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Individual Disability Insurance Association Program

Individual Disability Insurance Association Program. Strength In Numbers. Power of Protection. Agenda. Importance of Disability Coverage Available Products Association Benefits to Your Association Program Guidelines Promotion & Enrollment Next Steps.

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Individual Disability Insurance Association Program

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  1. Individual Disability Insurance Association Program Strength In Numbers. Power of Protection.

  2. Agenda • Importance of Disability Coverage • Available Products • Association Benefits to Your Association • Program Guidelines • Promotion & Enrollment • Next Steps

  3. How important is individual disability insurance coverage? • 51.2 million Americans have some level of disability. They represent 18% of the population. Source: U.S. Census Bureau, July 2006 • Almost 3 in 10 workers entering the workforce today will become disabled before retirement. Source: Social Security Administration, Fact Sheet, January 2007 • The average duration of a long-term disability is 30 months. Source: JHA Disability Fact Book, 2006

  4. Who needs individual disability insurance? A recent employee survey of Principal Life’s small-to-medium sized business clients, indicated: • 14% own an individual disability income (DI) insurance policy • 7% of spouses own an individual DI insurance policy • 45% feel not at all knowledgeable about individual DI insurance Source: Principal Well-Being Index, First Quarter 2009

  5. Successful financial strategy

  6. Available products Individual Disability Income insurance

  7. What is Individual Disability Income (DI) insurance? Helps cover daily personal expenses, such as: • Mortgage or rent • Car payment(s) • Utilities • Groceries

  8. Individual DI insurance • Non-cancelable • Guaranteed renewable

  9. Definition of disability During the Your Occupation Period, the insured is unable to perform the substantial and material duties of his or her occupation and is not working. • After the Your Occupation Period, the insured must be unable to work in any occupation he or she is reasonably suited to by his or her education, training or experience, and is not working.

  10. Your Occupation benefit periods • 2 year Your Occupation period built into base policy • Additional Your Occupation periods are available (for additional premium): • 5 year • To Age 65 • To Age 67 • To Age 70

  11. Key policy riders • Future Benefit Increase rider • Benefit Update rider • Residual Disability Benefit • Catastrophic Disability Benefit • Cost of Living Adjustment • Mental/Nervous Substance Abuse (MNSA) Disorder – required

  12. Additional key riders • Short Term Residual Disability Benefit • Recovery Benefit • Extended Total Disability Benefit • Regular Occupation

  13. Available products DI Retirement Security

  14. Do your clients realize, if they incur a disability and can no longer work and earn a salary, they will not be able to: Contribute to their 401(k) plans? Receive an employer match on those contributions (if available)? Contribute to Social Security? A disability impacts more than just receiving a paycheck Plus, placing money in any type of savings account may be difficult due to a reduced (or non-existent) income and increased medical bills.

  15. Don’t Let Your Clients Lose Out

  16. How it works This program is designed to help secure a client’s retirement in the event of disability. Please note: The maximum benefit amount is currently capped at $4,125/month. This maximum adjusts with IRS maximum contribution guidelines. 1 – For more information about the trust, go to: https://www.bankerstrust.com/btportfolios/new_home.html

  17. 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. Not yet approved in CA. 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. #4012009

  18. Available products Overhead Expense insurance Disability Buy-out insurance

  19. What are the odds? Chances of a Disability Lasting Three Months or Longer (Before Age 65) Based on Commissioner’s Individual Disability Table A – Equally Weighted, All Occupation Classes, Unisex

  20. Why Overhead Expense (OE) insurance? • Reimburses a business owner for covered business • Helps ensure a business can remain open and the owner can either: • return to a financially sound business; or • sell a business that has not depreciated because of the owner’s disability. • Business Loan Protection rider (cost rider) reimburses the owner for the covered business-related loan obligation during his or her total disability

  21. How does OE insurance work? The disabled client is reimbursed for expenses paid. • Premiums are tax deductible. (Rev. Rul. 55-264, 1955-1 C.B. 11) • Benefits are reportable as income but business expenses are deductible(Rev. Rul. 55-264, 1955-1 C.B. 11)

  22. About the Business Loan Protection rider • This coverage is ideal for business-related loan obligations* covering: • Purchase of a practice or existing business • Purchase of a large piece of equipment • Expansion of the business or practice • Facility renovations and improvements • An increase in working capital or build up of inventory • Purchase of building or land (must be purchased for the sole use of the business) * Must be in the form of a term loan, variable rate loan or commercial mortgage loan. Will not consider loans in the form of a line of credit, credit card, revolving line of credit or interest only.

  23. Disability Buy-Out (DBO) • Buy-sell agreement ensures the orderly transfer of a business interest in the event of the business owner’s death or disability. • Most business owners establish a buy-sell agreement but fail to fund it – or only fund it for an owner’s death.

  24. Why DBO insurance? The objective of DBO insurance is to: • provide a funding solution for the buy-sell agreement in the event disability. • reimburse money paid for the purchase of a disabled owner’s interest in the business in the event of a long-term disability.

  25. How does DBO insurance work? • The non-disabled policy owner or the business is reimbursed for the buy-out expense. • Premiums are non-deductible. (IRC 265; Rev. Rul. 66-262, 1966-2 C.B. 105) • Benefits are received income tax-free(IRC 104(a)(3); Rev. Rul. 66-262, 1966-2 C.B. 105)

  26. Association benefits

  27. Association benefits • A valuable benefit for existing members – at a discount • An incentive for enticing new members • No cost to your association • No administrative work required by your association to enroll members • Promotional assistance to help market the program to members

  28. Member benefits • 10% Association discount • Top-quality coverage from a company that provides exceptional customer service • Free education information and materials • Financial needs analysis by trained financial representative • Excellent claims handling and service

  29. Program Guidelines - Discounts • 10% Association discount • 10% discount if your members are in a select occupation: • Actuary, Architect, Attorney, CPA, Engineer, Executive & Pharmacist • 5% to 10% MNSA discount and rider * Required for Individual DI insurance and DI Retirement Security; not available for OE and DBO insurance. Not available in Texas or VT.

  30. Promotion and Enrollment • Pre-Promotion Activities • Group Activities • One-on-One Enrollment • Ongoing Promotion

  31. Next steps • Provide endorsement letter • Develop a 6-12 month marketing plan • Provide a membership roster

  32. Policy rider descriptions are not intended to cover all restrictions, conditions or limitations. Refer to rider for full details. Riders are subject to state availability. Riders may be subject to an additional charge. Insurance issued by Principal Life Insurance Company. Principal Life is a member company of the Principal Financial Group, Des Moines, IA 50392. Disability Insurance has limitations and exclusions. For costs and complete details of coverage, contact your local representative. Policy Form Numbers: HH750, HH702, HH703 Rider Form Numbers: HH736, HH704, HH753, HH757, HH758, HH756, HH752, HH759, HH777

  33. Thank you.I look forward to working with you. DI2174 | #1274022009 Approval #456062006

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