Principal Variable Universal Life Business SM

Transcription

1 The Principal Financial Group Principal Variable Universal Life Business SM Flexibility to meet key business market needs. BB11294

2 Are you meeting your business insurance needs? As a business leader, you know what it takes for your business to succeed. You can take pride in all you have accomplished and look forward to all the future holds. Still, the challenges of leading a dynamic business can be many, including how to preserve what you have worked so hard to build. Are you prepared? How can you attract and keep top talent? Could the business continue without a partner, a key employee or even you? Are your key people able to save enough money for retirement? Is your family s future protected should something happen to you? How you address planning issues such as these can be crucial to the long-term success of the business. Life insurance is often used to provide solutions to these issues. The features of life insurance TAX-FREE DEATH BENEFIT 1 Life insurance benefits generally pay to the beneficiary without being reduced by federal income tax. This allows the beneficiary to realize the full benefit of your smart planning. In some cases, life insurance can offer a more efficient transfer of proceeds than using other taxable assets. TAX-DEFERRED GROWTH Premium payments are used to pay policy costs. Any excess premium can earn interest and accumulate cash value that grows on a tax-deferred basis. Coverage continues as long as the accumulated cash value of the policy is enough to cover the monthly policy charges. Individuals with higher income levels are often limited in their options to save money on a tax-deferred basis life insurance provides an option to do so. INCOME TAX-FREE ACCESS TO CASH Your policy s cash value can provide a source of money that may be used to meet a variety of needs. Potential uses could include supplementing retirement income or covering emergency business needs, among others. Generally, there are no current income taxes due 2,3 when you access your cash value. FLEXIBILITY Premium payment options and adjustable death benefit amounts give you the flexibility to make changes when needed. You may select the frequency and amount of your premium payments with some limits 4, and you can tailor your death benefit protection to best fit your needs. 1 In exchange for the death benefit, life insurance products charge fees such as mortality and expense risk charges and surrender fees. For more detailed charge information on Principal Variable Universal Life - Business, see the Principal Executive Variable Universal Life II Prospectus - LV311 A (Executive Variable Universal Life II with Modified Cash Surrender Value Rider). 2 Policy surrenders and loans may reduce the amount of your death benefit and cash value. 3 Policy charges may apply to distributions taken from the policy. If the policy is a Modified Endowment Contract (MEC), policy distributions may be subject to current income taxes. 4 You may increase, decrease or skip premium payments, provided you have enough cash value within your policy to cover the cost of insurance and other policy charges. Policy changes may be made after the first policy year. 2

3 Principal Variable Universal Life Business SM The Principal Financial Group is a leader in the life insurance business market. We offer products and services focused on the unique needs of business owners and executives. Principal Variable Universal Life-Business (VUL-Business) was designed with these needs in mind. It can be ideal for plans that help protect the business and those that help you attract, reward and retain key talent. In addition to death benefit protection, VUL-Business permits you to direct your premium payments to specific investment options according to your objectives. So, not only do you get a federal income tax-free death benefit, but you also have the opportunity to grow policy value based on the performance of your selected investment options. VUL-Business provides: Protection Features focused on business needs Cash accumulation potential VUL Business may be ideal for: Executive benefit plans to recruit, retain and reward your key employees Funding your buy-sell agreement Key person insurance Using business dollars to protect your family s financial future Features for business needs ACCOUNTING CONSIDERATIONS VUL-Business maximizes early year cash values and offers long-term growth potential. The Modified Cash Surrender Value rider 5 produces high early year cash surrender values and pays the Net Policy Value plus an additional amount if the policy is surrendered in full. 6 This reduces the effect of surrender charges on your firm s balance sheet. There is no charge for this rider. It is automatically added to policies in states where approved. CHANGING THE INSURED The Change of Insured rider 5 allows for a new insured to be named to the policy. The policy face amount and the accumulated value remain the same after the change. Any riders attached to the original policy end on the change of insured date. Riders for the new insured may be added with underwriting approval. 5 The policy rider descriptions are not intended to cover all restrictions, conditions or limitations that may apply. See the rider for full details, state variations and availability. The Death Benefit Guarantee rider and all guarantees are subject to the claims-paying ability of the Principal Financial Group. 6 The rider benefit will not apply if the policy is surrendered in conjunction with a replacement or Section 1035 Exchange. 3

4 Opportunity for tax-deferred growth VUL-Business accumulates cash value that can be used to help you achieve your financial goals. There are no current taxes on cash value growth, which means it grows faster than if it were taxed each year. One of the key differences of variable universal life compared to other types of life insurance is the ability to allocate your premium to specific investment options. This lets you take advantage of the growth potential of the market. However, like any investment with market exposure, there is no guarantee the underlying funds will have positive performance over time. Your policy s cash value will increase or decrease based on the performance of the underlying investment options. As a variable universal life policy owner, you assume investment risk associated with the policy s sub-accounts. QUALITY INVESTMENT CHOICES The Principal believes you should have flexibility with investment choices for VUL-Business. We follow a rigorous analysis process in selecting the sub-accounts to be included on the investment platform. Care is taken to ensure options are available to give you the opportunity to diversify your portfolio not only by asset class and investment strategy, but also by management style. When selecting investment options, you should carefully consider your goals, time horizons and tolerance for risk. VUL-Business Investment Choice 100+ Investment Options 40+ Investment Managers 7 Asset Classes Your financial professional can assist you in making selections that best fit your situation. MANAGING YOUR POLICY You have ultimate control of your policy. Over time, your investment objectives may change or new investment options may be added to the lineup. VUL-Business lets you adjust to keep your investments in line with your objectives. You may direct your premium to new investments, change investment options and move money from one investment option to another. Tax-free transfers. You may move money from one investment option to another or to the Fixed Account. Transfers are made tax-free. For convenience, you are able to schedule transfers to occur on an ongoing basis. Automatic portfolio rebalancing. You may wish to maintain a specific percentage of your policy value in each investment account over time. This can be accomplished through automatic portfolio rebalancing. This feature can be elected either at the time you apply for your VUL-Business policy or after the policy has been issued. 4

5 Accessing policy values Your cash value can provide a source of funds for a variety of purposes. Account value is withdrawn from your policy using loans and partial surrenders. 7 In many situations, there are no income taxes due when you withdraw cash values. VUL-Business makes it easy for you to access money from your policy. AUTOMATED INCOME The automated income feature provides an easy way for you to set up and receive income payments from your policy. You decide how often you wish to receive payments. Then you submit a written request to start the payments. Once started, no further requests are required. Payments will continue until you tell us to stop, or until there is no longer enough money in your policy to meet your request. Added protection for your policy DEATH BENEFIT GUARANTEE You can ensure your policy stays in force to age 85, regardless of policy performance. The Death Benefit Guarantee rider 5,7 can help you meet future obligations by providing a death benefit guarantee. This rider is included in your policy at no additional charge. Note: To maintain the guarantee, you must meet the Death Benefit Guarantee premium requirement. Paying only this premium amount keeps your policy in force; however, it may not allow you to take full advantage of potential cash value growth. When this rider expires, it may be necessary for you to pay additional premiums to keep your policy in force. Whether your policy remains in force beyond the guarantee period is determined by whether there is enough net surrender value to cover monthly policy charges. Contact your financial professional prior to making a premium or policy change. Discuss with them the effect a change can have to your Death Benefit Guarantee premium. The following policy changes can affect your Death Benefit Guarantee premium: Your Total Face Amount is increased or decreased. A rider is added to or deleted from your policy. An adjustment is made to your policy. 7 Policy loans, partial surrenders or policy charges, including rider additions or deletions can negatively impact this guarantee. 5

6 OVER-LOAN PROTECTION The Life Paid-Up rider 5 can keep your policy from lapsing due to a large loan. If the insured is at least age 75 and the policy has been in force for at least 15 years, this rider ensures the policy will not lapse even if it would otherwise do so. When this rider is used, coverage is converted to paid-up life insurance. If this rider is not used, additional premium may be required to keep the policy in force. Or if the policy lapses, you may have to pay tax on the gain. This rider is added to all policies in states where it has been approved. There is a one-time charge for this rider when it is used. Death benefit options Create the right death benefit for your current life insurance needs. Three options are available. Select the one that best fits your objectives. The option you choose will affect the amount your beneficiary receives. The cost of your policy will also be affected by the option you select. Discuss with your financial professional which option might be most appropriate for you Death Benefit = Face Amount Death Benefit = Face Amount + Policy Value Leave the administration to us Death Benefit = Face Amount + Premiums Paid Withdrawals When you put in place a plan to protect your business or to provide executive benefits, you have taken an important step. The new plan, though, may require ongoing plan administration and reporting responsibilities for the plan sponsor. We can help. Our leadership in post-sale administrative services can lessen this burden. The Business Market Administration platform is designed to provide business plan sponsors with the information they need. You get quality ongoing service tailored to your needs all at no additional cost. Business Market Administration Highlights Service is currently provided to more than 11,600 business plans.* Complete policy and plan administrative support. Dedicated staff provides superior service. Online access offers an easy way to view policy information. * As of April 30,

7 Principal Variable Universal Life-Business Permanent life insurance protection, business-focused features, cash value accumulation, tax advantages, and premium flexibility are all wrapped up into one policy. Principal Variable Universal Life-Business can help you and your business meet financial commitments now and in the future. Your financial representative can discuss Principal Variable Universal Life-Business with you and how it can meet your specific needs. ABOUT THE PRINCIPAL Founded in 1879, the Principal Financial Group (The Principal ) is a global investment management leader. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, asset management and insurance, through its diverse family of financial services companies. A member of the FORTUNE 500, the Principal Financial Group has $483.2 billion in assets under management and serves some 19.4 million customers worldwide from offices in 18 countries throughout Asia, Australia, Europe, Latin America and North America. The Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. 8 8 As of December 31,

8 WE LL GIVE YOU AN EDGE Principal Life Insurance Company, Des Moines, Iowa , Before investing, carefully consider the investment option objectives, risks, charges, and expenses. Contact a financial professional or visit principal.com for a prospectus or, if available, a summary prospectus containing this and other information. Please read it carefully before investing. 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 none of the member companies of The Principal are 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. Principal Variable Universal Life Business SM is issued by Principal Life Insurance Company. Securities offered through Princor Financial Services Corporation, 800/ , member SIPC, and/or independent broker/dealers. Principal Life and Princor are members of the Principal Financial Group, Des Moines, IA Not FDIC or NCUA insured May lose value Not a deposit No bank or credit union guarantee Not insured by any Federal government agency Principal Life Insurance Company Policy Form: SF 837 Rider Forms: SF 612, SF 618, SF 838, SF 839, SF 840, SF 841, SF 842, and SF 954 BB /2014 t i