illness lasting longer than 90 days before they reach the age of 65.
Source: Commissioners Table on Disability (NAIC)
Source: Commissioner’s Individual Disability A table

8. Group Long Term Disability Plans
Easy to administer – one master policy covers all employees
Guaranteed issue (with pre-existing condition clause) – no hassling with medical information
Cost effective – usually cost is only ½ to 1% of gross covered monthly pay

9. Proposed Long Term Disability Plan
Benefits begin after 90 days of disability
Benefits are paid through Social Security Normal Retirement Age
Benefits are paid for total and partial (residual) disabilities
Pays 60% of W-2 + k-1
Pays up to $6,000 per month
Benefits received tax free

10. Supplemental Income Protection Plan Sample Owner $200,000 Salary + K-1
Gross Monthly Income: $16,667
Net Monthly Income: $11,667
(Assumes 30% effective tax rate)
Group Disability Benefit: $6,000
This represents 36% of your take-home pay.
With the Supplemental Income Protection Plan you will be able to buy up to an additional $1,675 per month. Because you are paying the premium, this benefit will be received tax free. Between the $4,250 of ABC, Inc. provided benefit and the $1,675 of supplemental benefit you would receive $5,925 per month covering about 80% of your take home pay.

11. guarantees variable comp
Supplemental Income Protection
How it Works
Enhancing a portion of the high earning employees LTD benefit can reduce volatility in the Group LTD plan given you are shifting a portion of the benefit into a fixed pooled rate individual platform.
Executives
Senior Managers
Individual LTD &
Group LTD
Protects Higher % plus
guarantees variable comp
Carve Out Group
Managers
Employees
Group LTD Provides a Foundation
but can only protect so much
Transfer of Risk: Individual experience does not impact group rating
Rate Stability: Individual rates are fixed To Age 65 and cannot increase
Value Added : Additional features generates executive benefit perk

12. Individual Disability Benefits
Policy Pays in Three Ways:
Total disability in your occupation
Residual (partial) benefits after a 20% loss of income
Catastrophic Benefits up to an additional $8,000 per month (age 60 and younger)
Guaranteed coverage increases can be included
Guaranteed benefits and premium through age 65
Guaranteed 20% unisex discount included
Policy and discounts are portable

13. Supplemental Income Protection Plan Sample Owner $200,000 Salary + K-1
Gross Monthly Income: $16,667
Net Monthly Income: $11,667
(Assumes 30% effective tax rate)
Group Disability Benefit: $6,000
Supplemental Individual Benefit $4,000
This represents 86% of your take-home pay. .
With the Supplemental Income Protection Plan you will be able to buy up to an additional $1,675 per month. Because you are paying the premium, this benefit will be received tax free. Between the $4,250 of ABC, Inc. provided benefit and the $1,675 of supplemental benefit you would receive $5,925 per month covering about 80% of your take home pay.

14. Percent Income Covered
Benefit/Monthly Premium Summary 90 Day Wait/to age 67 benefit period with residual and catastrophic disability benefits
Percent Income Covered
Individual Only
Individual + LTD
Exec 1
51%
60%
Exec 2
57%
Exec 3
Monthly Premium
$1,482.72
$1,045.26
Premiums reflect IDI non-smoker rates; cigarettes/chewing/dipping +25%

15. Underwriting Made Simple
Medical Underwriting:
Age 65 and higher
Telephone Interview confirming health history
Blood profile, urinalysis, paramedical exam
2016 Personal business returns (1120S)
Age 64 and younger and less than $6,000 per month benefit
Telephone interview confirming health history

16. Enrollment Timeline

17. Financial Strength and Integrity
Principal Life Insurance Company:
Over 130 years of experience with a comprehensive product portfolio
High ratings from independent rating firms1
Over 22 million customers
2016 One of Worlds Most Ethical companies – Ethisphere Magazine
Member of FORTUNE 500® and Standard and Poors 500®
1 A high rating by a particular firm does not constitute an endorsement of the rated insurer by the ratings firm.