Guaranteed Lifetime Income

The attraction of variable annuities is the ability to invest among a wide variety of mutual funds with the investment gains tax-deferred until withdrawn from the annuity at a later date.

Now almost all annuity companies offer "living benefits" which can be added to the basic contract for an additional fee. One of the most popular living benefits is the guarantee of lifetime income which cannot be reduced by poor performance of underlying investment selections.

The company that we prefer (rated A+) has a guarantee that 5% of the "protected withdrawal value" will be paid to the owner for life (or to the owner and surviving spouse) regardless of the performance of the investments selected by the owner. The protected withdrawal value is the starting value of the account plus gains from investments. This particular benefit locks in gains on a daily basis - in other words, the highest daily value of the contract becomes the "protected withdrawal value" upon which the 5% annual cash flow is calculated.

Therefore, if the investments in the annuity do well, it is possible for the "protected withdrawal value" to rise and "lock in" a higher and higher cash flow over time. Once this higher value is locked in, the 5% cash flow cannot be reduced over the lifetime of the owner(s), even if the investment value of the contract is reduced to zero.

Obviously, it is better to have superior investments in this contract, because in order to increase the protected withdrawal value over time the investments must exceed the 5% withdrawal rate and the expenses of the annuity contract. Alpha uses The FormulaTM to select investments for this annuity. Our "normal" policy is 40% bonds, 60% The FormulaTM (see The FormulaTM).

What if you don't need the income now? In that case, the benefit causes the protected withdrawal value to increase a minimum of 6% per year until the first withdrawal. Once again, if the underlying investments cause the investment value of the account to increase more than 6%, the protected withdrawal value is locked in at the highest daily value of the contract.

Alpha offers this product in some states through an affiliated broker-dealer (since these annuities are securities). Alpha's management fee is covered by the fee paid to the broker-dealer by the annuity company.

For more information, including a prospectus, send us your contact information below, or call us directly at 877-229-9400

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