1. Does your business have the right protection?
Individual disability insurance
Presenter name
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2. Disability insurance from Principal® is issued by Principal Life Insurance Company, Des Moines, IA
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 DI 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. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.
Disability insurance has limitations and exclusions. For costs and coverage details, contact your Principal 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®.
Not a deposit | Not FDIC or NCUA insured | No bank or credit union guarantee | May lose value | Not insured by any Federal government agency
Principal, Principal and symbol design and Principal Financial Group are trademarks and service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.

3. Top financial priorities from business owners like you
Protecting their business
Protecting their income
Yet, less than a third of owners have solutions in place.
Source: 2015 Principal Financial Group® Business Owner Survey, conducted by Harris Interactive.

4. Individual disability insurance can help

5. Know the facts Common misconceptions about disability insurance:
That happens to other people. Not me. My business can run without me. I’d rather put my money into growing my business.
Maybe you’ve done research online or talked to friends, family or other business owners about disability insurance. If so, you may have come across some common misconceptions like these:
“That happens to other people. Not me.”
-Most disabilities are caused by illnesses, such as cancer, heart conditions and strokes. Although we can’t predict the future and what our health will be, we can protect ourselves.
“My business can run without me.”
-While that may be true for some, many businesses rely on the owner to keep it running.
“I’d rather put my money into growing my business.”
-It doesn’t have to be an either/or situation. Disability insurance can be customized to fit your budget. There are discounts available, and you can set up coverage on a tax-advantaged basis. 8

6. Chances of a disability lasting 3 months or longer (before age 65)
Likelihood of disability
Chances of a disability lasting 3 months or longer (before age 65)
Age
One owner
Two owners
Three owners 27
45.3%
70.%
83.6% 37
40.4%
64.5%
78.8% 47
32.8%
54.8%
69.6% 57
19.6%
35.4%
48.1%
This slide shows the likelihood of a disability lasting three months or longer in a group for various ages and number of owners in a business.
Let’s assume you and your partner are both 37 years old. The chance of one of you becoming disabled is 64.5 percent. As the numbers indicate, the odds aren’t in your favor.
Source: Commissioner’s Individual Disability Table A, Equally Weighted, All Occupation Classes, Unisex

7. Solutions that put you in control

8. How our solutions can help
In the event of a disability, our products can help:
Pay everyday living expenses and maintain your lifestyle
Continue to save for retirement
Provide a well-rounded benefit package
Pay business expenses, like rent and salaries
Ease the transition of the business to another owner

9. Individual Disability Income insurance

10. Individual DI insurance
A disability policy from Principal®:
Stays with you even if you change jobs
Can’t be canceled, unless you stop paying for coverage
Guarantees your cost for coverage will not change until age 65
Can be designed to meet your budget and needs
Works well on its own or with other solutions you may have
Individual disability insurance helps you deal with these realities. Having your own policy puts you in the driver’s seat of securing your financial foundation. A disability policy from Principal:
›› Stays with you even if you change jobs
›› Can’t be cancelled, unless you stop paying for coverage
›› Guarantees your cost for coverage will not change until age 65
›› Can be designed to meet your budget and needs
›› Works well on its own or with other solutions you may have in place, such as disability coverage from your employer 10

11. Are group benefits enough?
Adding an individual disability insurance policy to group LTD coverage helps add an additional layer of income protection.
Plus, a 20% Multi-Life discount for DI insurance may be available*
While employer-paid benefits are valuable, the typical group long-term disability (LTD) benefit is only about 60% of regular income. And that benefit is usually taxable. An individual Disability Income insurance policy can help cover a greater percentage of income. .
Chart based on $6,250 gross monthly income ($75,000 annually), with 60% group LTD program, assuming a 30% tax bracket for federal, state and FICA.
*Three or more employees with a common employer must purchase coverage: based on gender-neutral rates.

12. DI Retirement Security

13. Helping protect retirement dreams
Impact of a permanent disability on retirement savings at age 40
Just look at how retirement savings can be impacted if the employee were permanently disabled at 40 and could no longer contribute to retirement. Over 25 years, there’s a 1.2 million dollar loss of savings. Not many can sustain a $1.2million dollar loss to their retirement plan and still enjoy the retirement they were hoping for.
The DI Retirement Security product pays disability benefits to a trust on the employee’s behalf to access for retirement income in the future.
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.

14. The trust invests the benefits (after a risk assessment is conducted)
How it works
Before a disability, DI insurance premiums are paid to Principal.
Insured
Principal
At the end of the benefit period, trust assets are distributed
Disability occurs, benefits are paid to an irrevocable trust
Irrevocable Trust
If you become disabled, Principal pays disability insurance benefits directly to an irrevocable trust. These benefits are income tax-free when premiums are paid with after-tax dollars.
The trust invests the benefits on the employee’s behalf into one of six asset allocation models (based on investment style and risk tolerance) until the end of the benefit period. At the end of the benefit period, trust assets are distributed. Investment earnings in the trust are taxable annually.
The trust invests the benefits (after a risk assessment is conducted)
For more on trust investment options:

15. Overhead Expense insurance

16. Overhead Expense insurance
Covering your business expenses if you’re too sick or hurt to work
Fixed business expenses are reimbursed
Cost of coverage is tax-deductible
Don’t have to rely on creditors to keep the doors open

17. Examples of covered business expenses
Replacement salary
Lease for building, furniture and equipment
Utilities, office supplies and insurance premiums
Much more

18. Disability Buy-Out insurance

19. Keep your business investment intact
If you’re permanently disabled, Disability Buy-Out insurance can help ease the transition to another owner by funding a buy-sell agreement.
Complimentary services offer a great starting point.
Principal® experts can help you lay the groundwork for business plans with:
Informal business valuations
Buy-sell reviews

20. Thank you
DI | 03/2017 | © 2017 Principal Financial Services, Inc.