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Decision Guide

The ELM^sm Income Annuity offers you the ability to build an income stream that fits your needs.

You Control the Sales Process

Please call the toll-free number (1-877-210-5565 ext. 356) dedicated to the ELM Income Annuity for assistance in determining if this contract is suitable for you. A qualified, salaried, representative will answer your questions and if you wish, estimate your payments and explain the product features. If you wish to purchase an ELM Income Annuity, a written proposal will be sent to you for your approval along with an application.

You control the sales process by deciding when to call the toll-free number for more information. No one will phone you unless you request a call.

You will also find additional information on current rates for the ELM Income Annuity at www.principal.com/retirement/incomeannuity/elm/ or by calling 1-877-210-5565 ext. 356.

Before you call, you may wish to think about the following issues:

Who are the people that will receive the income payments? There can be either one or two individuals. For each, you need their gender and birth date to have the income payments estimated.

Do you wish to provide for income benefits to a survivor? If there are two annuitants, consider what percentage of the payments should continue to the survivor, in the event one dies (50%, 75% or 100%). The most popular choices are 50% and 75%.

What’s the income start date? Consider when you need the income benefit to start. It can start immediately or you can delay it for up to 12 months.

How long do you want income payments to continue? They could continue for a specified period of years (10, 15 or 20 years) or for life. Most of the benefits of an annuity in retirement, discussed in the Retirement Research section of this website, apply to the lifetime annuity.

Are you comfortable with a contract that pays no potential death benefit to your heirs in the event all annuitants die prematurely?

• Yes — Income payments will be higher if there is no death benefit,
• No — Consider using the death benefit provision. You select what percentage of the premium, between (10% and 100%), is paid to the beneficiary in the event of death of the annuitants, and you select whether that dollar amount should decrease by either 5% or 10% per year.

Carefully consider how you will deal with future increases in the cost of living caused by future inflation.

Inflation Protection choices for your income payments:

• No inflation protection: This maximizes your starting income for a given premium; however, you will need to anticipate the impact of inflation on your purchasing power, by relying on the balance of your retirement savings or by decreasing your spending in the future.
• Fixed protection: In future years, income payments increase by a fixed percentage that you select (1% to 5%). Remember, inflation may be higher or lower than the percentage you select, but you know exactly what your future income payments will be for as long as you live.
• Full inflation protection: This means that in future years, income payments will increase on an annual basis to track the cumulative change in the Consumer Price Index-Urban (cpi-u) since your first income payment, measured annually. If the change in the cpi-u is negative for a year, the income payment will remain the same, with the decrease being offset against positive changes in the cpi-u in the future.

If you choose an inflation protection feature, your contract’s starting income payments will be significantly lower, for a given amount of premium, compared to level fixed income payments, without inflation protection. But since you’ve helped protect yourself against inflation, your payments in the future will increase according to the protection option you’ve selected.

The Elm Income Annuity is issued by Principal Life Insurance Company, a member of the Principal Financial Group®, Des Moines, IA 50392. ELM Income Group^sm is not affiliated with any member of the Principal Financial Group.

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