Selling Individual Disability Insurance to Small Business Owners

1. Selling Individual Disability Insurance to Small Business Owners For producer use only. Not for use with consumers or in New York.

2. Market Profile Small businesses are key to the nation’s well-being. They account for a significant share of the U.S. economic production. At last measurement, this U.S. market segment was represented by more than 28 million small businesses.* *Small Business Association Office of Advocacy. Frequently Asked Question. September, 2012.

3. The Need For Disability Insurance

4. The Protector SeriesSMIndividual disability insurance The disability insurance* The Standard offers to business owners is: • Protector PlatinumSM, Protector+SM and Protector EssentialSM Individual Disability Income Insurance • Business Overhead ProtectorSM Disability Insurance • Business Equity ProtectorSM Individual Buy/Sell Funding Insurance • To see which products are available for sale in your state, please see the The Protector Series States Availability List.

5. Individual Disability Income Insurance Provides a monthly income flow that helps offset the income loss in the event an insured experiences a disabling illness or accident and is unable to generate his or her predisability earned income.

6. Individual Disability Income Insurance For Employees When a business has several employees, consider offering voluntary individual disability income insurance. It may be available at a discounted rate, on a multi-life or guarantee issue basis.* * Except Protector Essential which is not available at xdiscounted rates. * The Protector in California

7. Business Overhead ProtectorSM Disability Insurance • Provides reimbursement of business expenses while an owner is disabled • Expenses covered include • employee salaries • employment taxes • rent • lease payments • utilities • business insurance premiums • property taxes • dues

8. Business Overhead ProtectorSM Disability Insurance • Available for businesses with ten employees or fewer. • For occupation classes 3A, 4A, and 5A, Business Overhead Protector includes a Salary Replacement Rider at no additional cost. The Salary Replacement Rider provides coverage for the salary, fees and wages of an individual hired to perform the disabled owner’s work.

9. Business Equity ProtectorSMBuy/Sell Funding Insurance For businesses with multiple owners, buy/sell funding insurance provides a source of funds for the purchase of an owner's interest in the business if the owner is required to sell due to disability. This is important because even with a buy/sell agreement in place, a disability buy-out obligation can hit a business hard if the necessary funds are not readily available.

10. Business Equity ProtectorSMBuy/Sell Funding Insurance This is especially true since the buy-out obligation comes at a time when the disabled business owner is no longer able to contribute time or energy to the success of the business. Many businesses fail to provide for the funding of established buy-out agreements.

11. Business Equity ProtectorSM Buy/Sell Funding Insurance Funding a buy-out obligation with disability insurance serves dual purposes. It provides • a source of funds for the purchase of a disabled owner’s interest in a business • a disabled owner with compensation for his or her equity in the business.

12. Business Owner Incentives

13. Business Owner Rewards Program The Standard recognizes that business owners have special disability insurance needs. The Business Owner Rewards program gives qualifying business owners access to increased individual disability insurance coverage while at the same time enhancing benefits and often reducing premium.

14. Business Owner Upgrade • Upgrades the insured’s occupation class, providing access to increased disability insurance coverage while at the same time enhancing benefits and often reducing premiums.* • The Business Owner Upgrade is available with • Protector+ • Business Overhead Protector • Business Equity Protector • Protector Platinum in Ohio. • It is not available with Protector Essential. *Upgrades are subject to final approval by an underwriter at xThe Standard.

15. Business Owner Upgrade With the Business Owner Upgrade come the advantages higher occupation classes offer. These may include: • Increased benefit amounts • Extended benefit periods • Additional optional benefit riders • Reduced premiums

16. Business Owner Upgrade Business Owners have the opportunity to upgrade their occupation class when they: • own at least 20% of their business and • have been financially successful for at least two years under the current business arrangement, as supported by appropriate business income documentation.

17. Business Owner Upgrade The Business Owner Upgrade is not available to: • medical or dental occupations (2P, 3P, 4P occupation classes), • long haul truck drivers, • those listed under Financial Services, Real Estate, Entertainment Industry or as “No” in the Occupation Classifications section of The Protector Series product guide.

18. More Business Owner Rewards New policy owners of the Business Overhead Protector • automatically receive an upgrade of one occupation class in addition to any increases under the Business Owner Upgrade. • 5A occupations receive a 10% discount on gender-distinct rates. • New business owners receive up to $10,000 monthly benefit.

19. Newly Self Employed Business Owners • Newly self-employed business owners with work experience in the same professional capacity may be eligible for individual disability income insurance coverage based on their historical W-2 earnings. • Insurable income is based on 75 percent of each individual’s final, annual earnings rate as a non-owner employee in the same profession as his or her new business. This is available to occupation classes 5A, and 4A, as well as to 4P, 3P and 2P physicians. • Maximum individual disability income Issue & Participation Limit is $10,000 for 5A and 4A occupation classes, and as published for 4P, 3P and 2P physician occupation classes in The Protector Series Product Guide.

20. Newly Self Employed Business Owners • Other occupation classes may also be eligible with a maximum IDI Issue & Participation of $1,000. • The Standard reserves the right, on a case-by-case basis, to request additional financial information or modify its underwriting approach. • This program is not available to those listed as “No” in the Occupation Classification List in The Protector Series Product Guide.

21. Newly Self Employed Business Owners To be eligible the business owner: • established a new business within the past 12 months • is actively involved in the operation of the business • is actively generating revenue at the time of underwriting • has been employed in the same professional capacity for at least three years as a non-owner employee immediately before becoming an owner, earning at least $50,000 annually • has provided documentation of two years’ prior income. Bonus income may be included depending on occupation, bonus history, and how the bonus was generated. Fluctuating income may be averaged.

22. Earned Income Enhancer The Earned Income Enhancer is a complement to the Business Owner Rewards Program because sometimes the amount of income earned may not accurately reflect the amount of income that needs to be protected. It is available with Protector Platinum, Protector+ and Protector Essential.

23. Earned Income Enhancer The Earned Income Enhancer allows business owners to qualify for up to $2,000 in additional coverage within issue and participation limits than non-business owners in the same occupation class.

24. Earned Income Enhancer Business Owners must: • own at least 20% of the business • have been financially successful for at least the last two years under the current business arrangement, as supported by appropriate business income documentation.

25. Earned Income Enhancer • To determine the coverage available with the Earned Income Enhancer, use the calculation below: Earned Income x 120% • The amount of additional coverage cannot be greater than $2,000 per month and the total coverage must fall within the occupation’s issue and participation limits.

26. Earned Income Enhancer The Earned Income Enhance is not available to • podiatrists, • long haul truck drivers, • those listed under Real Estate, Entertainment Industry or as “No” in the Occupation Classifications List of The Protector Series Product Guide.

27. Premium Discount Options

28. Premium Discounts Premium discounts are provided to help solicit multiple applicants. The types of discounts available are for: • Multi-Life Groups • Business Owners • Guarantee Issue Groups Availability of discounts, and the number of lives required to obtain a discount, may vary by state. The PPMD is available to government employees; others are not. No discounts are available with Protector Essential. Please see the online reference Protector Series Product Guide, form 9251REF SI/SNY * The Protector in California

29. Preferred Producer Multi-Life Discount • A 10% Multi-Life Discount for Preferred Producers is awarded to producers who have placed The Standard’s individual disability insurance policies for five* or more unique individuals. • Please see the Preferred Producer Multi-Life Discount Guidelines, form 17056 for details. * Seven if placed by a sales team pair that splits commission 50/50.

30. Premium Discounts for Employer-Based Multi-Life Groups1 • Employer-Based Multi-Life groups are generally defined as five or more lives employed by the same employer. • Employer-Based Multi-Life groups can be as few as two lives so long as those participating • Are each at least 20% owners of the same business • Purchase policies with combined pre-discounted annual premium of at least $5,0002 • Meet all other provisions related to timing of the Employer-Based Multi-Life discount 1. Availability of discounts, and the number of lives required to obtain a discount, may vary by state. Please see the Multi-Life Discounts State Availability Chart. 2. Or less, if both purchase the maximum benefit on both policies.

31. Business Owner Discount The Business Owner Discount provides 15% savings on gender-distinct rates to qualifying business owners with Protector Platinum policies.1 Qualifying2 business owners • own at least 20% of their business and • have been financially successful for at least two years under the current business arrangement as supported by the appropriate business income documentation 1. Except in Ohio, where the Business Owner Upgrade is available. 2. Not available to medical or dental occupations, (2P, 3P, 4P occupation classes), long haul truck drivers, or those listed under Financial Services, Real Estate, Entertainment Industry or as “No” in the occupations listing in The Protector Series Product Guide, form 9251REF SI/SNY

32. Multi-Product Discount When Protector Platinum is sold in conjunction with Business Overhead Protector disability insurance and/or Business Equity Protector disability buy-sell funding insurance, a 5% discount is applied to the Protector Platinum premium.

33. Discount Options for Protector Platinum Guarantee Issue Mandatory (Gender-Neutral) • 30%, 35% Large Case Discount (100+ lives), or 40% when combined with 5% Cross-Sale Discount with LTD from The Standard Voluntary (Gender-Neutral) • 15% Goal Participation Met Discount, or 20% if combined with 5% Cross Sale Discount with LTD from The Standard Participation Goal varies by case

34. Guarantee Issue Cross-Sale Discount When sold in conjunction with The Standard’s Long Term Disability group insurance, a 5% premium discount is applied to Protector Platinum Guarantee Issue individual disability insurance from The Standard.

35. Benefit Amounts for Guarantee Issue • Benefits may be tax-free • Incentive pay can be covered • Policies are portable and individually owned • There is no offset for Supplemental Social Security or Workers’ Compensation benefits Depending on case profile, the following tables illustrate the monthly benefit amounts that may be offered. Voluntary Mandatory Availability of discounts, and the number of lives required to obtain a discount, may vary by state. Please see the online Protector Series Reference Product Guide, form 9251REF SI/SNY.

36. Summary of Protector Platinum Premium Discount Options for Regularly Underwritten DI

37. Summary of Business Overhead Protector Premium Discount Options

38. Summary of Protector Platinum Premium Discounts for Guarantee Issue 1. Goal varies by case.

39. The Standard • Keeping its promises to its customers since 1906 • Ranks among the top ten disability insurance companies in the nation • Rates 1st among its peers with high levels of customer service, a sound liquidity position and strong financial flexibility* * Peer Comparison: U.S. Specialty Employee Benefit Insurers. xStandard & Poor’s Rating services.