Strong solutions to offer your clients.

Transcription

1 Strong solutions to offer your clients. A guide to annuities, strategies and support from Nationwide Financial. Not a deposit Not FDIC or NCUSIF insured Not guaranteed by the institution Not insured by any federal government agency May lose value

2 Three pillars to support your business. We help make it easier for advisors to deliver the consistent, sustainable retirement income their clients are counting on. Our combination of strategies, products and support give us an the advisors we serve the advantage. We developed a retirement income solution made up of:» Effective strategies based on industry best practices» Competitive products that help meet your client s needs» Extensive support so you don t have to do it alone Using a solid strategy one of the keys to meeting your client s goals. A retirement income strategy should address the complexity of inflation, market volatility and longevity risk, all within a portfolio designed to generate income. We ve built retirement income strategies that align with the approaches advisors use most:» IncomeInsight : designed for portfolio management as a whole; it combines an income floor with systematic withdrawal» RetireSense : designed for advisors who use a bond or CD laddering strategy and want to add the potential for more growth and guaranteed income» Personalized Health Care Assessment Tool: creates a customized analysis of clients estimated health care costs in retirement We re here when you need us. Our specialized support can help you save time, focus on clients and grow your practice. We have experienced teams of professionals who can help you with tasks varying from research assistance, case design, and using our retirement income tools to paperwork completion. Talk to your wholesaler about what strategies and support services are available to you.

3 Your guide to our competitive products. INCOME Promise Select 4 America s marketflex II Variable Annuity 5 Nationwide Destination SM Variable Annuity Series 6 The Nationwide Lifetime Income Rider (Nationwide L.inc) 8 Death Benefits 9 Why Nationwide 11 3

4 A fixed immediate annuity: INCOME Promise Select single premium, fixed immediate annuity INCOME Promise Select Client need Annuity type Contract basics Plan type Maximum issue age Investment minimums Income options Payout frequency Additional features Clients who need predictable and guaranteed retirement income A single premium, fixed immediate annuity Nonqualified, IRA or Roth IRA Rollovers Annuitant/Joint annuitant: age 95 1 ; owner: no age limit $10,000; investment maximum $3 million; subpays not permitted Single Life Single Life with Cash Refund Single Life with three- to 30-year Term Certain Three- to 30-year Term Certain Joint and (20 to 100)% Survivor Joint and (20 to 100)% Survivor with Cash Refund Joint and (20 to 100)% Survivor with three- Term Certain Joint and (20 to 100)% Last Survivor Joint and (20 to 100)% Last Survivor with Cash Refund Joint and (20 to 100)% Last Survivor with three- Term Certain Monthly, quarterly, semiannually, annually Liquidity feature Allows contract owners to withdraw up to 100% of the Liquidity value of their remaining guaranteed payments at any time during the Liquidity period. The Liquidity feature is available with any term-certain or cash-refund payment option as long as the purchase payment is no more than $1,000,000. A $50 fee will be deducted from the remaining Liquidity value or lump-sum withdrawal for each withdrawal taken (the fee is $100 in New York). Multiple withdrawals are allowed during the Liquidity period. All withdrawals must be $2,000 or more, unless the remaining Liquidity value is less than $2,000. In that case, the withdrawal must be 100% of the remaining Liquidity value. Cost-of-living Adjustment (COLA) An available feature that will automatically increase your client s annual payment amount by 1, 2, 3, 4, or 5% compounded annually; it must be elected at contract inception. 1 Certain payout options may be restricted. 4

5 A variable annuity option: America s marketflex II Variable annuities America s marketflex II Looking for greater diversification through the use of Client need alternative and traditional investment options B-share with 7-year withdrawal schedule, with Annuity type optional schedule reductions (at an additional cost) Contract basics Nonqualified, IRA, Roth IRA, SIMPLE IRA, SEP IRA, Plan type 401(a) (investment only) Maximum issue age Annuitant age 85; owner may be any age Initial $10,000 Investment minimum/subpays Subpays $500 ($50 ACH) 0.50% credit on purchase payments of $500,000 to $999,999 (cumulative payments in contract) Purchase payment credit (no charge) 1.00% credit on purchase payments of $1 million or more (cumulative payments in contract) Access and charges 1.25% (1.05% mortality and expense; 0.20% Cost administrative charge) Contingent deferred sales 7, 7, 6, 5, 4, 3, 2, 0% charge (CDSC) Penalty-free withdrawal Underlying investment options Unlimited transfers are available with most Fund exchanges underlying investment options Investment choices Approximately 150 variable subaccounts Asset rebalancing Dollar cost averaging Death benefit options (see death benefit page for more information) Death benefit protection Additional features L-schedule CDSC option Standard: Return of contract value Enhanced option 1: Return of Premium Enhanced Death Benefit issued through age 75 with $3 million cap (Cost: 0.20%) Enhanced option 2: Highest Anniversary Enhanced Death Benefit issued through age 75 with $3 million cap (Cost: 0.30%) 4-year CDSC (7, 7, 6, 5, 0%) (Cost:0.35%) C-schedule CDSC option No CDSC (Cost: 0.40%) Extra Value rider Nationwide Guided Portfolio Strategies (GPS) 3% credited to all year-one purchase payments (Cost: 0.40%) 4% credited to all year-one purchase payments (Cost: 0.55%) Nationwide GPS models offer a simpler way to help diversify portfolios through alternative investments and provide: Easier access to asset managers and actively managed funds 10 static models with varying levels of exposure to alternative asset classes and strategies (anchored around NVIT Cardinal Funds) America s marketflex II investment choices. You ll find brand-name money managers in our investment lineup that offer you strategies and specialties to help you build a portfolio that leverages these money managers knowledge and experience. America s marketflex II offers you traditional underlying investment options, and alternative asset classes to help achieve your goals while managing risk. Limited-transfer fund investment choices by fund family: AllianceBernstein American Century American Funds Blackrock Credit Suisse Fidelity Investments Franklin Templeton Investments Guggenheim Investments Ivy Funds MFS Morgan Stanley Nationwide Funds Northern Lights PIMCO Rydex Van Eck Actively-traded fund investment choices by fund family: Direxion Funds Guggenheim Investments Nationwide Funds Profunds Rydex 5

6 More variable annuity options: The Nationwide Destination SM 2.0 Variable Annuity Series Client need Variable annuities Nationwide Destination SM [ B ] 2.0 and NY 2.0 Customers planning for retirement with a longer time horizon Nationwide Destination SM [ L ] 2.0 and NY 2.0 Customers planning for retirement with a shorter time horizon Annuity type B-share VA (7-year CDSC) L-share VA (4-year CDSC) Contract basics Plan type Nonqualified/IRA/IRA Rollover/Roth IRA/SEP IRA/ CRT/SIMPLE IRA/401(k)/401(a) Investment Only Maximum issue age Annuitant age 85; owner may be any age Investment minimum/subpays Purchase payment credit (no charge) Initial: $10,000 Subpays: $1,000 ($150 ACH) 0.50% credit on purchase payments of $500,000 to $999,999 (cumulative payments in contract) 1.00% credit on purchase payments of $1 million or more (cumulative payments in contract) Initial: $10,000 Subpays: $500 ($50 ACH) 0.50% credit on purchase payments of $500,000 to $999,999 (cumulative payments in contract) 1.00% credit on purchase payments of $1 million or more (cumulative payments in contract) Extra Value Credit Access and charges Cost 1.30% (1.10% mortality and expense charge; 0.20% administrative charge $30 contract maintenance charge for contract values under $50, % (1.55% mortality and expense charge; 0.20% administrative charge) $30 contract maintenance charge for contract values under $50,000 Contingent deferred sales charge (CDSC) In CA, CDSC is called surrender charge Penalty-free withdrawal 2 Greater of 10% of purchase payments or the amount of the required minimum distribution, noncumulative; Distributions prior to age 59½ may be subject to a 10% early withdrawal federal tax penalty Long-term Care/Terminal Illness Waiver Underlying investment options Investment choices 7, 7, 6, 5, 4, 3, 2, 0% 7, 7, 6, 5 0% Over 80 variable subaccounts 1-year fixed account Over 80 variable subaccounts 1-year fixed account Asset rebalancing Dollar cost averaging Available 6- and 12-month enhanced rates for new purchase payments Death benefit options (see death benefit page for more information) Death benefit protection Spousal protection feature No charge No charge Return of Purchase Payment Standard Standard One-year Enhanced Death Benefit issued through age % 0.20% One-month Enhanced Death Benefit issued through age 75 (not available in New York) 0.35% 0.35% Combination Death Benefit II issued through age 75 (not available in New York) 0.45% 0.45% Beneficiary Protector II Additional features The Nationwide Lifetime Income Rider (Rider features and benefits vary, see Nationwide L.inc page for more information) Guaranteed lifetime withdrawal benefit with lifetime income Issue age: (in New York: 50-85) 6

7 Nationwide Destination SM [ EV ] 2.0 and NY 2.0 Investors looking for a boost saving for retirement B-share VA with extra value credit (8-year CDSC) Initial: $10,000 NQ, $3,000 Q Subpays: $1,000 ($150 ACH) 5% of purchase payments made within the first 12 months of contract date All payments in the first contract year receive extra value credit 1.85% years 1 8 (1.65% mortality and expense charge; 0.20% administrative charge) 1.50% years 9+ (1.30%mortality and expense charge 0.20% administrative charge) $30 contract maintenance charge for contract values under $50,000 Nationwide Destination SM [ C ] Investors at or near retirement C-share VA (no CDSC) Initial: $10,000 Subpays: $1,000 ($150 ACH) 8, 8, 8, 7, 6, 5, 4, 3 0% None Over 80 variable subaccounts 1-year fixed account 1.60% (1.40% mortality and expense charge; 0.20 administrative charge) No contract maintenance charge Assets may be withdrawn at any time, for any reason, without incurring surrender charges Over 80 variable subaccounts Guaranteed Term Options 3 (not available in all states) No charge 0.20% Standard 0.20% Standard 0.35% 0.20% 0.45% 0.35% (not available in New York and Washington) Investment choices by fund family. You ll find brand-name money managers you know throughout our investment lineup that are available with Nationwide Destination B, L, C and EV. For the investment options in the Nationwide Funds section below, we ve hired the listed subadvisors to bring their strategies and experience to your portfolio. The investment options listed under the other fund families are available to you directly from the third-party managers themselves. AllianceBernstein American Century American Funds Blackrock Dreyfus Federated Fidelity Investments Franklin Templeton Investments Huntington VA Funds Invesco IVY Funds Janus MFS Investment Management Nationwide Funds Neuberger Berman Oppenheimer Funds PIMCO T. Rowe Price Van Eck Global Wells Fargo Advantage 2 Withdrawals of earnings at any age are subject to ordinary income tax. 3 Guaranteed Term Options are called Target Term Options in Pennsylvania. 7

8 Our living benefit rider: Nationwide L.inc Client need Annuity type Contract basics Issue age Access and charges Cost How does it work? If the market is up If the market is flat or down Affords flexibility Lifetime income Clients looking for lifetime income Living Benefits The Nationwide Lifetime Income Rider An optional living benefit rider available with certain Nationwide variable annuities 45 85, age in New York (some firms may have an age restriction) Single life: 1.20% assessed annually on the income benefit base (maximum is 1.50%) Joint option 4 : 0.30% assessed annually on the income benefit base (maximum 0.40%) If your client s contract value at any rider anniversary is higher than the guaranteed roll-up amount, the higher amount becomes the new income benefit base, potentially increasing your client s lifetime withdrawal amount. Your client s original income benefit base is still guaranteed to increase by at least 7% simple interest each year. That lasts for 10 years or until your client takes the first withdrawal, whichever comes first. If no withdrawals are taken for 10 years, your client s original income benefit base increases by 70%. Subpays allowed 5 Withdrawals can begin immediately; the first withdrawal will lock in the lifetime withdrawal percentage Required minimum distribution (RMD) friendly some restrictions apply Excess withdrawals do not void the guarantees, but it will reduce the future income payment and any death benefit Lifetime withdrawal percentage is based on the owner s age when the first withdrawal is taken. AGE Single Joint 45* up to 59½ 3.00% 3.00% 59½ % 3.75% % 4.75% % 5.75% * In New York, the minimum age is 50. Underlying investment options Select packaged solutions from: American Funds Fidelity Investment choices up to NVIT Cardinal SM Funds NVIT Investor Destinations Funds a maximum of 60% Or, build a custom portfolio from more than 50 different underlying investment options. The underlying in equities investment options are not publicly traded mutual funds and are not available directly for purchase by the general public. They are only available through variable annuity policies issued by life insurance companies. 4 May also be referred to as spousal continuation. 5 Nationwide reserves the right to limit subpays to $50,000 / year. 8

9 Death Benefits Note: Not all optional riders and features are available with all annuities. All death benefits are only paid prior to annuitization. Spousal Protection Feature The spousal protection feature (SPF) helps your client and their spouse provide for each other no matter who dies first even if only one spouse owns the contract. It s available with IRA and non-ira variable annuities. With SPF, the surviving spouse: Can continue the contract as the owner at the higher of the death benefit or market value, or take the lump-sum death benefit and walk away without a surrender charge Will realize no current income tax consequences related to the transfer of ownership how it works Mike bought a Nationwide variable annuity contract in his IRA for $100,000. He named his wife, Sarah, as co-annuitant and primary beneficiary. On his first contract anniversary, Mike s account value had grown to $150,000 due to positive market performance. Because he purchased a One-year Enhanced Death Benefit rider,* his death benefit value was set at $150,000. After the first year, Mike s account value fell to $75,000 and Sarah died shortly after that. With the One-year Enhanced Death Benefit rider, Mike s death benefit was locked in at the first anniversary s account value of $150,000. When Sarah passed away, he had the choice to receive the death benefit payout or to continue his contract at the stepped up amount. If he continued the contract, he could then name a new beneficiary. Without SPF, nothing would have happened to Mike s account and a death benefit would not have been paid. That s because the death of his spouse would not have any impact on his IRA contract. Remember, with SPF it doesn t matter who dies first. If Mike had passed away first, Sarah would have been given the choice to receive the stepped-up death benefit or continue the contract at the death benefit value with no current tax consequence. Account Value $175,000 $150,000 $125,000 $100,000 $75,000 The death benefit locked in at $150,000 even though Sarah passed away when the contract value was only $75,000. $50,000 Original contract value Contract value on first anniversary Contract value at Sarah s death * The One-year Enhanced Death Benefit is an optional rider available for an additional charge. SPF is available on most Nationwide variable annuities, regardless of the death benefit option. Please see the prospectus for additional information. This example is hypothetical. It does not reflect the performance of any investment. If the owner takes a withdrawal, the death benefit and cash value will be reduced. 9

10 One-year Enhanced Death Benefit 6 If the annuitant dies, the beneficiary will receive the greatest of: The value of the annuity at the time we receive all required paperwork in good order The total purchase payments made to the annuity, less adjustments for amounts surrendered The highest contract value on any contract anniversary prior to the annuitant s 86th birthday, 7 less any subsequent amount surrendered Issue ages and availability vary by contract. See the product grids for details. One-month Enhanced Death Benefit If the annuitant dies, the beneficiary will receive the greatest of: The value of the annuity at the time we receive all required paperwork in good order The total purchase payments made to the annuity, less adjustments for amounts surrendered The highest contract value on any monthly contract anniversary prior to the annuitant s 81st birthday, less any subsequent amount surrendered Issue ages and availability vary by contract. See the product grids for details. Combination Enhanced Death Benefit If the annuitant dies, the beneficiary will receive the greatest of: The value of the annuity at the time we receive all required paperwork in good order The total for all purchase payments made to the annuity, less adjustments for amounts surrendered The highest contract value on any contract anniversary prior to the annuitant s 81st birthday, less any subsequent amount surrendered Purchase payments accumulated at 5.0% compound interest (maximum benefit of 200% of net purchase payments) until the most recent contract anniversary prior to your 81st birthday, adjusted for each amount surrendered Issue ages and availability vary by contract. See the product grids for details. Beneficiary Protector II 8 (Cost: 0.35%) Beneficiary Protector II was designed to help your beneficiaries with the expenses they ll face when they inherit the annuity. When the annuitant dies, we will add a percentage of the contract earnings to the contract value. annuitant s age at contract issue amount added upon death up to 70 yrs 40% of adjusted contract earnings yrs 25% of adjusted contract earnings 6 Also known as Highest Anniversary Enhanced Death Benefit or One-Year Step-up Enhanced Death Benefit. 7 The age may vary depending on product. 8 Availability varies by contract. 10

11 Why Nationwide? There s no way around it: investing involves risk. But insurance companies that issue annuities can take steps to manage that risk and help protect their investors. Nationwide has diversified sources of earnings and cash flows, a strong balance sheet and a long history of maintaining a high-quality investment portfolio that s governed by a very sound and disciplined investment policy. Our risk management capabilities have been rated as strong by third-party ratings agency Standard & Poor s, placing us in the top 15% of insurers. Nationwide Financial strength ratings Agency Rating Rank Received Affirmed A.M. Best A+ Superior 2nd strongest of 16 1/30/06 3/27/12 Moody s A1 Good 5th strongest of 21 3/10/09 8/03/10 Standard & Poor s A+ Strong 5th strongest of 22 12/22/08 8/31/12 These ratings and rankings reflect rating agency assessment of the financial strength and claims-paying ability of Nationwide Life Insurance Company and are subject to change at any time. They are not intended to reflect the investment experience or financial strength of any variable account, which is subject to market risk. Because the dates are only updated when there s a change in the ratings, the dates above reflect the most recent ratings we have received. 11

12 When evaluating the purchase of a variable annuity, your clients should be aware that variable annuities are long-term investment vehicles designed for retirement purposes and will fluctuate in value; annuities have limitations; and investing involves market risk, including possible loss of principal. Protections and guarantees are subject to the claims-paying ability of the issuer and do not apply to the investment performance of the variable accounts which are subject to investment risk. Variable products are sold by prospectus. Both the product prospectus and underlying fund prospectuses can be obtained by writing to Nationwide Life Insurance Company, P.O. Box , Columbus, OH Before investing, make sure your clients carefully consider the fund s investment objectives, risks, charges and expenses. The product prospectus and underlying fund prospectuses contain this and other important information. Your clients should read the prospectuses carefully before investing. Variable annuities are issued by Nationwide Life Insurance Company, Columbus, Ohio. The general distributor is Nationwide Investment Services Corporation, member FINRA. In MI only: Nationwide Investment Svcs. Corporation. Nationwide, Nationwide Destination, The Nationwide Lifetime Income Rider, RetireSense, IncomeInsight, INCOME Promise Select, Nationwide Funds, the Nationwide framemark and On Your Side are service marks of Nationwide Mutual Insurance Company. America s marketflex and Beneficiary Protector are service marks of Nationwide Life Insurance Company Nationwide Financial Services, Inc. All rights reserved. FOR BROKER DEALER USE ONLY NOT FOR USE WITH THE PUBLIC. VAM-1843AO.2 (01/13)