Principal Life Insurance Company

Protect Yourself Against Disability’s Triple Threat

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intended to provide general information about the subject matter covered and is provided with the understanding that The

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Insurance issued by Principal Life Insurance Company a member of the Principal Financial Group®, Des Moines, IA 50392,

www.principal.com

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

Keeping a roof over your head – income protection

Individual Disability Income insurance

You insure your home and your car, but what about your income?

Income

$4,216,000

Home

$294,3000

Car

$31,501

Keeping a roof over your head

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?

Can your 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 your head

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

Keeping your business’ door open – risk management

Overhead Expense Insurance

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?

Source: Commissioner’s Individual Disability Table B “Equally Weighted 90 day Elimination Period”

Chances of a disability lasting 12 months or longer (before age 65)

Age 2 Owners 3 Owners 4 Owners

27 26.3”% 36.7% 45.7%

37 24.5% 34.5% 43.1%

47 20.7% 29.4% 37.1%

57 21.1% 17.6% 22.8%

Keeping your business’ door open

Possible income sources

• Business partner

• Creditors

• Liquidate assets

• Personal savings

• Sell the business

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

Keeping your business’ door open

Keeping your business investment intact – succession planning

Disability Buy-Out Insurance

Keeping your business investment intact

• 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?

If you or one of your partners is disabled …

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 your 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

Disabled owner advantages

• Assures a definite price and buyer

• Financial future is no longer contingent on the business’s success

Keeping your 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

Keeping your business investment intact

Funding alternatives

• Current cash flow

• Establish a sinking fund

• Borrow the funds

• Disability Buy-Out insurance

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.

What we will provide to you

• Assessment of your current program

• Design options

• Cost Benefit Analysis

• Tax consequences

• Implementation steps

Keeping your business investment intact

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!

Get peace of mind … at a multi-life discount

OE = Overhead Expense | DBO = Disability Buy-Out | DI = Individual Disability Income

Name

Title

Phone | E-mail

Name

Title

Phone | E-mail

Contact my office for more information

DI 2221 | #5057072009

Insurance issued by Principal Life Insurance Company a member of the Principal Financial Group®, Des Moines, IA 50392, www.principal.com