1. Principal Life Insurance Company Protect Business Owners Against Disabilitys Triple Threat Presented By: Don Schamay, CFP Disability Income Regional Vice President Principal Life Insurance Company

2. Disabilitys triple threat Business owners face a triple threat Keeping a roof over their head Keeping their business door open Keeping their business investment intact - 2 -

3. Clients insure their home and their car, but what about their income? Income $4,216,000 Home $294,3000 Car $31,501 Keeping a roof over their head - 3 -

4. Keeping a roof over their head What would happen to their income? How would your client maintain their lifestyle? Where would the money come from to pay for bills? What happens to their retirement savings and other financial goals? Do your client have Group Long-Term Disability insurance in place? Are the benefits taxable? - 4 -

5. Can their employees live on 42% of their income? Chart based on $5,000 gross monthly income ($60,000 annually), with 60% Group Long Term Disability program, assuming a 30% tax bracket for Federal, State and FICA. Few could live on 42% of their income. Keeping a roof over their head - 5 -

6. Keeping their business door open If your clients are unable to work, would their business be able to stay open? How would business expenses get paid (rent, salaries, utilities, etc....)? Would they have to turn customers away? What would happen to their business if a key employee became totally disabled? - 6 -

7. Source: Commissioners Individual Disability Table B Equally Weighted 90 day Elimination Period Chances of a disability lasting 12 months or longer (before age 65) Age2 Owners3 Owners4 Owners 2726.3%36.7%45.7% 3724.5%34.5%43.1% 4720.7%29.4%37.1% 5721.1%17.6%22.8% Keeping their business door open - 7 -

8. Possible income sources Business partner Creditors Liquidate assets Personal savings Sell the business Keeping their business door open - 8 -

9. With Overhead Expense insurance: Fixed business expenses are reimbursed your client dont rely on creditors their savings and investment plans arent jeopardized Avoid foreclosure or liquidation Premiums are tax-deductible Keeping their business door open - 9 -

10. Keeping their business door open Protect owners of small- to medium- sized businesses who have taken out loans to grow their business Reimburses the owner for covered business-related loan obligation during his/her total disability. With the Business Loan Protection rider: Did you know? The U.S. had six million small employers in 2005, representing over 99 percent of the nations employers. 1 In 2007, outstanding small business loans (under $1 million) were valued at over $684 billion for more than 24 million loans. 1 1 SBA Office of Advocacy, 2008 - 10 -

11. With Key Person Replacement insurance: Protects the business from the loss of a key employee Business pays for and is the owner of the policy Any benefits received can be used at their discretion, but cannot be assigned to the key employee Helps demonstrate financial stability to creditors, shareholders and other stakeholders Keeping their business door open - 11 -

12. Keeping their business investment intact Would they want to sell their share of the business? Would they want to buy out their partner? How would the price be determined? Where would the money come from? Is it guaranteed to be there when its needed? If your clients or one of their partners is disabled … - 12 -

13. The disabled partner may: Become a drain on income while not contributing to the business Have different priorities for the business income and profits and may not want to reinvest profits Decide to let spouse or relative take over their role in the business Keeping their business investment intact The healthy partner may not: Be able to pay the disabled partner an income and maintain the business Have funds to buy the disabled partner out Want to share business decisions with the disabled partners family - 13 -

14. Disabled owner advantages Assures a definite price and buyer Financial future is no longer contingent on the businesss success Keeping their business investment intact Healthy owner(s) advantages Avoids negotiation of price Assures complete and orderly transfer of ownership Retains control of the business Provides continuity and credibility for customers and creditors Establishing a buy-sell agreement - 14 -

15. Keeping their business investment intact Funding alternatives Current cash flow Establish a sinking fund Borrow the funds Disability Buy-Out insurance - 15 -

16. Keeping their business investment intact Disability Buy-Out Insurance A written agreement that specifies when and for how much the buy-out will take place, and... is funded with the right amount of Disability Buy-Out insurance. - 16 -

17. What we will provide to your client Assessment of their current program Design options Cost Benefit Analysis Tax consequences Implementation steps Keeping their business investment intact - 17 -

18. OE + DI + DI = 20% discount A business owner purchases OE and employees purchase their own DI = 20% discount! DBO + DBO + KPR = 20% discount Two business owners purchase DBO policies and pay premiums for an employees KPR policy = 20% discount! DI + DI + DI = 20% discount Three individuals with a common employer purchase DI policies = 20% discount! Get peace of mind … at a multi-life discount OE = Overhead Expense | DBO = Disability Buy-Out | DI = Individual Disability Income | KPR = Key Person Replacement - 18 -

19. For more information Please contact their local Plus Group office for more information. Go to www.plusgroupus.com and click on the agency locator map to find an office near your client or call 800/831-1018.www.plusgroupus.com - 19 -

20. 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 The Principal is not 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. your client should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. Insurance issued by Principal Life Insurance Company a member of the Principal Financial Group®, Des Moines, IA 50392, www.principal.com - 20 -