Principal Life Insurance Company Protect Yourself Against Disability’s Triple Threat

1. Principal Life Insurance CompanyProtect Yourself Against Disability’s Triple Threat

2. 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. You 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

3. Disability’s Triple Threat Business owners face a triple threat • Keeping a roof over your head • Keeping your business’ door open • Keeping your business investment intact

4. Keeping a roof over your head – income protection Individual Disability Income insurance

5. You insure your home and your car, but what about your income? Keeping a roof over your head Income $4,216,000 Home $294,3000 Car $31,501

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

7. Can your employees live on 42% of their income? Keeping a roof over your head Few could 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.

8. Keeping a roof over your head Personal income protection so you can: • Provide for your family if you become too sick or hurt to work • Maintain your lifestyle without draining savings or business profits • Protect a higher level of your income (in the event you have Group LTD insurance) Individual Disability Income (DI) insurance

9. Keeping your business’ door open – risk management Overhead Expense Insurance

10. Keeping your business’ door open • If you are unable to work, would your business be able to keep the doors open? • How would business expenses get paid (rent, salaries, utilities, etc....)? • Would you have to turn clients away?

11. Keeping your business’ door open Source: Commissioner’s Individual Disability Table B “Equally Weighted 90 day Elimination Period”

12. Keeping your business’ door open Possible income sources • Business partner • Creditors • Liquidate assets • Personal savings • Sell the business

13. Keeping your business’ door open With Overhead Expense insurance: • Fixed business expenses are reimbursed • You don’t rely on creditors • Your savings and investment plans aren’t jeopardized • Avoid foreclosure or liquidation • Premiums are tax-deductible

14. Keeping your business investment intact – succession planningDisability Buy-Out Insurance

15. Keeping your business investment intact If you or one of your partners is disabled … • Would you want to sell your share of the business? • Would you want to buy out your partner? • How would the price be determined? • Where would the money come from? • Is it guaranteed to be there when it’s needed?

16. Keeping your business investment intact 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 • 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

17. Keeping your business investment intact Establishing a buy-sell agreement Disabled owner advantages • Assures a definite price and buyer • Financial future is no longer contingent on the business’s success • 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

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

19. Keeping your 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.

20. Keeping your business investment intact What we will provide to you • Assessment of your current program • Design options • Cost Benefit Analysis • Tax consequences • Implementation steps

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

22. Contact my office for more information Name Title Phone | E-mail Name Title Phone | E-mail Insurance issued by Principal Life Insurance Company a member of the Principal Financial Group®, Des Moines, IA 50392, www.principal.com DI 2221 | #5057072009