RIDERS OVERVIEW: THE INFLATION RIDER

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WHAT IS INFLATION?

IN•FLA•TIONin’flāSH(ә)n (noun): increases in the price levels of goods and services in the economy over time

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WHY SHOULD YOU CARE?

Inflation levels determine HOW MUCH YOUR ANNUITY WILL ACTUALLY BUY

Interest rates determine HOW MUCH YOUR ANNUITY COSTS TO BUY TODAY

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Inflation and the purchasing power of a dollar move in opposite directions

WHEN INFLATIONGOES UP

PURCHASING POWER GOES DOWN

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An inflation rider protects your annuity income from reductions in purchasing power caused by increases in inflation

An inflation rider essentially increases your future income to account for the inflation that occurs

THE INFLATION RIDER: Known as the cost of living adjustment (COLA)

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5%

4%

3%

2%

1%

0%1995

INFLATION PERCENTAGE PER YEAR

2000 2005 2010

5 YEAR - 2.08%

AVERAGE PER YEAR

10 YEAR – 2.38%

20 YEAR – 2.38%

OVER THE LAST 20 YEARS, ANNUAL INFLATION HAS TYPICALLY BEEN BETWEEN 1% AND 3% AND THE FEDERAL RESERVE TARGETS 2% INFLATION LEVELS.

INFLATION RIDER IN CONTEXT

The options for inflation riders typically include flat increases (for example 1% PER YEAR). The range for these varies greatly across product and insurance companies

Many insurance companies also provide a CONSUMER PRICE INDEX (CPI) RIDER The CPI measures changes in the price level of a basket of goods and services

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CONSIDERATIONS OF INFLATION RIDERS

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In today’s market, the inflation riders kick in once you start receiving income They don’t cover the deferral period

This means, it can be helpful to have your future income incorporate some growth to take inflation over the deferment period into account

Inflation riders will have a cost associated with them – be sure you understand what that cost is

Abaris recommends including a CPI-U INFLATION RIDER in your Deferred Income Annuity

USE OUR ONLINE TOOLS to see what the price of the inflation rider is or contact us for more information

SO WHAT’S NEXT?

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END NOTES

Slide 05: Minneapolis Fed Website, based on Bureau of Labor Statistics CPIU data. Available at:https://www.minneapolisfed.org/community/teachingaids/cpicalculatorinformation/consumerpriceindexandinflationrates1913

Based on fullyear data available as of September 2014.

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DISCLAIMERSThe information contained in this presentation, is provided for general informational purposes as a convenience to Abaris Financial Inc. customers and Internet users and is based upon information generally available to the public from sources believed to be reliable. Although we believe the information provided herein is reliable, we have not verified this information and we do not guarantee its accuracy, completeness, timeliness or availability. Any examples shown in this presentation are purely hypothetical and have been included for demonstrational purposes only. This information is subject to change without notice. This information is not a substitute for obtaining advice from a qualified professional. Therefore, you should not rely solely upon this information in making any decision. This information, including any prospectus information, is not and does not constitute an offer to sell or a solicitation of an offer to buy any security, service or product.

Abaris Financial, Inc., Philadelphia PA is neither a registered broker-dealer nor a registered investment adviser. Nothing in this presentation, including links to other material, is intended as legal or tax advice. Abaris Financial Inc.’s Licensed Producers do not give legal or tax advice. Taxpayers should seek advice based on their particular circumstances from an independent tax advisor.

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