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© 2013, AnnuityStraightTalk.com ** Bryan J. Anderson & Nathaniel M. Pulsifer ** 800-438-5121 P. 2

Product Details Report: Hybrid Annuities

Table Of Contents:

1. Why This Report 2. Who Is Annuity Straight Talk? 3. What Are Hybrid Annuities 4. Overview- The Complete Picture 5. Case Studies: Using Hybrid Annuities 6. Deconstructing The Hybrid Annuity

a. Index Annuity Basic Function b. Caps, and Participation c. Account Crediting Methods d. Income Riders and Fees e. Account Value Vs Income Benefit Value f. Rollup Rate, Bonus Rate and Payout Rate g. The Hybrid Annuity- Full Illustration h. Additional Details: Surrender Charges, Free Withdrawals, LT Care, Death Benefit

7. Choosing A Hybrid Annuity 8. Further Resources 9. Your Next Steps

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Why This Product Detail Report

Investing and growing your money is a topic beaten to death by the main stream media and Wall Street. There are plenty of people who can take risks, pick stocks, read charts, and analyze a balance sheet.

What they all have in common is that they can blame ‘the market’ when you lose money. Well, we are decidedly different. We deal in principles- long standing financial truths, and not

short term, one trick tactics, tricks or flash in the pan products. We set you up for a 100% probability of success... we deal in guaranteed outcomes... we deal in

certainty. It’s a totally different approach and you owe it to yourself to give it serious consideration. This detailed report is a complement to our “Retirement Income The Right Way” report and is

meant to expand on this particular product. We work with a range of annuity products. This particular product may or may not be appropriate

for you, so be sure to contact us to get one on one assistance understanding your needs and devising an optimal strategy appropriate to you.

To Get Started With Us, Visit http://www.annuitystraighttalk.com/members/strategy/

Or Call 800-438-5121

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So Who Are The People At Annuity Straight Talk?

Annuity Straight Talk is a collaboration of Bryan J. Anderson and Nathaniel M. Pulsifer. They are appointed with a wide range of Life and Annuity companies and are experts in a diverse range of guaranteed strategies. They build optimal retirement income plans, founded on guarantees from market leading carriers, for their clients around the United States.

Bryan J Anderson

Bryan Anderson is a multi-state licensed insurance producer and a career finance specialist. With Mr Pulsifer, he started Annuity Straight Talk to bring his unique views on guaranteed retirement income and planning to a wide audience. He enjoys working with investors around the US from his offices in Northwest Montana.

To Learn More About Me, Click Here:

Nathaniel M. Pulsifer

Nathaniel M. Pulsifer is a multi- state licensed insurance producer and retirement income expert. He builds plans for clients that produce financial freedom and security, and that work even when the markets tank. His clients enjoy their retirement with income annuities that offer the optimal combination of Safety, Flexibility, Profitability, and Longevity specific to their needs.

To Learn More About Me, Click Here:

What Annuity Straight Talk Can Do For You

We work with guarantees. A guaranteed floor that produces income now or income later is the key to retirement security.

We create optimal retirement income plans that produce this financial freedom and security, and

our plans are guaranteed to work even when the markets tank. But there is no silver bullet. There is no one-size fits all financial product that is right for everyone. We can help to find what’s right for you, and balance your needs for safety, flexibility, profitability, and longevity to craft your optimal plan.

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What Are Hybrid Annuities?

‘Hybrid Annuity’ is a catchall term for an annuity contract with a combination of benefits. A ‘hybrid annuity’ is not a specific kind of annuity per se, such as a Fixed Annuity, Immediate Annuity, etc.

Rather, a hybrid annuity has contractual appreciation elements, lifetime income benefits, death

benefits and long term care benefits, all rolled into one. It is a collection of benefits rolled in to one contract that can be a very powerful retirement tool.

But like a computer that can do 250 highly complicated processes at once, it may be overkill if you only need one thing done very well.

The purpose of this report is to explain the moving parts of these contracts in detail so that you can

make an informed decision about a contract you are considering, to truly know if it’s appropriate for your needs.

What Annuities Underpin a ‘Hybrid Annuity’ Contract?

Hybrid annuities have appreciation, account value, and lifetime income benefits. These benefits are usually attached to underlying contracts as ‘riders’.

The most common annuity contracts that are used in combination with riders to create a hybrid annuity are Index Annuities and Variable annuities, and both with Lifetime Income Riders.

Index Annuities

Please note, Index Annuity, Fixed Index Annuity, and Equity Indexed Annuity, all mean the same thing. These are all the same insurance product, but with different labels. Acronyms you may see for each are FIA, EIA, and sometimes IA.

Our Index Annuity Product Detail Report explains these contracts in detail. This report will

abbreviate some details, so be sure to get a thorough understanding with that report also.

Variable Annuities

Variable Annuities with lifetime income riders are another type of annuity in the hybrid annuity

marketplace, although they are less frequently identified as ‘hybrids’. Variable annuities generally incur high fees and are sold through securities firms and are securities

products. We at Annuity Straight Talk do not sell securities or Variable Annuities but we will discuss Variable Annuities in this report in the interests of general information.

You can learn more in our Variable Annuity Product Detail Report. Throughout this report, we’ll refer to Variable Annuities occasionally but the focus will be primarily

on Index Annuities with Lifetime Income Riders as they are the primary type of annuity that underpins products marketed as ‘Hybrid Annuities’ in the marketplace today.

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Product Overview: The Complete Picture

Lets go top to bottom on an index annuity with lifetime income rider- your typical hybrid annuity. This benefits oriented overview is 100% factual, but has a marketing focus. It will put the product in context and identify the terms that will be expanded on later in this report.

****

A hybrid annuity offers the potential for market based appreciation, protection from market volatility, and the benefits of lifetime income, all in one product. Hybrids also offer liquidity for emergencies, and accelerated payouts for home health care issues.

An Index Annuity with Guaranteed Lifetime Income Rider, or ‘hybrid annuity’, is invested

conservatively. Earnings from the annuity are invested by the issuing Insurance Company in a way that credits you a portion of the gains in a market index, such as the S+P 500 or the Dow Jones. These gains can increase your account value, but losses in the market do NOT affect your account.

You have no volatility and no risk of loss to your money in an index annuity. Hybrid annuities also offer lifetime payout options, without ‘annuitizing’ your assets and forfeiting

your money. To calculate the lifetime income amount, the Insurance Company grows an ‘income account’ every year that you leave your money invested. The longer you leave your money invested, the larger this income account grows.

When you decide to start taking lifetime income, the company uses a ‘payout rate’ to calculate

your lifetime income. For example, if you started with $100,000, and your income account rolled up at 7% per year for 10 years, your income base would have grown from 100,000 to roughly 200,000 in that time. The payout rate depends on your age when you start income, but lets assume it’s a 6% payout. Rollup Rates and Payout Rates vary with each carrier.

When you decide to start the lifetime income, you receive 6% of the 200,000, or $12,000 per year,

for life. Of course, this income can be a joint payout too for you and a spouse. Even if your actual account value drops to $0, the lifetime income continues.

One of the many benefits is that if you die after only a few years of income, your heirs will get

whatever is in your account value. This is a huge advantage over other kinds of annuities. A few other perks of these contracts include: provisions to increase your income if you have a Long

Term Care or disability issue, enhanced death benefits for your heirs, and provisions to allow withdrawals of a portion of your money each year for liquidity needs. Some also offer a signup ‘Bonus’ credit to your Income Account when you open a new account.

One of the best aspects of hybrid index annuity contracts is that they come with very low fees. The

lifetime income rider is typically just 1% of the account per year. And while there are no other fees, you may be subject to surrender schedules just as you would have with a CD. Overall, the low fees are a major advantage over expensive Variable Annuities.

In sum, Hybrid Annuities offer potential appreciation, zero volatility, lifetime income, together

with liquidity options and long term care benefits. They are a great option for investors seeking safety, security, income, and flexibility in retirement.

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Sample Planning Cases Using Hybrid Annuities

Sometimes a real example is much more effective than any facts and details. So before we jump to the details, let us show a few example cases where we used a hybrid annuity as part of a client’s optimal plan. Because of the diverse nature of the benefits, you can achieve different objectives with this sort of annuity.

***

Client: Larry S. Situation: Mid 60’s seeking joint life, lifetime income with a home health care rider as wife could not

get Long Term Care coverage. Concerns: Larry had a clear idea of the Hybrid Annuity benefits he wanted, and had seen many

options from other agents. On his initial call to us, it became clear he’d been shown low credit quality carriers. We offered a more reasoned analysis and a higher credit contract that accomplished his goals.

Assets: $100,000 investment Solution: We located an excellent Fixed Index Annuity with Lifetime Income rider and LT Care rider

available in his state. Complicated rollover of multiple accounts, but we got it done.

*** Client: Janet K. Situation: Mid 60’s, Single woman, seeking lifetime income. She had no idea how to go about

planning for retirement. Concerns: Converting assets to income. Social security would play a big part but there was no clear

answer telling her when the right time to take it would be. Janet wanted nothing to do with the market and simply wanted to protect what she had so she could approach the last few working years she has with some certainty.

Assets: $100K IRA and $50K cash Solution: Rolled IRA into and index annuity that would protect her assets and allow for lifetime

income. She has since added another $20K to her cash reserves and has decided to look for an additional annuity to produce a cash flow and return.

As a result of this planning she is actually going to retire two years earlier than expected.

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Deconstructing the Hybrid Annuity

Now that you’ve seen the one page overview and a few planning cases, lets take a hybrid annuity apart piece by piece to understand how they all work. Those pieces are:

Index Annuity Basic Function: o Upside Potential, Downside Protection

Caps, Spreads, and Participation Rates: o How Much Interest You Are Credited With

Crediting Methods: o How To Calculate Index Gains

Income Riders: o Lifetime Income Attached To The Index Annuity

Account Value Vs Income Benefit Value: o How Lifetime Income Is Calculated

Rollup Rate, Bonus Rate And Payout Rate: o How Much Income You Get

Liquidity Options, Free Withdrawals: o Flexibility Options

Tying It All Together o Illustration Of Benefits

Additional Benefits: o Such As Home Health Care, Death Benefit, Minimum Guarantee, Etc

Index Annuity Basics

Index annuities are nothing more than fixed annuities with a different method of crediting interest.

With a fixed annuity, the contract owner receives a stated rate of interest each year. With an index annuity, the appreciation rate is calculated based on growth in an outside market

index. If the index goes up, the contract makes money. But if the index goes down, the principal is protected and the contract does not lose value.

This is possible because the Insurance carrier does not directly invest your money in the markets.

Rather, it invests in safe instruments like bonds and commercial mortgages. It uses the income from these safe investments to purchase options in the market index.

If the markets rise, the options make money, which leads to a credit to your account. If the market

falls, the options may expire worthless, in which case the company has only wagered your interest income. While you will not have a gain in that period, the principal remains safe and protected.

Be sure to explore the Index Annuity Product Detail Report for more details. Of course, we’re ready to assist you picking the best contract for your needs. Simply give us a call.

To Get Started With Us Call 800-438-5121

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Caps, Spreads, And Participation Rates

There are three different ‘pricing controls’ an insurance company can place on a contract that are

specifically meant to apply an interest credit that’s in line with the net gain from the option. Depending on the company or product you are considering, you may see one or more of these terms.

Participation Rate- This specifies the percentage of the index growth available for credit to the

account. Example- a 10% gain in the S&P Index in a contract with a 50% participation rate means you would be credited with a 5% gain to your account value.

Cap Rate- Another option is to have a stated maximum level of interest, or a cap, available for

account crediting. Example: A 5% cap rate means if the index goes up 10% and you have a 5% cap, you will be credited the 5%.

Spread- This is a fee imposed on the index credit that represents overall operating expenses for the

insurance company. Example: In a year when the index gained 10% and you have 50% participation and a 2% spread, you would have 50% of the gain- 5%- and that 5% credited gain would be reduced by a 2% ‘spread’ charge. You would net 3%. In most cases, in years where there is no index gain, no spread is assessed, so you can’t go backwards.

Pricing Controls Summary:

Every annuity will apply one or more of these pricing controls. They have only so much income from

the ‘fixed’ account to work with as an option investment, so it’s only logical that they would limit the amount of gain.

Remember, your money is NOT invested directly in the markets, and NOT subject to risk of loss. So

don’t think that the insurance company is ‘taking’ anything away from you with their caps, participations, and spreads.

You are buying appreciation potential, AND downside protection. Downside protection necessarily

comes at some cost.

Of course, we’re ready to assist you picking the best contract for your needs. Simply give us a call.


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Crediting Methods

Total interest credit is subject to any one or more of the pricing controls previously mentioned. But

how does the company determine the gain in the underlying index? Every index annuity comes with one or more crediting methods. There are the various ways- and

they vary from company to company- that the gain in the underlying index is credited to your account. I’ll focus on the most common methods.

Annual Point to Point- The beginning and ending index value are used to calculate the total gain or

loss. For example, if the S&P 500 starts the year at 1000 and ends at 1100, the interest credit would be 10%, subject to the participation rate, cap rate or spread. If the annual return is 0% or less, no interest will be credited. So, while the option contract that gives you participation in the market expired ‘out of the money’ the underlying principal value, guaranteed by contract, cannot lose value.

Monthly Point to Point- Same as above, but the period is a month rather than a year, and also

subject to the participation rate, cap rate or spread. Monthly Average- Each monthly anniversary, the level of the index is recorded. Those levels are

added up at year’s end and the total is divided by twelve and compared to the index level at the beginning of the year. The difference represents the gain or loss for the year, subject to the participation rate, cap rate or spread. If the annual return is 0% or less, no interest will be credited. Again, while the option contract that gives you participation in the market expired ‘out of the money’ the underlying principal value, guaranteed by contract, cannot lose value.

Monthly Sum- The gain or loss in the index every month is recorded. Each value is totaled to

calculate the annual gain or loss, subject to the participation rate, cap rate or spread. If the annual return is 0% or less, no interest will be credited. Again, while the option contract that gives you participation in the market expired ‘out of the money’ the underlying principal value, guaranteed by contract, cannot lose value.

What Is The Best Crediting Method?

Extensive studies attempt to determine which crediting method is most profitable. No single method has shown total superiority as each works well in different market conditions.

Most Index Annuity contracts offer multiple crediting methods and ways to change allocation for

portions of the account between different methods. Choice of crediting method will depend on your view of where the market is going. But since no one

really knows for sure, the prudent strategy is to divide your premium investment between the various crediting methods available in your contract.

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Hypothetical Illustration Table:

Lets look at a table of a basic index annuity. The starting investment of $100,000 has a 0% floor rate, meaning there is no minimum guaranteed growth. Some offer a minimum, others do not, so be sure to ask us for details of the specific contract you are considering.

We used the actual returns for the S&P 500 Index for the years 2001 thru 2010. This was a volatile

‘Lost Decade’ for stocks, but it illustrates the value proposition of an index annuity extremely well. There are columns for the year, the Index performance, and the Annuity performance. For the

moment, we’ll assume no fees for your investment in either the index, or the annuity. Other assumptions are a 5% annual cap.

Year S&P 500 Hypothetical

Market Annuity Interest

Credit Annuity Account

Value

Performance 5% Annual Cap 0% Min.

$ 100,000 $ 100,000

2001 -9.11% $ 90,890 0% $ 100,000

2002 -11.98% $ 80,001 0% $ 100,000

2003 -22.27% $ 62,185 0% $ 100,000

2004 28.72% $ 80,045 5% $ 105,000

2005 10.82% $ 88,705 5% $ 110,250

2006 4.79% $ 92,954 4.79% $ 115,531

2007 15.74% $ 107,585 5% $ 121,308

2008 5.46% $ 113,460 5% $ 127,373

2009 -37.22% $ 71,230 0% $ 127,373

2010 14.87% $ 81,822 5% $ 133,742

Index Annuity Summary:

Referring to the table above, you can see that if you were invested in the S&P 500 Market Index, you would have swung down to $62,185, up to $113,460, then back down to end a wild ride at $81,822.

However in an index annuity you are protected from the down market, and you participate in the

upswing. Your ending account value is a respectable $133,742. The Index Annuity delivered the promised protection from loss, and the participation in gains. Of course, we’re ready to assist you picking the best contract for your needs. Simply give us a call.


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Income Riders

The Lifetime Income Rider is an optional attachment to many contracts. This is the point where an

Index Annuity (or a Variable Annuity, for that matter) becomes a ‘hybrid annuity’. When lifetime income riders are attached to the underlying investment, the annuity takes on new benefits, and a little more complexity.

With an income rider, a calculation starts at the beginning of a contract, and accumulates for each

year the annuity is invested and accruing. This ‘Income Account Value’ and the ‘Payout Rate’ is how the Insurance Company calculates your lifetime income when you turn on the income option.

The income account may be phrased as an ‘income account’, ‘benefits base’, or other terms.

Acronyms are usually IAV and BB. We’ll use Income Account through this report.

Account Value Vs Income Account Value

A key element to clarify in our discussion of hybrid annuities is the difference between your actual

account value, as opposed to your income account value. These are two very different things that are frequently confused by investors and advisors alike. If anyone is telling you that a hybrid annuity they are selling is ‘guaranteed to go up by 7% per year’

they are flat out lying to you. Let this tripwire be your gauge of the integrity of any sales person you encounter- if they mess this one up, what else do they not understand?

If you want, go back up to the product overview page where I gave a marketing focused description

of a Hybrid Annuity. Reading carefully, it may seem like the annuity account grows at 7% per year, but that is not what it actually says. It’s the Income Account that ‘Rolls Up’ at 7% per year.

The account value is YOUR money- real dollars that may appreciate (or lose value, in the case of a

Variable Annuity). That’s the core of the annuity as an investment product. An Income Account Value is NOT real dollars. It’s just a number that the insurance company uses to

calculate future payout rates from. It’s the bridge between the investment, and the income insurance.

Income Rider Fees

The income Rider on a typical Index Annuity incurs an annual fee of ranging among carriers between .75% and 1% of the account value per year. Compare this to the fees in Variable Annuities, averaging 3% to 5%, and this lifetime income option is a good value.

Index annuities marketed as lifetime income products with this rider may have lower caps and

participation rates, however. Be sure to know your goals going in- if you are looking for safe appreciation only, without the lifetime income, it may be more lucrative to buy an index annuity with higher caps and participation that does not offer a lifetime income rider.


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Rollup Rate: How An Income Account Value Works

Income accounts generally start with the same value as your premium investment. If you invest $100,000 at the start, your Income Account will also start with 100,000. Notice, there is no “$” in front of this number. Companies may also use a Bonus that will add to your Income Account at the contract start. More on the bonus in just a moment.

With a $100,000 investment, just the Income Account calculation rolling up at 8% per year would

look like this:

Income

Account Value

Year Rollup: 8%

100,000

2001 108,000

2002 116,640

2003 125,971

2004 136,049

2005 146,933

2006 158,687

2007 171,382

2008 185,093

2009 199,900

2010 215,892

Bonus Rate

Some companies additionally offer a ‘Bonus’ on new accounts. It varies from company to company, but usually, the bonus is credited to your Income Account Value. For example, a $100,000 investment in a contract with a 10% bonus would have an Income account value of 110,000 on day one. This 110,000 would grow by the rollup rate each year. Using the table above with a 10% bonus, it would look like this:

Income Account With

10% Bonus

Year Rollup: 8%

110,000

2001 118,800

2002 128,304

2003 138,568

2004 149,654

2005 161,626

2006 174,556

2007 188,521

2008 203,602

2009 219,891

2010 237,482

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Payout Rate:

The payout rate is an aged based percentage of the Income Account Value that determines your lifetime income amount. In most contracts, once you start taking income, the rollup of the Income Account stops.

Some companies allow you to start and stop income a few times, and reinstitute the rollup when

you are not taking income, but this is not available in all contracts. In the chart below, I show the rollup rate from above, an aged based Payout Rate that gets better

the older you get, and the corresponding annual income amount. You could commence a lifetime income of the amount in the right hand column in any year, but once you start, the rollup stops.

Your payout rate will vary depending on the carrier and your current age. Below is just for

illustration purposes.

Income Account With

10% Bonus Payout

Rate Annual Income

Year Rollup: 8%

110,000

2001 118,800 4% $ 4,752

2002 128,304 4% $ 5,132

2003 138,568 4% $ 5,543

2004 149,654 4% $ 5,986

2005 161,626 4.5% $ 7,273

2006 174,556 4.5% $ 7,855

2007 188,521 4.5% $ 8,483

2008 203,602 4.5% $ 9,162

2009 219,891 4.5% $ 9,895

2010 237,482 5% $ 11,874



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Hybrid Annuities: Tying It All Together

Lets put all these charts together to look at a typical hybrid annuity. Here we have a chart showing the Account Value, the Income Account Value, the Payout Rate, the Lifetime Income, and additional columns for an Enhanced Death Benefit and a Long Term Care Benefit.

The LTC benefit and the Death Benefit are explained in the next section.

Year S&P 500

Interest Credit Account Value Death Benefit

Income Account

With 10%

Bonus Payout

Rate Lifetime

Annual Income LTC Benefit

5% Annual

Cap 0% Min. 4% Rollup:

8% 2X

$ 100,000 $ 100,000 110,000

2001 -9.11% 0% $ 100,000 $ 104,000 118,800 4% $ 4,752 $ 9,504

2002 -11.98% 0% $ 100,000 $ 108,160 128,304 4% $ 5,132 $ 10,264

2003 -22.27% 0% $ 100,000 $ 112,486 138,568 4% $ 5,543 $ 11,085

2004 28.72% 5% $ 105,000 $ 116,986 149,654 4% $ 5,986 $ 11,972

2005 10.82% 5% $ 110,250 $ 121,665 161,626 4.5% $ 7,273 $ 14,546

2006 4.79% 4.79% $ 115,531 $ 126,532 174,556 4.5% $ 7,855 $ 15,710

2007 15.74% 5% $ 121,308 $ 131,593 188,521 4.5% $ 8,483 $ 16,967

2008 5.46% 5% $ 127,373 $ 136,857 203,602 4.5% $ 9,162 $ 18,324

2009 -37.22% 0% $ 127,373 $ 142,331 219,891 4.5% $ 9,895 $ 19,790

2010 14.87% 5% $ 133,742 $ 148,024 237,482 5% $ 11,874 $ 23,748

You will receive ONE of the amounts in any given year in the colored columns.

In any year, the Account Value (prior to surrender penalties) is in the BLUE Account Value o It is available to you if you surrender the contract.

If you pass away, the enhanced GREEN Death Benefit will be received by your heirs, if it is greater than the Account Value

In any year, you may commence the PINK Annual Lifetime Income. When income starts, the Income Account will stop rolling up and growing

You will receive the YELLOW LTC Benefit in income, shown annually, if you are diagnosed with a qualifying Long Term Care issue.

The Income Account Value, rolling up at 8% and with a 10% bonus, is not colored. This is not money you could receive, it is only used to calculate the Lifetime Income at the Payout Rate.

In this hypothetical illustration, if you invested $100,000 in an index annuity with lifetime income

rider in 2001, you would have avoided all the downs, captured some of the ups, and could elect in 2010 to take either $133,742 as a lump sum, or take a full $11,874 per year, for life! Not a bad deal considering the state of the marketplace!

Hybrid Annuity Summary:

In a volatile market, a hybrid annuity offers protection from losses, participation in gains, and the security of lifetime income. It also offers enhanced Death and Long Term Care benefits, all while offering liquidity through free withdrawals.

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More Contract Options and Benefits:

Minimum Guaranteed Surrender Value: (MGSV)

Most companies offer a minimum guaranteed value to your contract, which is often illustrated as a

column that includes a surrender charge. So if you have a 10% surrender penalty in year one on a $100,000 investment, your minimum surrender value would be shown as $90,000. To save space, this was not shown in the chart earlier however it would be shown abbreviated as MGSV in a product illustration.

Surrender Charges:

Every Insurance carrier incurs costs for selling products and servicing accounts. They can recoup these costs in two ways- one is through annual fees, the other is Surrender Schedules

Typically with Index Annuities with lifetime income riders you are entering into a long term

relationship with a company, and they have long surrender schedules. The Carriers do not want you to surrender the contract- rather, they want to keep the premium and pay it out over time thru the income rider.

Therefore, it’s common to see surrender schedules of 8 to 12 years, and that step down with each

passing year. For example, a 12 year surrender schedule may start at 12% in year 1 and go down by 1% each passing year, so that in the 10th contract year you would have a 2% surrender penalty, and by year 13, there would be no surrender charge.

The surrender value of the account is your actual account value, less this surrender charge if any. When examining a hybrid annuity, be sure you’re taking the long view with this money. Of course, if

you must surrender it you can, but the surrender penalties are lengthy and can be costly.

Free Withdrawal Options:

With nearly all annuities, you do have the option to withdraw a portion of your actual account value penalty free each year. The amount of free withdrawal varies between contracts, and even varies state by state among the same contract.

Typically, a 10% free withdrawal is permitted each year without penalty. So on a $100,000

investment that experienced no account growth, you could withdraw $10,000 without penalty in year 2. However, on hybrid annuities that carry a lifetime income withdrawal benefit rider, if you take out

10% of your account value, the company will also lower your Income Account Value by a corresponding 10%.

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Enhanced Death Benefit

Some carriers offer an enhanced death benefit, where if you die, your actual account value may have a payout to your heirs in excess of the actual value.

While this is not the same as a guaranteed minimum surrender value, because you cannot get the

money while alive, it is a nice security for your heirs if you pass away early. Typically, contracts that offer the enhanced death benefit offer a guaranteed growth rate of 4%,

though it varies among carriers. That would apply a 4% per year growth to your account value and pay the greater of the enhanced death benefit, or your actual account value, upon death.

Long Term Care Provisions

Typically, hybrid annuities that have a suite of benefits as we have been describing in this report also offer an enhanced payout rate if you are diagnosed with a critical illness or long term care issue. Usually this requires some medical confirmation that some of your critical ‘Activities of Daily Living’, or ADL’s are compromised.

While the LTC rider is a nice added feature, and generally comes at no additional cost, it is not a true

replacement for Long Term Care Insurance which generally has higher payments and lower standards. LTC care is truly insurance, though there are LTC annuities also.

For our purposes in this report, as a rule of thumb most hybrid annuities offer an enhanced payout

of 1.5x to 2x your lifetime income amount if you have medical proof that 2 or 3 of your ADL’s are compromised.

Be sure to call us for details about LTC care riders in your Hybrid Annuity. For some of our clients it

was a major decision factor as they were otherwise ineligible for LTC coverage.

Contract Options and Benefits Summary:

There are many components to a hybrid annuity. It truly is a compilation of benefits- it’s an investment, insurance, income, and safety, rolled into one.

Choosing a hybrid annuity is actually quite easy. Give us a call- using your goals, State of residence,

and age, we will screen all the available products in the marketplace and select the best for you. We’ll even do this live on screen with you - you can see the database of all the options and see how

we select the best for you to choose. Don’t hop from free lunch to product pitch to advertisement, getting confused along the way. Let

the experts help you the right way- transparently, openly, and with you understanding each step of the way.


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How To Select Annuities- 5 Critical Decision Tools

When selecting annuities, we’ll make the presumption that you have a goal in mind. Remember

your “Goal Statement”? That can be something like, ‘immediate income, starting now’ or ‘$5000 per month for life starting in 2025 when I plan to retire, increasing 3% annually’ or simply ‘safe growth for 10 years, and I’ll figure out income then’. Each of these goals is valid and feasible.

So how do you analyze the various contractual provisions and options to arrive at the best contract

to accomplish the goal? There are 5 key areas to consider when evaluating an annuity, and these decision points cut across

product lines and help you level the playing field. With Hybrid Annuities, these decision factors are:

1. Surrender Schedules 2. Growth Rate Components

a. Cap and Participation Rates For Index Annuities b. Guaranteed Income Riders And Payout Rates

3. Free Withdrawals 4. Bonus Rates 5. Issuing Company Credit Rating

If you look to these key areas, you can determine in a quick glance if a contract is a good or a

bad deal. For example, a contract with high lifetime income payout rates and a high bonus rate may be

smokescreen for low participation rates compared to its peers, marginal credit rating, and long surrender schedules. Watch out for this one.

However, a high quality company may offer generous surrender schedules and withdrawals, and

have a very high credit rating. This carrier offers its strength and safety first and foremost, and does not need to trap and lock you in.

These 5 key areas are most useful when comparing apples to apples. In other words, once you have

selected a course of action or a particular collection of benefits that suits you, you can compare two carriers against each other with these key points to pick a winner.



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Further Resources On Index Annuities

The real benefit that makes index annuities competitive is the ability for the account value to flat-

line when the market experiences a downturn. In turbulent markets like we have had recently, having potential appreciation with downside protection is critical.

The reduced volatility makes indexed annuities almost non-correlated to market risks. You get some

of the ups, with none of the downs. In fact, there is a strong argument for index annuities being positioned as the perfect safe money investment vehicle during a highly volatile economic climate.

Recently the Wharton School released a white paper that studied actual returns of index annuities

since they hit the market in 1995. This report gives a fair comparison between index annuities and various market indexes. The results show that although the annuities were never meant to compete with actual market returns, they have performed favorably in most years.

The report is excellent because it’s useful to cast aside polarizing opinions and get down to the

concrete facts. The Wharton report can be found by CLICKING HERE. Also, Sheryl Moore of AnnuitySpecs.com is a great factual resource for independent market analysis

of index products from someone who does not sell or endorse any particular annuity contract or company.

http://www.annuitystraighttalk.com/FreeDownload/Wharton%20RealWorldReturns.pdfhttp://www.annuityspecs.com/

AnnuityStraightTalk


Your Next Step

Now that you understand index annuities, and the lifetime income riders that make them into ‘hybrid annuities’, and you understand our approach using guarantees as the floor of a responsible financial plan, you really have two choices.

You can do nothing with this information, and let the future unfold. Who knows, you might get

lucky. But the risks of losing your investments in the market, or being forced to sell assets in a bad market to fund your retirement, will remain squarely on your head.

The smart choice is to use the information you now have to make a proactive decision to secure

your financial future. Call us to discuss your situation. We will explore the options that are appropriate to your needs.

We’re not a one trick, one product shop. The right annuity makes sense for many people. But one specific product type or carrier definitely

does NOT make sense for all investors. Let us help you to find what’s right for you. Above all, we’re not afraid to tell you when NOT to buy an annuity either. For some people with

sufficient guaranteed income already in place, there is no need for more! The ball is in your court, and we look forward to hearing from you. Yours, Nathaniel M. Pulsifer & Bryan Anderson Annuity Straight Talk

1-800-438-5121

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