OHIO | 6311 | 31-4156830 |
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
415 under the Securities Act of 1933, check the following box. | ☑ |
statement for the same offering. | □ |
offering. | □ |
offering. | □ |
filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. | □ |
Large accelerated filer | □ |
Accelerated filer | □ |
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Title of Each Class of Securities to be Registered | Amount to be Registered1 | Proposed Maximum Offering Price Per Unit1 | Proposed Maximum Aggregate Offering Price2 | Amount of Registration Fee |
Single Purchase Payment Deferred Index-Linked Annuity Contract | N/A | N/A | $500,000,000.00 | $60,600.00 |
Title of Each Class of Securities to be Registered | Amount to be Registered | Proposed Maximum Offering Price Per Unit | Proposed Maximum Aggregate Offering Price, including previously registered securities1 | Amount of Registration Fee, including fee paid for previously registered securities |
Flexible Purchase Payment Modified Guaranteed Annuity Contracts | N/A1 | N/A1 | $138,419,6722 | $14,810.913 |
1 | The amount to be registered and the proposed maximum offering price per unit are not applicable |
The proposed maximum aggregate offering price is estimated solely for the purpose of determining the registration fee. | |
2 | This registration statement includes unsold securities previously registered pursuant to Rule 462(b) under the Securities Act of 1933 ("Securities Act") on Form S-1 (File No. 333-133163) filed by the Registrant on April 10, 2006 ("Prior Registration Statement"). Pursuant to Rule 415(a)(6) under the Securities Act, unsold securities were added to a registration statement on Form S-1 (File No. 333-200329) filed by the Registrant on November 18, 2014, and subsequently added to a registration statement on Form S-1 (File No. 333-216964) filed by the Registrant on March 27, 2017. Pursuant to Rule 415(a)(6) under the Securities Act, all unsold securities from the Prior Registration Statement will be added to this Registration Statement and the offering of securities under the Prior Registration Statement will be deemed terminated as of the date of effectiveness of this Registration Statement. As of February 28, 2020, there were $138,419,672 of unsold securities registered pursuant to the Prior Registration Statement. |
3 | Pursuant to Rule 415(a)(6) under the Securities Act, $14,810.91 (calculated at the rate in effect at the time the Prior Registration Statement was filed) of filing fees paid in connection with the unsold securities shall continue to apply to the unsold securities, and no additional filing fee in respect to such unsold securities is due hereunder. |
certain risks (seeRisk Factors on page 6). For information on how to contact Nationwide, see
are referred to as Target Term Options)information indate of this prospectus is not complete andMay 1, 2020.Certain state insurance laws applicable to these investment options may preclude, or be interpreted to preclude, Nationwide Life Insurance Company ("Nationwide") from providing a contractual guarantee in conjunction with the Specified Interest Rate. In such jurisdictions, the investment options are referred to as "Target Term Options" as opposed to "Guaranteed Term Options."Despite this distinction in terminology, Nationwide will administer all obligations described in this prospectus, regardless of the jurisdiction, in precisely the same manner. Thus, there will be no difference between the calculation, crediting, and administration of Specified Interest Rates in "Guaranteed Term Options" issued in states permitting a contractual guarantee, and the calculation, crediting, and administration of Specified Interest Rates in "Target Term Options" issued in states not permitting a contractual guarantee. changed. We may not sell these securities until the registration statement filedread along with the Securitiesappropriate variable contract prospectus and Exchange Commission is effective. This prospectus is not an offer to sellthe prospectuses describing the underlying mutual fund investment options. All of these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.Nationwide Defined ProtectionSM AnnuityIndividual Single Purchase Payment Deferred Annuity Contract with Index-Linked StrategiesIssued byNATIONWIDE LIFE INSURANCE COMPANYProspectus Dated ________, 2019This prospectus describes the Nationwide Defined ProtectionSM Annuity Contract (the “Contract”), including all material rights and obligations under the Contract.Pleaseprospectuses should be read this prospectus carefully and keep itmaintained for future reference. Special terms used throughout this prospectusdefinedavailable under “Defined Terms.”The Contract iscertain variable annuity contracts or variable life insurance policies (collectively, "variable contracts") issued by us,Nationwide. Generally, the variable contracts offered by Nationwide Life Insurance Company. The Contract is designed to help you invest on atax-deferred basis and meet long-term financial goals. Under the Contract, you may select one or moreprovide an array of underlying mutual fund investment options each linking to which the performance of a specific market index and including a level of protection against loss. We refer to thesecontract owner allocates his or her purchase payments. The GTOs are separate, guaranteed interest investment options as “Strategies.” Each Strategy in which you invest hasavailable under variable contracts.Strategy Account. We will credit your Strategy Account with interest (which may be positive, negative, or equal to zero) on the Strategy Term End Date. We may also credit interest upon partial withdrawals and a surrender (which may be positive, negative, or equal to zero). The amount of interest that we credit to your Strategy Account will depend, among other factors, on the performance of the Strategy’s Index. An Index may perform positively or negatively.The Indexes for the Strategies that we are offering for investment currently include:S&P 500®IndexJ.P. Morgan Mozaic IISMIndexMSCI EAFEIndexNYSE® Zebra Edge®IndexEach Strategy has six Crediting Factors that you should consider based on your risk tolerances and financial goals.The Index is one of the six Crediting Factors associated with each Strategy. The other five Crediting Factors are the Strategy Term, Index Multiplier, Strategy Spread, Protection Level, andNon-Preferred Withdrawal Adjustment Percentage. Each Crediting Factor can affect (potentially positively or negatively) the amount of interest that we credit to a Strategy Account. You should understand the application, operation, and impact of each Crediting Factor. See “Crediting Factors” for more information.At any time prior to the Annuitization Date you may take a partial withdrawal or fully surrender your Contract. Any partial withdrawal or full surrender—even if takenguaranteed annual effective yield at the end of a Strategy Term—is treatedSpecified Interest Rate so long as either a Preferred Withdrawal, aNon-Preferred Withdrawal, or a combination of both depending on the total dollar amount of your Gross Withdrawals during the Contract Year. We credit interest to a Strategy Account whenever you take a partial withdrawal or full surrenderamounts invested are not withdrawn prior to the end of a Strategy Term. Such interest may be positive, negative, or equal to zero. However, when you take a partial withdrawal or full surrender that is aNon-Preferred Withdrawal, you will typically receive a lower positive interest rate, or a potentially more negative interest rate, than if the partial withdrawal or full surrender was a Preferred Withdrawal.Atguaranteed term. In the endevent of a Strategywithdraw from the GTO for any reason prior to the expiration of the Guaranteed Term, for a Strategy, you choose how to manage the money in your Strategy Account. You may reinvest some or all in the same Strategy, based on the Crediting Factors that we declare for the upcoming Strategy Term, or transfer some or all to another Strategy, assuming that the Strategy you choose is available for investment. You cannot transfer your money between Strategies during a Strategy Term.You should carefully consider the consequences of takingNon-Preferred Withdrawals before you purchase the Contract.Non-Preferred Withdrawalsamount withdrawn may be subject to Contingent Deferred Sales Chargesa market value adjustment. Please refer to the variable contract prospectus for specific information regarding variable contract transactions that may be subject to a Market Value Adjustment.Adjustment, and the interest crediting formula forNon-Preferred Withdrawals is typically less favorable to you than the formula for Preferred Withdrawals.Each Strategy includes aLock-In feature. If you decide to exercise theLock-In feature for a Strategy Account, the Index Value as of a certain date will belocked-in for purposes of calculating interest credited to your Strategy AccountAdjustment. The prospectus for the remaindervariable contract must be read along with this prospectus.Strategy Term. You should fully understand the operation and impactgeneral assets of theLock-In feature. See“Lock-In” for more information.An investment in this Contract is subject to risks, including the possible loss of principal. See “Risk Factors” beginning on page 15.Prospective purchasers may obtain an application to purchase the Contract through broker-dealers that have been appointed by us as insurance agents and that have selling agreements with Nationwide Investment Services Corporation (“NISC”), the principal underwriterare available for the Contracts. NISC will use its best effortspurpose of meeting the guarantees of the GTOs. Amounts allocated to sell the Contracts, but is not requiredGTOs are generally invested in fixed income investments purchased by Nationwide. Variable contract owners allocating amounts to sella GTO have no claim against any number or dollar amountassets of Contracts. We may stop offeringNationwide, including assets held in the Contracts at any time.Index-linked annuity contracts are complicated investments. You should speak with a financial professional about the Contract’s features, benefits, and risks, and whether the Contract is appropriate for you based on your financial situation and objectives.This prospectus does not constitute an offering in any jurisdiction in which the Contract may not lawfully be sold.All guarantees under the ContractNationwide Multiple Maturity Separate Account.our creditworthiness and claims-paying ability.The Contract is not a bank deposit, is not FDIC insured, and is not insured or endorsed by any bank or government agency. The Contract may not be available in every state.prospectus.Prospectus. Any representation to the contrary is a criminal offense.Contacting the Service Center
TABLE OF CONTENTSPage 1 2 2 53 3 153 4 234 6 236 6 STATE VARIATIONSWithdrawals prior to the Maturity Date will be subject to a Market Value Adjustment.236 6 236 6 236 7 237 7 247 8 248 8 24A-1 24242525252525252626272728282929303031313233STRATEGY REMAINING PREFERRED WITHDRAWAL AMOUNT AND REMAINING PREFERRED WITHDRAWAL AMOUNT35363637STRATEGY EARNINGS PERCENTAGE (SEP) AND INTERIM EARNINGS PERCENTAGE (IEP)394142424343444444464748494950505151CONTINGENT DEFERRED SALES CHARGE AND MARKET VALUE ADJUSTMENT55555557585859596161636366757780858789Information about Nationwide and the product may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C., or may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC at 100 F Street NE, Washington, D.C. 20549. Additional information on the operation of the Public Reference Room may be obtained by calling the SEC at (202)551-8090. also maintains a website (www.sec.gov) that contains the prospectus and other information.
Guaranteed Term – The period corresponding to a 1, 3, 5, 7 or 10 year GTO. Amounts allocated to a GTO will be credited with a Specified Interest Rate over the corresponding Guaranteed Term, so long as such amounts are not withdrawn from the GTO prior to the Maturity Date. Because every Guaranteed Term will end on the final day of a calendar quarter, the Guaranteed Term may last for up to three months beyond the 1, 3, 5, 7 or 10 year anniversary of the allocation to the GTO. |
Guaranteed Term Option or GTO – An investment option offered under variable contracts that provides a Specified Interest Rate over Guaranteed Terms, so long as certain conditions are met. In some jurisdictions the GTO is referred to as a Target Term Option or TTO. |
Market Value Adjustment – The upward or downward adjustment in value of amounts allocated to a GTO that are withdrawn from the GTO for any reason prior to the Maturity Date. |
Maturity Date – The date on which a GTO matures. The date will be the last day of the calendar quarter during or within 30 days after the first, third, fifth, seventh or tenth anniversary on which amounts are allocated to a 1, 3, 5, 7 or 10 year GTO, respectively. |
Maturity Period – The period during which the value of amounts allocated under a GTO may be withdrawn without any Market Value Adjustment. The Maturity Period will begin on the day following the Maturity Date and will end on the 30th day after the Maturity Date. |
MVA Interest Rate – The rate of interest used in the Market Value Adjustment formula. Depending on the variable contracts under which the GTO is offered, the interest rate will be the Constant Maturity Treasury ("CMT") rates, or interest rate swaps, for maturity durations of 1, 3, 5, 7 and 10 years, as published, on a regular basis, by a commercially reasonable and publicly available source based on treasury bond yields. |
Specified Interest Rate – The interest rate guaranteed to be credited to amounts allocated to a GTO as long as the allocations are not withdrawn prior to the Maturity Date. The Specified Interest Rate will not be less than the minimum required by applicable state law. |
Specified Value – The amount of a GTO allocation, plus interest accrued at the Specified Interest Rate, minus any other amounts withdrawn. The Specified Value is subject to a Market Value Adjustment at all times other than during the Maturity Period. |
Provided below is a list
Annuitant-The person upon whose life any life-contingent annuityall states.
Annuitization Date - The date on which annuity payments begin.
Annuity Commencement Date - The date on which annuity payments are scheduled to begin.
Beneficiary- A person designated by the Contract Owner who may receive certain benefits under the Contract, including the Death Benefit.
Business Day - Each day that the New York Stock Exchange is open for regular trading. A Business Day ends at the same time that regular trading on the New York Stock Exchange closes (typically 4:00 p.m. Eastern Time).
Cash Withdrawal-The dollar amount paid to the Contract Owner uponvariable contracts or by using funds transferred from other investment options available in the variable contracts. The minimum allocation to a partial withdrawal or full surrender.
Charitable Remainder Trust - A trust meeting the requirements of Section 664GTO is $1,000 per allocation. Not all of the Code.
Co-Annuitant-The person, if any, designatedvariable contracts issued by Nationwide offer GTOs. If GTOs are available under a variable annuity contract or variable life insurance policy, the Contract Owner who may receiveprospectus for the benefitvariable contract and this prospectus must be read together.
Code -GTOs are the exclusive obligation of Nationwide. The Internal Revenue CodeNationwide Multiple Maturity Separate Account, authorized and created in accordance with Ohio law, was established for the sole purpose of 1986,reserving and accounting for assets associated with the GTOs. Its assets are owned by Nationwide. Contract owners with GTOs have no claim against, and maintain no interest in, the assets. Also, contract owners do not participate in the investment experience.
Contingent Annuitant-The person who becomeslong as allocations remain in the Annuitant ifGTO until the Annuitant diesMaturity Date. Any withdrawal prior to the Maturity Date will be subject to a Market Value Adjustment.
(1) | the MVA Interest Rate for the period coinciding with the Guaranteed Term of the GTO at investment; |
(2) | the MVA Interest Rate for the number of years remaining in a Guaranteed Term when the withdrawal from the GTO occurs; and |
(3) | the number of days remaining in the Guaranteed Term of the GTO. |
Contingent Beneficiary - Maturity Date (seeGTOs at Maturity).
Contingent Deferred Sales Charge (CDSC)-A chargeright to make allocations to or to effect withdrawals from the GTOs.
Contract - The GTO prior to the maturity date will be subject to a Market Value Adjustment.
Contract Accumulation Value-The sum of your Strategy Accumulation Values as of a given date.
Contract Anniversary - Each recurring twelve-month anniversaryfixed-income investments available at the time and having durations and cash flow attributes compatible with the Guaranteed Terms of the DateGTOs. In addition, the establishment of Issue whileSpecified Interest Rates may be influenced by other factors, including competitive considerations, administrative costs and general economic trends. Nationwide has no way of precisely predicting what Specified Interest Rates may be declared in the Contract remains in force.
Contract Earnings-The sum of Strategy Earnings credited to your Strategy Account(s) on a given date or over afuture, however, the Specified Interest Rate will not be less than the minimum rate required by applicable state law.
Contract Owner (you) - The person possessing all rights underavailable GTOs. All allocations made to a GTO during an Investment Period are credited with the ContractSpecified Interest Rate in effect at the time of allocation. An Investment Period ends when a new Specified Interest Rate relative to the applicable GTO is declared. Subsequent declarations of new Specified Interest Rates have no effect on allocations made to GTOs during prior Investment Periods. Prior allocations to the GTO will be credited with the Specified Interest Rate in effect when the allocation was made.
Contract Value - The sum of your Strategy Values as of a given date.
Contract Year - The twelve-month period starting on the Date of Issue and each Contract Anniversary. A Contract Year ends on the dayreason prior to the Maturity Date, a Contract Anniversary.
Crediting Factors - The factors that are used in the calculation of Strategy Earnings for a Strategy. Each Strategy has the following Crediting Factors: an Index, a Strategy Term, an Index Multiplier, a Strategy Spread, a Protection Level, and aNon-Preferred WithdrawalMarket Value Adjustment Percentage. See “Crediting Factors” for information about each Crediting Factor.
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Date of Issue - The date we issue the Contract. Your Purchase Payment iswill be applied to that amount.
Death Benefit-The benefit triggered upon the death of the Annuitant, orCo-Annuitant if the Spousal Continuation Death Benefit is elected, provided such death occurs before the Annuitization Date while the Contract is in force and there is no Contingent Annuitant.
Elapsed Term-The length of elapsed time between the firstlast day of a Strategycalendar quarter. Consequently, a Guaranteed Term and a specific future day during that Strategy Term. It is calculated by dividingmay last up to three months longer than the numberanniversary date of calendar days that have elapsed in the Strategy Term by 365.
Gross Withdrawal - A value that we calculate each time you take a partial withdrawal or if you take a full surrender. When referringallocation to the effectGTO.
(1) | surrender the GTO, in part or in whole, without a Market Value Adjustment during the Maturity Period; however, any surrender charges that may be applicable under the variable contract will be assessed; |
(2) | transfer (all or part) of the GTO, without a Market Value Adjustment, to any other permitted investment option under the variable contract, including any permitted underlying mutual fund sub-accounts, or another GTO of the same or different duration during the Maturity Period. A confirmation of any such transfer will be sent immediately after the transfer is processed; or |
(3) | elect not to transfer or surrender all or a portion of the GTO, in which case the GTO will be automatically transferred to the available money market sub-account of the contract at the end of the Maturity Period. A confirmation will be sent immediately after the automatic transfer is executed. |
Index-The market indexprospective interest rate fluctuations.
Index Change - The change in the value of an Index, expressedmaturity not published (such as a percentage,4, 6, 8 or 9 year maturity), Nationwide will calculate such rates based on the relationship of the published rates. For example, if the published 3-year rate is 6% and the published 5-year rate is 6.50%, the 4-year rate will be calculated as 6.25%.
(1) | the MVA Interest Rate for the period of time coinciding with the Guaranteed Term of the GTO; |
(2) | the MVA Interest Rate for a period coinciding with the time remaining in the Guaranteed Term of a GTO when a withdrawal giving rise to a Market Value Adjustment occurs; and |
(3) | the number of days remaining in the Guaranteed Term of the GTO. |
[ | ] | t | |
1 + a | |||
1 + b + .0025 | |||
a | = | the MVA Interest Rate for a period equal to the Guaranteed Term at the time of deposit in the GTO; |
b | = | the MVA Interest Rate at the time of withdrawal for a period of time equal to the time remaining in the Guaranteed Term. In determining the number of years to maturity, any partial year will be counted as a full year, unless it would cause the number of years to exceed the Guaranteed Term; and |
t | = | the number of days until the Maturity Date, divided by 365.25. |
Index Value-On a Business Day,interest rate swap, depending on the closing value of an Index published for that day. On a day other than a Business Day, the Index Valuevariable contract. For variable contracts using CMT rates, "a" will be the closing value of the IndexCMT rate published on Fridays and placed in effect by Nationwide for the previous Business Day.
Individual Retirement Account - An account that qualifies for favorable tax treatment under Section 408(a) of the Code, but does not include Roth IRAs.
Individual Retirement Annuity (IRA) - An annuity contract that qualifies for favorable tax treatment under Section 408(b) of the Code, but does not include Roth IRAs or Simple IRAs.
Interim Contract Earnings- The sum of all Interim Strategy Earnings creditedallocations made to the ContractGTO on a given daythe following Wednesday through Tuesday. For variable contracts using interest rate swaps, "a" is the interest rate swap published two days before the date the allocation to the GTO was made.
Interim Earnings Percentage (IEP)- Avariable contract. For variable contracts using CMT rates, "b" will be the CMT rate of interest (which may be positive, negative, or equal to zero) used to calculate Interim Strategy Earnings creditedpublished on Fridays and placed in effect by Nationwide for withdrawals giving rise to a Strategy Account when a StrategyNon-Preferred Withdrawal is taken prior to the Strategy Term End Date.
Interim Strategy Earnings-The amount credited to your Strategy Account for a Strategy when you take a partial withdrawal or full surrender on a day other than the Strategy Term End Date. References to Interim Strategy Earnings may refer to Interim Strategy Earnings credited on a given date or over a period of time, as the context requires. Interim Strategy Earnings can be positive, negative, or equal to zero.
Investment-Only Contract - A Contract purchased by a qualified pension, profit-sharing, or stock bonus plan as defined by Section 401(a) of the Code.
Joint Owner - The person, if any, designated as a second person (in addition to the Contract Owner) to possess an undivided interest in the Contract. If there is a Joint Owner, references to Contract Owner and Joint Owner will apply to both of them, or either of them, unless the context requires otherwise.
Lock-In -The feature under the Contract that allows an Index Value as of a certain date to belocked-in for purposes of calculating the Index Change for a Strategy Account for the remainder of the Strategy Term.
Lock-In Date -The date as of which the Index Value for a Strategy Account islocked-in under theLock-In feature.
Market Value Adjustment (MVA)-The adjustment that may be applied if you takeon the following Wednesday through Tuesday. For variable contracts using interest rate swaps, "b" is the interest rate swap published two days before the date of withdrawal giving rise to aNon-Preferred Withdrawal during the MVA Period (as defined under “Contingent Deferred Sales Charge and Market Value Adjustment.
Modified ContractAdjustment formula shown above also accounts for some of the administrative and processing expenses incurred when fixed-interest investments are liquidated. This is represented by the addition of .0025 in the Market Value-The sum Adjustment formula.
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Modified StrategySpecified Value - The maximum Gross Withdrawal that may be taken being distributed from a Strategy Account as ofGTO, in order to effect a given date during a Strategy Term.Market Value Adjustment. The Modified StrategyMarket Value takes into account unrealized Interim Strategy Earnings based on the maximum possible Strategy Preferred Withdrawal (using the SEP) and the maximum possible StrategyNon-Preferred Withdrawal (using the IEP).
Nationwide (we, us, our) - Nationwide Life Insurance Company.
Net Withdrawal - A value that we calculate each time you take a partial withdrawal or full surrender. When referring to the effect of a partial withdrawal or full surrender on the entire Contract, the Net Withdrawal represents the change in your Contract Value. When referring to the effect of a partial withdrawal or full surrender on a particular Strategy Account, the Net Withdrawal represents the change in your Strategy Value.
Non-Preferred Withdrawal - Any portion of a Gross Withdrawal from the Contract that is in excess of the Remaining Preferred Withdrawal Amount. Interim Strategy Earnings for aNon-Preferred Withdrawal are calculated using the Interim Earnings Percentage (or IEP).Non-Preferred Withdrawals may involve the application of theNon-Preferred Withdrawal Adjustment Percentage.Non-Preferred Withdrawals may alsofactor will either be subject to CDSCs and MVAs.
Non-Qualified Contract - A Contract which does not qualify for favorable tax treatment as a Qualified Plan, IRA, Roth IRAs, SEP IRA, Simple IRA, or Tax Sheltered Annuity.
Preferred Withdrawal - Any portion of a Gross Withdrawal from the Contract that isgreater than, less than, or equal to one and will be multiplied by the Remaining Preferred Withdrawal Amount. Preferred WithdrawalsSpecified Value (or a portion of the Specified Value) being withdrawn from the GTO for any reason. If the Market Value Adjustment factor is greater than one, a gain will be realized by the contract owner. If the Market Value Adjustment factor is less than one, a loss will be realized. If the Market Value Adjustment factor is exactly one, no gain or loss will be realized.
Preferred Withdrawal Amount - The dollar amount of Gross Withdrawalsvariable contract. Please refer to the variable contract prospectus for more information about variable contract transactions that you can take from the Contract duringmay incur surrender charges and/or a given Contract Year without takingMarket Value Adjustment.
Purchase Payment - Money paid into the Contract by the Contract Owner.
Qualified Plan-A retirement plan that receives favorable tax treatment under Section 401 of the Code, including Investment-Only Contracts. In this prospectus, all provisions applicable to Qualified Plans also apply to Investment-Only Contracts unless specifically stated otherwise.
Remaining Preferred Withdrawal Amount - The Preferred Withdrawal Amount for a Contract Year minus the total dollar amount of all Gross Withdrawals from the Contract already taken that Contract Year. The Remaining Preferred Withdrawal Amount will never be less than zero.
Roth IRA - An variable annuity contract which qualifies for favorable tax treatment under Section 408A of the Code.
SEP IRA- An annuity contract which qualifies for favorable tax treatment under Section 408(k) of the Code.
Service Center - The department of Nationwide responsible for receiving all service and transaction requests relating to the Contract. For service and transaction requests submitted other than by telephone (including fax requests), the Service Center is Nationwide’s mail and document processing facility. For service and transaction requests communicated by telephone, the Service Center is Nationwide’s operations processing facility. Information on how to contact the Service Center may be found under “Contacting the Service Center.”
Simple IRA- An annuity contract which qualifies for favorable tax treatment under Section 408(p) of the Code.
Strategy - Each investment option to which you may allocate your Purchase Payment or Contract Value.
Strategy Account - Each Strategy in which you are invested is represented by a single Strategy Account. A Strategy Account exists for the duration of the Strategy Term for its corresponding Strategy. If you are simultaneously invested in the same Strategy for Strategy Terms that began on different dates, those investments will be represented by separate Strategy Accounts.
Strategy Accumulation Value - The value of a Strategy Account if unrealized Strategy Earnings were to be credited to the Strategy Value using only the SEP as of a given date during a Strategy Term.
Strategy Earnings-The amount credited to a Strategy Account, including Term Strategy Earnings and/or Interim Strategy Earnings, on a given date or over a period of time, as the context requires.
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Strategy Earnings Percentage (SEP) - A rate of interest (which may be positive, negative, or equal to zero) used to calculate Term Strategy Earnings credited to a Strategy Account on the Strategy Term End Date, as well as any Interim Strategy Earnings credited to a Strategy Account when a Strategy Preferred Withdrawal is takenannuitized prior to the Strategy Term End Date. The SEP is also used in the calculationMaturity Date of the Death Benefit.
StrategyNon-Preferred Withdrawal - The portion ofGTO, aNon-Preferred Withdrawal attributable Market Value Adjustment will apply to amounts transferred from the GTO to other investment options under the variable annuity contract (unless such an adjustment is not permitted in your jurisdiction).
Strategy Preferred Withdrawal-The portionMarket Value Adjustment.
Strategy Remaining Preferred Withdrawal Amount-The portionMarket Value Adjustment. The Market Value Adjustment may decrease the value of the Remaining Preferred Withdrawal Amount attributablewithdrawal.
Strategy Term - The lengthor from the GTOs.
Strategy Term End Date - The last day of a Strategy Term.
Strategy Value-The value of a Strategy Account without taking into account any unrealized Strategy Earnings.
Surrender Value - The amount available upon full surrender of the Contract. The Surrender Value is equalmake additional allocations to the Modified Contract Value minus any applicable CDSC and after any applicable MVA. We may deduct taxesGTOs and/or to effect transfers or withdrawals from the Surrender Value.
Term Strategy Earnings-Strategy EarningsGTOs.
Transition Account Value – Thecredited guaranteed interest rate by the amount of the Death Benefit transferred into the Transition Account plus any interest credited to the Transition Account.
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This summary provides a brief overview of the Contract. You should carefully read the entire prospectus before you decide whether to purchase the Contract. The Contract may not be currently available in all states, may vary in your state,applicable fee or may not be available from all selling firms or from all financial professionals.
Who is Nationwide?charge.
What
The Index is only one of six Crediting Factors associated with each Strategy. The other five Crediting Factors associated with each Strategy are the Strategy Term, Index Multiplier, Strategy Spread, Protection Level, andNon-Preferred Withdrawal Adjustment Percentage. Each Crediting Factor affects (potentially positively or negatively) the amount of interest that we credit to a Strategy Account. See “Crediting Factors.”
You may access your money at any time prior to the Annuitization Date by taking partial withdrawals or fully surrendering your Contract. If you have multiple Strategy Accounts at a given time, you should understand that you cannot select specific Strategy Accounts from which partial withdrawals are to be taken. Instead, partial withdrawals are allocated across all of your Strategy Accounts in a particular manner. See “Withdrawals – Strategy Preferred Withdrawals and StrategyNon-Preferred Withdrawals.” A full surrender always results in a complete withdrawal from all of your Strategy Accounts and the termination of the Contract.
The Contract has a Death Benefit that may be triggered prior to the Annuitization Date upon the death of the Annuitant (or theCo-Annuitant, if any). A surviving spouse may be eligible to continue the Contract after the payment of the Death Benefit. See “Death Benefit and Succession Rights.”
Once you reach the Annuitization Date, we pay guaranteed income in the form of annuity payments. The duration and dollar amount of the annuity payments will depend on the dollar amount that you annuitize and the annuity payment option that you select. See “Annuitization.”
All payments under the Contract are subject to our financial strength and claims-paying ability, as well as the terms and conditions described in this prospectus.
You should not buy the Contract if you are looking for a short-term investment or if you plan on takingNon-Preferred Withdrawals, as described in this prospectus. You should understand that while the Contract provides some protection against loss, you can lose money under the Contract. It is possible to lose a substantial amount of your principal investment. You should not buy the Contract if you are not willing to assume the risks associated with the Contract. See “Risk Factors.”
How can the Contract be categorized under the Code? The Contract can be categorized under the Code as a:
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If you purchase the Contract as an Individual Retirement Account or Roth IRA, the Contract will not provide you with any additional tax deferral benefits.
See “Contract Types and Federal Tax Considerations” for additional detail.
How do I purchase the Contract? You may purchase the Contract by completing an application and submitting a Purchase Payment of at least $25,000 to our Service Center. Only one Purchase Payment is allowed under the Contract. We may agree to accept multiple payments as part of a single Purchase Payment.
What are the investment options under the Contract?You may allocate your money under the Contract to one or more of the index-linked Strategies that are available for investment under the Contract. Each Strategy that you select for investment is represented by a Strategy Account. If you are simultaneously invested in the same Strategy for Strategy Terms that began on different dates, those investments will be represented by separate Strategy Accounts. You may be invested in no more than five Strategy Accounts at any given time.
We credit your Strategy Earnings for a Strategy to your Strategy Account. Strategy Earnings may be positive, negative, or equal to zero. A Strategy’s Crediting Factors affect (potentially positively or negatively) the amount of interest that we credit to your Strategy Account.
A Strategy’s Crediting Factors do not cap the amount of positive Strategy Earnings that you may receive, but certain Crediting Factors will or may have the ultimate effect of reducing the rate at which your Strategy Earnings are credited. A Strategy’s Protection Level provides a level of protection against negative Strategy Earnings. However, your downside protection may be lower when you receive negative Interim Strategy Earnings on a StrategyNon-Preferred Withdrawal than when you receive negative Term Strategy Earnings or negative Interim Strategy Earnings on a Strategy Preferred Withdrawal. See “What are the Crediting Factors for a Strategy?” below.
Once you reach the Annuitization Date, the Strategies are not available for investment. In addition, except when the Contract is continued, the Strategies are not available for investment after we pay the Death Benefit.
What are the Indexes for the Strategies?The Indexes for the Strategies that we are offering for investment currently include:
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Each Index is described in more detail under “Strategies – Indexes” and “Risk Factors – Index Risk.” We reserve the right to make Strategies available for investment that use Indexes other than those listed above. There is no guarantee that a Strategy using any of the Indexes listed above will always be available for investment.
What may I do at the end of a Strategy Term?At the end of a Strategy Term for a Strategy, you may take any of the permissible actions listed below.
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Please note that you are not permitted to transfer Strategy Value from a Strategy Account until the end of its Strategy Term. Nor are you permitted to transfer Strategy Value into a Strategy Account while its Strategy Term is ongoing. See “Risk Factors – Transfer Risk.”
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Non-Preferred Withdrawals may be subject to CDSCs and MVAs, and the interest crediting formula forNon-Preferred Withdrawals is typically less favorable to you than the formula for Preferred Withdrawals. See “What are Preferred Withdrawals andNon-Preferred Withdrawals?” and “Why Should I Avoid TakingNon-Preferred Withdrawals?” below.
For each of your Strategy Accounts, at least 30 days prior to the end of the Strategy Term, we will send you a notice stating (i) the Strategies that will be available for investment at the end of the Strategy Term, (ii) their respective Crediting Factors, and (iii) how to communicate your instructions to us regarding what to do with the Strategy Value invested in the maturing Strategy Account.
If we do not receive instructions from you prior to the close of business on the Strategy Term End Date (or if the Strategy Term End Date is not a Business Day, then at least one Business Day prior to the Strategy Term End Date), your Strategy Value will remain in the same Strategy, but with the Crediting Factors that we declare for the upcoming Strategy Term. If the same Strategy is no longer available for investment, the Strategy Value will be transferred to the Default Option. See “Risk Factors – Transfer Risk.”
The Default Option is the1-Year S&P 500 100% Protection Level Strategy. The Default Option’s other Crediting Factors, which may include the Index Multiplier, Strategy Spread, andNon-Preferred Withdrawal Adjustment Percentage, will be sent to you at least 30 days prior to the end of the Strategy Term.
When are Strategy Earnings credited to a Strategy Account?Strategy Earnings are the sum of any Term Strategy Earnings and Interim Strategy Earnings.
We credit Strategy Earnings to a Strategy Account on the Strategy Term End Date. We refer to this form of Strategy Earnings as “Term Strategy Earnings.” Term Strategy Earnings represent Strategy Earnings paid on the full Strategy Value of a Strategy Account as of the Strategy Term End Date. Term Strategy Earnings take into account the performance of the Strategy’s Index over the course of the entire Strategy Term (except when theLock-In feature has been exercised or in the event that the Index has been substituted).
We also credit Strategy Earnings to a Strategy Account when you take a partial withdrawal or full surrender prior to the Strategy Term End Date. We refer to this form of Strategy Earnings as “Interim Strategy Earnings.” Interim Strategy Earnings represent both (i) any Strategy Earnings paid on any portion of the partial withdrawal or full surrender that is a Strategy Preferred Withdrawal and (ii) any Strategy Earnings paid on any portion of the partial withdrawal or full surrender that is a StrategyNon-Preferred Withdrawal. Interim Strategy Earnings take into account the performance of the Strategy’s Index between the beginning of the Strategy Term and the date on which the partial withdrawal or full surrender was taken (except when theLock-In feature has been exercised or in the event that the Index has been substituted). Interim Strategy Earnings are not credited on a Strategy’s Strategy Term End Date, because only Term Strategy Earnings are credited on a Strategy’s Strategy Term End Date.
If you exercise theLock-In feature for a Strategy Account, Term Strategy Earnings and Interim Strategy Earnings will take into account the performance of the Strategy’s Index since the beginning of the Strategy Term until theLock-In Date. See “Calculation of Strategy Earnings –Lock-In.”
How are Term Strategy Earnings calculated?We calculate Term Strategy Earnings for the Strategy Account using the following formula:
Term Strategy Earnings = Strategy Value x SEP
The Strategy Value of a Strategy Account represents the value of your investment in the Strategy without taking into account any unrealized Strategy Earnings, which differs from the Modified Strategy Value and the Strategy Accumulation Value. See “Strategy Account and Contract Values.”
The Strategy Earnings Percentage (or SEP) is a factor that we calculate based on certain Crediting Factors, including the performance of the Strategy’s Index, and the amount of time that has elapsed during the Strategy Term. See “Calculation of Strategy Earnings – Strategy Earnings Percentage (SEP) and Interim Earnings Percentage (IEP).”
How are Interim Strategy Earnings calculated?We calculate Interim Strategy Earnings for a Strategy Account using the following three-step process:
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Interim Strategy Earnings on Strategy Preferred Withdrawals = SEP x amount of the Strategy Preferred Withdrawal / (1 + SEP)
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Interim Strategy Earnings on StrategyNon-Preferred Withdrawals = IEP x amount of the StrategyNon-Preferred Withdrawal / (1 + IEP)
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Please note that the three-step process described above is applied on a Strategy Account by Strategy Account basis. If you are invested in multiple Strategy Accounts, your Strategy Accounts will likely have different Strategy Remaining Preferred Withdrawal Amounts. As a result, it is unlikely that a partial withdrawal or full surrender will result in the same amount of Strategy Preferred Withdrawals and StrategyNon-Preferred Withdrawals across your Strategy Accounts.
As reflected in the three-step process above, Interim Strategy Earnings for a Strategy Account may be calculated using either the Strategy Earnings Percentage (or SEP), the Interim Earnings Percentage (or IEP), or both depending on whether you have taken a Strategy Preferred Withdrawal and/or a StrategyNon-Preferred Withdrawal. The SEP and IEP are rates of interest that we use to calculate Strategy Earnings, as well as other values under the Contract.
You should carefully consider the consequences of takingNon-Preferred Withdrawals.Non-Preferred Withdrawals may be subject to CDSCs and MVAs. In addition, Interim Strategy Earnings credited on a StrategyNon-Preferred Withdrawal are calculated using the IEP. The calculation of Interim Strategy Earnings using the IEP will result in a lower positive interest rate, or potentially a more negative interest rate, than the calculation of Interim Strategy Earnings using the SEP. As such, you should generally avoid takingNon-Preferred Withdrawals under the Contract. See “What are Preferred Withdrawals andNon-Preferred Withdrawals?” and “Why Should I Avoid TakingNon-Preferred Withdrawals?” below.
How are the SEP and IEP calculated, and why is the SEP formula more favorable to me than the IEP formula?The SEP and IEP are calculated using different formulas.
Each day during a Strategy Term for a Strategy, we calculate the SEP using the following formula:
SEP = Greater of A or B, where:
A = Strategy Change Percentage(see “What is the Strategy Change Percentage, and how is it calculated?”)
B = Protection Level – 100%
Please note that if the Contract is continued under the Contract’s Spousal Continuation Death Benefit, the calculation of the SEP changes for the remainder of the Strategy Terms that were ongoing when the Contract was continued. See “Death Benefit and Succession Rights – Calculation of the SEP After Continuation of the Contract.”
Each day during a Strategy Term for a Strategy, we calculate the IEP using the following formula:
IEP = Greater of A or B, where:
A = C x D, where:
C = Strategy Change Percentage(see “What is the Strategy Change Percentage, and how is it calculated?”)
D = 1 if C is less than 0, or (ET / ST) if C is greater than or equal to zero
ET = Elapsed Term(i.e., the number of calendar days elapsed in the Strategy Term divided by 365)
ST = Strategy Term(in whole years,e.g., 1, 2, 3)
B = E – F x (ST – ET), where:
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E = Protection Level minus 100%
F =Non-Preferred Withdrawal Adjustment Percentage
ET = Elapsed Term(i.e., the number of calendar days elapsed in the Strategy Term divided by 365)
ST = Strategy Term(in whole years,e.g., 1, 2, 3)
See “Calculation of Strategy Earnings – Strategy Earnings Percentage (SEP) and Interim Earnings Percentage (IEP)” for more information, including examples of how to calculate the SEP and IEP.
While the ability to takeNon-Preferred Withdrawals provides an additional level of liquidity for Strategy Accounts prior to their Strategy Term End Dates, as previously noted, you should generally avoid takingNon-Preferred Withdrawals under the Contract. One reason is thatNon-Preferred Withdrawals may be subject to CDSCs and MVAs. Another reason is that the IEP formula is typically less favorable to you than the SEP formula, which is used to calculate any Interim Strategy Earnings when you take a Preferred Withdrawal. Whether the SEP formula is more favorable to you than the IEP formula depends on the Protection Level of the Strategy and whether the interest is positive or negative. For example:
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What is the Strategy Change Percentage, and how is it calculated?The Strategy Change Percentage (or SCP) is a factor in the formulas for the SEP and IEP. Each day during a Strategy Term for a Strategy, we calculate the SCP using the following formula:
Strategy Change Percentage = A – B, where:
A = Index Change x Index Multiplier(see “How is the Index Change calculated?” below)
B = Strategy Spreadx Elapsed Term (i.e., the number of calendar days elapsed in the Strategy Term divided by 365)
You should understand that the SCP does not equal the Index Change (i.e., the percentage change in the value of Strategy’s Index between the beginning of a Strategy Term and a future date during the Strategy Term). Instead, the SCP essentially represents an adjusted Index Change.
In addition to the Index Change, the SCP formula incorporates the Index Multiplier and the Strategy Spread.
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See “What are the Crediting Factors for a Strategy” for important information about the Index Multiplier, the Strategy Spread, and the other Crediting Factors.
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See “What are the Crediting Factors for a Strategy?” below. See also “Risk Factors – Limited Growth Potential Risk (Index Multiplier & Strategy Spread Risk).”
How is the Index Change calculated?We calculate the Index Change for a Strategy on apoint-to-point basis. Except as noted below, we calculate the Index Change by comparing (a) the Index Value on the first day of a Strategy Term to (b) the Index Value on a specific future date during that Strategy Term. For example, if the Index Value on the first and last day of a Strategy Term equals 1,000 and 1,100, respectively, the Index Change between those two dates equals +10% (i.e., (10% = (1,100 – 1,000) / 1000). Conversely, if the Index Value on the first and last day of a Strategy Term equals 1,000 and 900, respectively, the Index Change between those two dates equals-10% (i.e.,-10% = (900 –1,000) / 1000).
Please note that we calculate the Index Change differently when you have exercised theLock-In feature or in the event that we substituted an Index, as described in this prospectus. See “Index Change” and“Lock-In” under “Calculation of Strategy Earnings.”
While the Index Change is important to the amount of Strategy Earnings that is credited to a Strategy Account, you should note that we do not calculate Strategy Earnings based solely on the Index Change, as reflected in the formulas for the IEP and the SEP (as well as the SCP).
Can Ilock-in an Index Value during a Strategy Term?Yes. On any day prior to the Strategy Term End Date for a Strategy Account, you maylock-in the Index Value for that Strategy Account. Thelocked-in Index Value will be used for purposes of calculating the Index Change for the remainder of the Strategy Term. As a result, the Index Change will not change for the remainder of the Strategy Term. You should note, however, thatlocking-in an Index Value does notlock-in a particular SEP, IEP, or SCP.
For each Strategy Account, theLock-In feature may be exercised only once during a Strategy Term. Exercise of theLock-In feature is irrevocable.
You should fully understand the operation and impact of theLock-In feature prior to purchasing the Contract or exercising it. See“Lock-In Risk” and“Lock-In” for additional information.
What are the Crediting Factors for a Strategy?Each Strategy has the following six Crediting Factors: an Index, a Strategy Term, an Index Multiplier, a Strategy Spread, a Protection Level, and aNon-Preferred Withdrawal Adjustment Percentage. The following table provides a brief description of the Crediting Factors and the purposes that they serve under the Contract. See “Crediting Factors” for additional information.
When selecting a Strategy for investment, you should not select a Strategy based on any single Crediting Factor in isolation. While one Crediting Factor for a Strategy may be more or less favorable or attractive to you, the other Crediting Factors also impact whether that Strategy is appropriate for you based on your financial needs and goals. You should consult with a financial professional prior to selecting a Strategy for investment.
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For those Strategies that are available for initial investment under your Contract on the Date of Issue, their Crediting Factors (as well as any associated guaranteed minimums and maximums) will be described in your Contract. Their respective Crediting Factors are guaranteed only for their first Strategy Terms. For any new Strategies that we make available for investment under your Contract after the Date of Issue, their Crediting Factors (as well as any associated guaranteed minimums and maximums) will be declared by us at least 30 days prior to the beginning of their first Strategy Terms. Their respective Crediting Factors are guaranteed only for their first Strategy Terms. The guaranteed maximum and minimums associated with a Strategy’s Crediting Factors are guaranteed for the entire time that the Strategy is offered under the Contract.
For all Strategies, after their first Strategy Terms, we will declare their respective Crediting Factors at least 30 days prior to the beginning of their next Strategy Terms. A Strategy’s Crediting Factors are guaranteed only for the Strategy Term for which they are declared.
What are Preferred Withdrawals andNon-Preferred Withdrawals?Each Contract Year, your total Gross Withdrawals under your Contract (if any) up to your Preferred Withdrawal Amount will be treated as Preferred Withdrawals. Any portion of your total Gross Withdrawals under your Contract (if any) in excess of your Preferred Withdrawal Amount will be treated asNon-Preferred Withdrawals. This applies to all Gross Withdrawals, including withdrawals taken on a Strategy Term End Date. Your Preferred andNon-Preferred Withdrawals are further broken down into Strategy Preferred Withdrawals and StrategyNon-Preferred Withdrawals for each of your Strategy Accounts.
If you take a StrategyNon-Preferred Withdrawal from a Strategy Account on its Strategy Term End Date, the withdrawal may be subject to a CDSC and MVA, and you would not receive any Interim Strategy Earnings (because only Term Strategy Earnings are credited on a Strategy’s Strategy Term End Date).
At the beginning of each Contract Year while you are invested in one or more Strategies, we calculate your Preferred Withdrawal Amount using the following formula:
Preferred Withdrawal Amount = Greater of A or B, where:
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Your Contract Value is the sum of your Strategy Values. See “Strategy Account and Contract Values – Strategy Value and Contract Value.”
The Preferred Withdrawal Percentage is determined according to a schedule. For the first six Contract Years, the Preferred Withdrawal Percentage is 7.00%. After the sixth Contract Year, the Preferred Withdrawal Percentage is 10.00%.
At any point during a given Contract Year, the total dollar amount of Gross Withdrawals that you may take under the Contract without taking aNon-Preferred Withdrawal is represented by your Remaining Preferred Withdrawal Amount. Each Gross Withdrawal during a Contract Year will decrease your Remaining Preferred Withdrawal Amountdollar-for-dollar until the Remaining Preferred Withdrawal Amount equals zero. Once your Remaining Preferred Withdrawal Amount equals zero, all Gross Withdrawals taken during the remainder of the Contract Year will be treated asNon-Preferred Withdrawals. Depending on your Remaining Preferred Withdrawal Amount, a Gross Withdrawal may be treated as a Preferred Withdrawal, aNon-Preferred Withdrawal, or a combination of both.
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Why Should I Avoid TakingNon-Preferred Withdrawals?While the ability to takeNon-Preferred Withdrawals provides an additional level of liquidity for Strategy Accounts prior to their Strategy Term End Dates, to the extent possible, you should carefully manage the amount of your partial withdrawals, and the timing of any full surrender, to avoid takingNon-Preferred Withdrawals for the following reasons:
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Number of Completed Contract Years | CDSC Percentage (as a percentage of the CDSC Base) | |
0 | 6.00% | |
1 | 5.00% | |
2 | 4.00% | |
3 | 3.00% | |
4 | 2.00% | |
5 | 1.00% | |
6+ | 0.00% |
The CDSC Base equals the amount of theNon-Preferred Withdrawal. If aNon-Preferred Withdrawal represents only a portion of a Gross Withdrawal, the CDSC Base equals only the portion of the Gross Withdrawal that is aNon-Preferred Withdrawal. There are circumstances under which we will or may waive or reduce a CDSC.
A CDSC will always reduce the amount of your Cash Withdrawal.
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An MVA—which may be positive, negative, or equal to zero—is assessed on the MVA Base. The MVA Base equals the amount of theNon-Preferred Withdrawal. If aNon-Preferred Withdrawal represents only a portion of a Gross Withdrawal, the MVA Base equals only the portion of the Gross Withdrawal that is aNon-Preferred Withdrawal. There are circumstances under which we will or may waive an MVA.
A negative MVA will always reduce the amount of your Cash Withdrawal. A positive MVA will always increase the amount of your Cash Withdrawal. A MVA equal to zero will have no effect on your Cash Withdrawal.
See “Contingent Deferred Sales Charge and Market Value Adjustment – Market Value Adjustment” for an explanation of how we calculate an MVA.
Does the Contract provide a death benefit?Yes. Prior to the Annuitization Date, the Death Benefit is triggered on the death of the Annuitant (or theCo-Annuitant, if any), provided that (i) the death occurs prior to the Annuitization Date; (ii) the Contract is in force at the time of the death; and (iii) there is no Contingent Annuitant. Except as otherwise provided in this prospectus, the Death Benefit will equal the Contract Accumulation Value (which may be more, less, or equal to your Contract Value). Surviving spouses are permitted to continue the Contract as described in this prospectus, subject to certain restrictions.
What annuity payment options are available once I reach the Annuitization Date?Subject to certain restrictions described in this prospectus, you may select from the following three annuity payment options under the Contract:
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Other annuity payments options may be available. If no annuity payment option is selected prior to the latest possible Annuitization Date, we will automatically select the single life annuity with 240 month term certain for you. Once an annuity payment option is selected—whether by you or automatically by us—it may not be changed. All annuity payments are paid on a fixed basis.
How do I contact Nationwide?If you need more information, or you wish to submit a request, you should contact us at our Service Center:
The purchase and maintenance of the Contract involves certain risks. You should carefully consider the following factors, in addition to the matters set forth elsewhere in this prospectus, prior to purchasing the Contract or deciding whether to maintain the Contract.
GENERAL LIQUIDITY RISK
We designed the Contract to be a long-term investment, not a short-term investment. You may take partial withdrawals or a full surrender at any time while your Contract is invested in one or more Strategies, but there may be negative consequences for doing so if any such withdrawal or full surrender involves aNon-Preferred Withdrawal. See“Non-Preferred Withdrawal Risk” below. In addition, any partial withdrawal or full surrender may also be subject to a 10% additional federal tax if taken before age 591⁄2. If you plan on takingNon-Preferred Withdrawals, or if you plan to take partial withdrawals or a full surrender prior to age 591⁄2, this Contract may not be appropriate for you.
We may defer payment for a partial withdrawal or full surrender under this Contract for up to six months if the insurance regulatory authority of the state in which we issued the Contract approves such deferral. There are other circumstances under which we may delay the payment of partial withdrawals or full surrenders, as described in this prospectus. See “Withdrawals – General.”
It is not possible to take withdrawals or surrender your Contract once you reach the Annuitization Date.
TRANSFER RISK
The extent to which you may transfer Strategy Value among the Strategies is restricted. Strategy Value in a Strategy Account cannot be transferred until the end of the Strategy Term, and you cannot transfer Strategy Value into a Strategy Account while its Strategy Term is ongoing. This restricts your ability to react to changes in market conditions during a Strategy Term other than through withdrawals and by exercising theLock-In feature, which also has risks. You should consider whether the inability to reallocate Strategy Value at any time is consistent with your financial needs.
In order to transfer Strategy Value from a Strategy Account on the Strategy Term End Date to another Strategy that is available for investment, we must receive your transfer request prior to the close of business on the Strategy Term End Date (or if the Strategy Term End Date is not a Business Day, then at least one Business Day prior to the Strategy Term End Date). If we do not receive such a transfer request, your Strategy Value will be treated in the following manner:
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If your Strategy Value is invested in the same Strategy or the Default Option as described above, and you do not wish to be invested in that Strategy or the Default Option, your only option will be to fully surrender the Contract. You can take a partial withdrawal to mitigate your unwanted investment exposure, but if you are invested in multiple Strategies, you cannot instruct us to take the partial withdrawal solely from the undesired Strategy Account. Instead, your partial withdrawal will be allocated among all of your Strategy Accounts. In addition, taking a partial withdrawal or full surrender may result in aNon-Preferred Withdrawal. See“Non-Preferred Withdrawal Risk” below. Taking a partial withdrawal or a full surrender may also have negative tax consequences.
INDEX RISK
When you invest in a Strategy for a Strategy Term, you are not directly participating in the performance of any stocks or other assets. Instead, the performance of the Strategy depends (in part) on the performance of its Index over the course of the Strategy Term. The performance of an Index is based on changes in the values of the securities or other assets that comprise or define the Index. The securities comprising or defining the Indexes are subject to a variety of investment risks, many of which are complicated and interrelated. These risks may affect capital markets generally, specific market segments, or specific issuers. The performance of the Indexes may fluctuate, sometimes rapidly and unpredictably. Negative index performance may cause you to realize investment losses. Your investment losses may be significant.
The historical performance of an Index or a Strategy does not guarantee future results. It is impossible to predict whether an Index or a Strategy will perform positively or negatively over the course of a Strategy Term.
While it is not possible to invest directly in an Index under the Contract or otherwise, when you invest in a Strategy, you are indirectly exposed to the investment risks associated with its Index. If you invest in a Strategy that has an Index with higher investment risks, your investment in that Strategy indirectly exposes you to those higher investments risks.
Because the Indexes under the Contract are all comprised or defined (at least in part) by a collection of equity securities, each Index is exposed to market risk and issuer risk. Market risk is the risk that market fluctuations may cause the value of a security or asset to fluctuate, sometimes rapidly and unpredictably. Issuer risk is the risk that the value of an issuer’s securities may decline for reasons directly related to the issuer, as opposed to the market generally.
Provided below is a summary of other important investment risks to which each Index under the Contract is exposed. For more information on the Indexes, see “Strategies – Indexes.”
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The index’s exposure to its fixed income components may be greater, perhaps significantly greater, than its exposure to its equity or commodities components. If the index has greater exposure to its fixed income components, a change in the value of the index’s fixed income futures contracts may have a greater impact on the index’s return than a change in the value of the index’s equity or commodities components.
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The J.P. Morgan Index utilizes a rules-based methodology based on momentum and smoothing volatility. The index’s methodology identifies market directions in trending markets. As such, the index may not perform well in markets characterized by short-term volatility.
On a monthly basis, the index is rebalanced to strategically adjust its composition to include the equity, fixed income, and commodities components with the greatest returns over the previous six months, and those components are weighted based on the index’s target annualized volatility. There can be no assurance that the index’s methodology will generate positive performance or achieve its target volatility. As part of its methodology for seeking the target volatility, the index may not be fully exposed to its equity, fixed income, or commodity components at all times. Any portion of the index without market exposure will not participate in positive market movements.
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The J.P. Morgan Index also includes a “stop-loss” feature. If on any day the overall index’s weekly return is less than-3%, the index removes its market exposure entirely. After one week, the indexre-establishes its market exposure. The stop-loss feature may reduce the risk of potential short-term loss in the index during a period of significant market distress but may also cause the index to miss a potential recovery in the underlying asset classes.
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The NYSE® Zebra Edge® Index is an equally-weighted index that uses a rules-based contrarian methodology favoring “cool” stocks over “hot” stocks within the universe of the 500 stocks included in the NYSE® U.S. Large Cap Equal Weight IndexTM. Cool stocks are stocks that have experienced lower trading frequency over the last two years and lower volatility over the last three months and one year. Hot stocks are stocks that have experienced the highest trading frequency over the last two years and the highest volatility over the last three months and one year. The index rebalances quarterly based on its methodology. There can be no assurance that the index’s methodology will generate positive performance.
The NYSE® Zebra Edge® Index also rebalances daily as part of its risk control process designed to mitigate volatility. When certain volatility thresholds are triggered, the index moves a portion of its equity allocation to U.S. Treasury futures or cash. The index’s exposure to U.S. Treasury futures and cash is adjusted on a daily basis. To the extent that the index reduces its exposure to the equity markets, the index will not be fully participating in any equity market growth. The risk control overlay strategies may not successfully manage volatility.
NON-PREFERRED WITHDRAWAL RISK
To the extent possible, you should carefully manage the amount of your partial withdrawals, and the timing of any full surrender, to avoid takingNon-Preferred Withdrawals (which, in turn, result in taking StrategyNon-Preferred Withdrawals).
Non-Preferred Withdrawals may be subject to CDSCs. The amount of a CDSC, if any, will depend on the amount of aNon-Preferred Withdrawal and the number of Contract Years that you have completed when you take aNon-Preferred Withdrawal. The CDSC schedule starts at 6.00% and declines with each completed Contract Year until it reaches 0% after six completed Contract Years. When a CDSC applies to aNon-Preferred Withdrawal, the CDSC will reduce the amount of your Cash Withdrawal. Preferred Withdrawals are not subject to CDSCs.
Non-Preferred Withdrawals are subject to MVAs during the MVA Period, which lasts until you have completed six Contract Years. An MVA—which may be positive, negative, or equal to zero—is assessed as a percentage of theNon-Preferred Withdrawal. If an MVA is negative, the MVA will reduce the amount of your Cash Withdrawal. Preferred Withdrawals are not subject to MVAs.
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When you take a StrategyNon-Preferred Withdrawal prior to the Strategy Term End Date, we use the Interim Earnings Percentage (or IEP) rather than the Strategy Earnings Percentage (or SEP) to calculate Interim Strategy Earnings. The IEP formula is typically less favorable to you than the SEP formula, which is used to calculate any Interim Strategy Earnings when you take a Preferred Withdrawal. The SEP formula is more favorable to you than the IEP formula for two reasons:
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NON-PREFERRED WITHDRAWAL ADJUSTMENT PERCENTAGE RISK
TheNon-Preferred Withdrawal Adjustment Percentage is a factor in the calculation of the IEP. TheNon-Preferred Withdrawal Adjustment Percentage represents a percentage that may negatively impact the IEP when a StrategyNon-Preferred Withdrawal is taken prior to the end of a Strategy Term.
Within the IEP formula, the manner in which theNon-Preferred Withdrawal Adjustment Percentage is applied causes the most negative interest rate possible under the IEP formula to be more negative than the most negative interest possible under the SEP formula. Under the SEP formula, the SEP will never be lower than: Protection Level–100%. Under the IEP formula, the IEP will never be lower than: (Protection Level–100%)–(Non-Preferred Withdrawal Adjustment Percentage x Strategy Term).
The potential impact of theNon-Preferred Withdrawal Adjustment Percentage on the IEP gradually decreases over the course of a Strategy Term, reaching its least potential impact on the day prior to the Strategy Term End Date. As a result, the lowest possible IEP for a Strategy during a Strategy Term will gradually increase as the Strategy Term elapses.
Based on the IEP formula, the potential impact of aNon-Preferred Withdrawal Adjustment Percentage is directly related to the length of a Strategy Term. For example, if two Strategies have the sameNon-Preferred Withdrawal Adjustment Percentage but one Strategy has aone-year Strategy Term and the other has a three-year Strategy Term, the potential impact of theNon-Preferred Withdrawal Adjustment Percentage for the three-year Strategy Term is three times greater than for theone-year Strategy Term. As such, when comparing Strategies with Strategy Terms of the same length but differentNon-Preferred Withdrawal Adjustment Percentages, a higherNon-Preferred Withdrawal Adjustment Percentage is always more unfavorable to you than a lowerNon-Preferred Withdrawal Adjustment Percentage.
When selecting a Strategy for investment, you should not select a Strategy based on theNon-Preferred Withdrawal Adjustment Percentage in isolation. While one Crediting Factor for a Strategy may be more or less favorable or attractive to you, the other Crediting Factors also impact whether that Strategy is appropriate for you based on your financial needs and goals. In addition, if you do not take anyNon-Preferred Withdrawals, theNon-Preferred Withdrawal Adjustment Percentage will not affect your Strategy Earnings. Even if you take aNon-Preferred Withdrawal, theNon-Preferred Withdrawal Adjustment Percentage will not affect your Strategy Earnings unless the IEP is so negative that it triggers your downside protection within the IEP formula. You should consult with a financial professional prior to selecting a Strategy for investment.
LIMITED GROWTH POTENTIAL RISK (STRATEGY SPREAD AND INDEX MULTIPLIER RISK)
When you invest in a Strategy, the growth (or upside) potential of your investment is not capped, but if your Strategy has a Strategy Spread greater than zero, it will reduce the upside potential of your investment. In addition, if the Index Multiplier is less than 1, the Index Multiplier will dampen the upside potential of your investment.
As part of the process for calculating Strategy Earnings for a Strategy Account, we calculate the Strategy Change Percentage (or SCP), which is then used to calculate the Strategy Earnings Percentage (or SEP) and Interim Earnings Percentage (or IEP). See “Calculation of Strategy Earnings.” As described under “Calculation of Strategy Earnings – Strategy Change Percentage (SCP),” the SCP is effectively an adjusted Index Change after the application of the Strategy Spread and the Index Multiplier within the SCP formula.
The Strategy Spread represents an annualized percentage rate that always has the effect of reducing the SCP within the SCP formula. The effect of the Strategy Spread gradually increases over the course of the Strategy Term, reaching its full potential impact on the Strategy Term End Date. Because the Strategy Spread is an annualized percentage, if two Strategies with the same Strategy Spreads have Strategy Terms that differ in length, then over the course of a single Strategy Term, the potential impact of the Strategy Spread for the longer Strategy will be greater than for the shorter Strategy.
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The Index Multiplier represents the proportion of Index performance that is reflected in the SCP. Within the formula for calculating the SCP, the Index Multiplier may have the effect of amplifying or dampening the SCP (or neither).
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When selecting a Strategy for investment, you should not select a Strategy based on any single Crediting Factor in isolation, including the Index Multiplier or the Strategy Spread. While one Crediting Factor for a Strategy may be more or less favorable or attractive to you, the other Crediting Factors also impact whether that Strategy is appropriate for you based on your financial needs and goals. You should consult with a financial professional prior to selecting a Strategy for investment.
LOCK-IN RISK
Under theLock-In feature, you maylock-in an Index Value for a Strategy Account prior to the Strategy Term End Date. If you exercise theLock-In feature, the Index Value that is next calculated after we receive your request will belocked-in for purposes of calculating the Index Change for the remainder of the Strategy Term. You should consider the following risks related to theLock-In feature:
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CHANGES TO CREDITING FACTORS RISK
Except in the limited circumstances under which we may substitute an Index, the Crediting Factors for a Strategy will not change for the duration of an ongoing Strategy Term. However, the Crediting Factors for a Strategy, including the Index, may change from Strategy Term to Strategy Term. Other than the guaranteed minimums and maximums associated with a Strategy’s Crediting Factors, which will not change for the entire time that the Strategy is offered under the Contract, there is no guarantee that a Strategy’s current Crediting Factors will remain the same while you own the Contract.
You do not have the right to reject any Crediting Factors that we declare for a future Strategy Term. If you do not wish to invest inany of the Strategies, your only option will be to fully surrender your Contract. A full surrender may be treated (in whole or in part) as aNon-Preferred Withdrawal, which may be subject to a CDSC and an MVA, and any Interim Strategy Earnings on theNon-Preferred Withdrawal would be calculated using the Interim Earnings Percentage (or IEP). A full surrender may also have negative tax consequences.
You should evaluate whether our ability to change Crediting Factors, and your inability to reject such changes, is consistent with your investment goals. When such changes occur, you should also evaluate whether those changes are appropriate for you based on your investment goals and, if not, you should evaluate your options under the Contract, which may be limited and may have negative consequences associated with them, as described throughout this prospectus.
INDEX SUBSTITUTION RISK
The Index for a Strategy generally will not change for the duration of an ongoing Strategy Term. However, we may substitute the Index during a Strategy Term in limited circumstances. Subject to regulatory approval, we may substitute the Index if (a) the Index is discontinued or (b) there is a substantial change to the calculation of the Index. If we substitute an Index, the new Index will be similar in composition to the old Index. We will seek to notify you at least 30 days prior to substituting an Index for any Strategy in which you are invested. However, in the event that it is necessary to substitute on less than 30 days’ notice due to circumstances outside of our control, we will provide notice of the substitution as soon as practicable.
You will have no right to reject the substitution of an Index. If we substitute the Index for a Strategy in which you are invested, you will not be permitted to transfer your Strategy Value until the end of the Strategy Term. See “Transfer Risk” above.
If we substitute the Index for a Strategy in which you are invested, the performance of the new Index may differ significantly from the performance of the old Index. This may negatively affect the Strategy Earnings credited to your Strategy Account and the Index Values that you canlock-in under theLock-In feature.
RIGHT TO EXAMINE RISK
Under state insurance laws, you have the right, during a limited period of time, to examine the Contract and decide if you want to keep it or cancel it. This right is referred to as a “free look” right. The length of this time period depends on state law and may vary depending on whether the purchase is a replacement of another annuity contract. For ease of administration, Nationwide will honor any free look cancellation request that is in good order and received at the Service Center or postmarked within 30 days after the Date of Issue.
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Where state law requires the return of purchase payments for free look cancellations, Nationwide will return the Purchase Payment applied to the Contract, less any withdrawals from the Contract and any applicable federal and state income tax withholding. Where state law requires the return of Contract Accumulation Value for free look cancellations, Nationwide will return the Contract Accumulation Value as of the date of the cancellation, less any withdrawals from the Contract and any applicable federal and state income tax withholding. It is possible that your Contract Accumulation Value may be less than your Purchase Payment.
NATIONWIDE’S FINANCIAL STRENGTH AND CLAIMS-PAYING ABILITY RISK
Our general account assets support our guarantees under the Contract and are subject to claims by our creditors. As such, our guarantees under the Contract are subject to our financial strength and claims-paying ability. There is a risk that we may default on those guarantees. You need to consider our financial strength and claims-paying ability in meeting our guarantees under the Contract. You may obtain information on our financial condition by reviewing our financial statements included in this prospectus. Additionally, information concerning our business and operations is set forth under “Nationwide LifeMutual Insurance Company and Subsidiaries.”Nationwide Mutual Fire Insurance Company (the "Companies") are the ultimate controlling persons of the Nationwide group of companies. The Companies were organized under Ohio law in December of 1925 and 1933 respectively. The Companies engage in a general insurance and reinsurance business, except life insurance.
To request additional information about
CYBER SECURITY RISK
exemption provided by Rule 12h-7 under the Securities Exchange Act of 1934 ("1934 Act"). In reliance on that exemption, Nationwide does not file periodic reports that would be otherwise required under the 1934 Act.
Cyber-attacks may negatively affect your investment in the Contract.
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GENERAL INFORMATION ABOUT THE CONTRACT
This prospectus describes the Contract. The Contract is an agreement between
• | In writing: P.O. Box 182021, Columbus, Ohio 43218-2021 |
• | By telephone: 1-800-848-6331, TDD 1-800-238-3035 |
• | By the internet: http://www.nationwide.com/nw/investor-relations/index.htm |
On the Annuitization Date, if it occurs, we promise to begin paying annuity payments based on the amount annuitized and the annuity payment option selected. You may not invest in the Strategies once you reach the Annuitization Date.
The Contract has a Death Benefit that may be triggered prior to the Annuitization Date upon the death of the Annuitant (or theCo-Annuitant, if any). A surviving spouse may be eligible to continue the Contract. See “Death Benefit and Succession Rights.”
All payments under the Contract are subject to the terms and conditions described in this prospectus, as well as our financial strength and claims-paying ability.
The Contract is available as aNon-Qualified Contract, which will provide you with certain tax deferral features under the Code. If you purchase the Contract as an Individual Retirement Account or Roth IRA, the Contract will not provide you with any additional tax deferral benefits.
This prospectus describes the material rights and obligations under the Contract. Certain provisions of the Contract may be different from the general description in this prospectus due to variations required by state law. For example, state law may require different right to examine and cancel periods. The state in which your Contract is issued also governs whether certain features will vary under your Contract. Please see your Contract for the material rights and obligations specific to you. All material rights and obligations under your Contract will be included in your Contract or in riders or endorsements attached to your Contract. To review a copy of your Contract and any riders or endorsements, contact the Service Center.
We will charge against your Contract any premium taxes levied by a state or other government entity in connection with your Contract. Premium tax rates currently range from 0% to 5.0%. This range is subject to change. The method that we use to assess premium taxes will be determined by us at our sole discretion in compliance with state law. Nationwide will assess premium taxes to the Contract at the time Nationwide is assessed the premium taxes by the state. Premium taxes may be deducted from death benefit proceeds.
The Contract isnon-participating, meaning that the Contract will not share in our profits or surplus.
To the extent allowed by state law, we reserve the right to refuse our consent to any assignment at any time on anon-discriminatory basis if the assignment would violate or result in noncompliance with any applicable state or federal law or regulation. The Contract Owner may request to assign or transfer rights under the Contract by sending us a signed and dated request. We will not be bound by an assignment until we acknowledge it.
If we consent to an assignment, the assignment takes effect on the date it is signed, unless otherwise specified by the request. We are not responsible for the validity of an assignment, any tax consequences of any assignment, or for any payment or other settlement made prior to our receipt and consent of and assignment.
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Upon assignment or a change in ownership of the Contract, the Death Benefit under the Contract will be the Surrender Value (rather than the Contract Accumulation Value) unless the requirements specified under “Death Benefit and Succession Rights – Calculation of the Death Benefit” are satisfied.
The Contract is issued in consideration of the single Purchase Payment paid by the Contract Owner. Only one Purchase Payment is allowed under the Contract. The minimum Purchase Payment is $25,000.
Your Purchase Payment should be made payable to Nationwide Life Insurance Company and submitted to our Service Center. Your Purchase Payment must be made in U.S. dollars and must be in a form acceptable to us. You may choose to make your Purchase Payment by personal check, Electronic Funds Transfer (EFT), or wire transfer. We will not accept a Purchase Payment in cash, by credit card, or by money order or travelers check. We reserve the right not to accept third-party checks.
We reserve the right to reject a Purchase Payment that is comprised of multiple payments paid to us over a period of time. If we permit you to make multiple payments as part of your Purchase Payment, the Contract will not be issued until all such payments are received. We reserve the right to hold such multiple payments in anon-interest bearing account until the Date of Issue.
Unless we agree in writing, we will not accept your Purchase Payment if your Purchase Payment plus any other purchase payments for any other annuity contracts issued by Nationwide to the Contract Owner, Annuitant,Co-Annuitant, or Contingent Annuitant exceeds $1,000,000.
We reserve the right to refuse any application for the Contract. If we refuse your application, we will return your Purchase Payment.
We may be required to provide information about your Contract to government regulators. If mandated under applicable law, we may be required to reject a Purchase Payment and to refuse to process transaction requests under the Contract until instructed otherwise by the appropriate regulator.
The Date of Issue is the date we issue your Contract. Your Purchase Payment is applied to the Contract on the Date of Issue. The Date of Issue will be the date as of which we have both received your Purchase Payment and approved your Contract application.
ALLOCATING YOUR PURCHASE PAYMENT
You tell us how to apply your Purchase Payment by specifying in the Contract application your desired allocation among the Strategies that are available for investment on the Date of Issue. You may invest your Purchase Payment in a single Strategy or in multiple Strategies. You may be invested in no more than five Strategy Accounts at any given time.
You have the right to examine and cancel the Contract. If you elect to cancel the Contract, you may return it to the Service Center within a certain period of time known as the “free look” period. Depending on the state in which the Contract was purchased (and, in some states, if the Contract is purchased as a replacement for another annuity contract), the free look period may be 10 days or longer. For ease of administration, Nationwide will honor any free look cancellation request that is in good order and received at the Service Center or postmarked within 30 days after the Date of Issue.
Where state law requires the return of purchase payments for free look cancellations, Nationwide will return the Purchase Payment applied to the Contract, less any withdrawals from the Contract and any applicable federal and state income tax withholding. Where state law requires the return of Contract Accumulation Value for free look cancellations, Nationwide will return the Contract Accumulation Value as of the date of the cancellation, less any withdrawals from the Contract and any applicable federal and state income tax withholding.
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PARTIALNON-PREFERRED WITHDRAWAL TREATED AS A FULL SURRENDER
Nationwide may treat a request for a partial withdrawal as a request for a full surrender of the Contract if the following three criteria exist: (i) any portion of the partial withdrawal is aNon-Preferred Withdrawal; (ii) the partial withdrawal would reduce the Contract Value to an amount less than $5,000; and (iii) the Purchase Payment minus the sum of any Gross Withdrawals since the Date if Issue is less than $5,000.
PARTIES TO THE CONTRACT AND RELATED PERSONS
Nationwide and the Contract Owner (including any Joint Owner) are the parties to the Contract. Other related persons—including any Annuitant, Contingent Annuitant, Beneficiary, and Contingent Beneficiary—have certain rights under the Contract. If the person purchasing the Contract names someone else as the Contract Owner, the purchaser will have no rights under the Contract unless he or she is named under the Contract as one of the other related persons listed above.
Nationwide issues the Contract to the Contract Owner (and any Joint Owner). Nationwide assumes certain risks and promises to make certain payments under the Contract, as described in this prospectus.
The Contract Owner has all rights under the Contract before the Annuitization Date, unless a Joint Owner is named, in which case the Contract Owner and the Joint Owner have equal rights under the Contract before the Annuitization Date. If you are purchasing the Contract for someone else and you will not be a Contract Owner, then you will have no rights under the Contract.
As of the Annuitization Date, the Annuitant(s) exercise all remaining rights under the Contract. See “Annuitization.”
If a Contract has a Joint Owner, the Contract Owner and the Joint Owner have an undivided interest in the Contract.
Non-Qualified Contract Owners can name a Joint Owner at any time before the Annuitization Date. However, Joint Owners must be spouses at the time joint ownership is requested, unless state law requires Nationwide to allownon-spousal Joint Owners. Joint ownership is not permitted for Contracts owned by anon-natural Contract Owner.
Generally, the exercise of any ownership rights under the Contract must be in writing and signed by both Joint Owners. However, if a written election, signed by both Contract Owners, authorizing Nationwide to allow the exercise of ownership rights independently by either Joint Owner is submitted, Nationwide will permit Joint Owners to act independently. If such an authorization is submitted, Nationwide will not be liable for any loss, liability, cost, or expense for acting in accordance with the instructions of either Joint Owner.
If either Joint Owner dies before the Annuitization Date, the Contract continues with the surviving Joint Owner as the
remaining Contract Owner.
ANNUITANT,CO-ANNUITANT, AND CONTINGENT ANNUITANT
Annuitant
The Annuitant is the person who will receive annuity payments once you reach the Annuitization Date. The Annuitant is also the person whose death prior to the Annuitization Date triggers payment of the Death Benefit.
On the Date of Issue, the Annuitant must be age 85 or younger unless we approve a request to name an older Annuitant.
OnlyNon-Qualified Contract Owners may name someone other than himself/herself as the Annuitant. The Contract Owner may not name a new Annuitant without Nationwide’s consent.
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Co-Annuitant
ACo-Annuitant may be named under the Contract. When aCo-Annuitant is named, theCo-Annuitant is considered an Annuitant under the Contract.
ACo-Annuitant must be the Annuitant’s spouse. TheCo-Annuitant must be named at the time of application and will receive the benefit of the Spousal Continuation Death Benefit, provided all the requirements set forth under “Death Benefit and Succession Rights – Spousal Continuation Death Benefit” are met.
If eitherCo-Annuitant dies before the Annuitization Date, the survivingCo-Annuitant may continue the Contract and will receive the benefit of the Spousal Continuation Death Benefit.
On the Date of Issue, theCo-Annuitant must be age 85 or younger unless we approve a request to name an olderCo-Annuitant. ACo-Annuitant cannot be named if a Contingent Annuitant is named.
Contingent Annuitant
If the Annuitant dies before the Annuitization Date, the Contingent Annuitant becomes the Annuitant. If the Contingent Annuitant becomes the Annuitant, all provisions of the Contract which are based on the death of the Annuitant will become based on the death of the Contingent Annuitant. In addition, once the Contingent Annuitant becomes the Annuitant, a new Contingent Annuitant cannot be named.
OnlyNon-Qualified Contract Owners may name a Contingent Annuitant.
On the Date of Issue, the Contingent Annuitant must be age 85 or younger unless we approve a request to name an older Contingent Annuitant. A Contingent Annuitant cannot be named if aCo-Annuitant is named.
BENEFICIARIES AND CONTINGENT BENEFICIARIES
The Beneficiary is the person who is entitled to the Death Benefit if the Annuitant (and Contingent Annuitant, if applicable) dies before the Annuitization Date and there is no Joint Owner. The Contract Owner can name more than one Beneficiary. Multiple Beneficiaries will share the Death Benefit equally, unless otherwise specified.
A Contingent Beneficiary will succeed to the rights of the Beneficiary if no Beneficiary is alive when a Death Benefit is paid. The Contract Owner can name more than one Contingent Beneficiary. Multiple Contingent Beneficiaries will share the Death Benefit equally, unless otherwise specified.
Unless otherwise directed by the Contract Owner, the following applies with respect to Beneficiaries and Contingent Beneficiaries under the Contract:
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CHANGES TO PERSONS NAMED UNDER THE CONTRACT
To the extent allowed by state law, we reserve the right to refuse our consent to any request to change the Contract Owner at any time on anon-discriminatory basis if the change would violate or result in noncompliance with any applicable state or federal law or regulation. Prior to the Annuitization Date (and subject to any existing assignments), the Contract Owner may request to change the following:
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The Contract Owner must submit the request to Nationwide in writing and Nationwide must receive the request at the
Service Center before the Annuitization Date. Once Nationwide receives and records the change request, the change will be effective as of the date the written request was signed (unless otherwise specified by the Contract Owner), whether or not the Contract Owner or Annuitant is living at the time it was recorded. The change will not affect any action taken by Nationwide before the change was recorded.
Any request to change the Contract Owner must be signed by the existing Contract Owner and the person designated as the new Contract Owner. Nationwide may require a signature guarantee.
If the Contract Owner is not a natural person and there is a change of the Annuitant, distributions will be made as if the
Contract Owner died at the time of the change, regardless of whether the Contract Owner named a Contingent Annuitant.
Nationwide reserves the right to reject any change request that would alter the nature of the risk that Nationwide assumed when it originally issued the Contract.
Certain features under the Contract have specific requirements as to who can be named as the Contract
Owner, Annuitant,Co-Annuitant, and/or Beneficiary in order to receive the benefit of the feature. Changes to the parties to the Contract may result in the termination or loss of benefit of these features.
If we permit an assignment or a change in ownership of the Contract, the Death Benefit under the Contract will be the Surrender Value (rather than the Contract Accumulation Value) unless the requirements specified under “Death Benefit and Succession Rights – Calculation of the Death Benefit” are satisfied.
You may invest in one or more of the Strategies offered under the Contract. When you invest in a Strategy, you remain invested in that Strategy for the length of the Strategy Term. The total amount of Strategy Earnings credited over the life of your Contract, if any, will depend on the Strategies that you select for investment and the actions that you take under the Contract.
You have a Strategy Account for each Strategy in which you invest. If you are simultaneously invested in the same Strategy for Strategy Terms that began on different dates, those investments will be represented by separate Strategy Accounts. When Strategy Earnings are credited to you based on your investment in a Strategy, the Strategy Earnings are credited to your corresponding Strategy Account. Strategy Earnings are calculated separately for each Strategy Account.
The amount of Strategy Earnings credited to a Strategy Account during and at the end of a Strategy Term depends on several factors, including:
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You may have no more than five Strategy Accounts at any given time.
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We reserve the right to add or remove Strategies, subject to any necessary regulatory approval. We will not remove a Strategy during an ongoing Strategy Term.
The Strategy Term for a Strategy is the length of time the Strategy will be linked to the performance of an Index, expressed in years. Each Strategy has its own Strategy Term. The lengths of Strategy Terms may vary among Strategies. In addition, the length of a Strategy Term for a Strategy may change from Strategy Term to Strategy Term.
A Strategy Term may begin on the Date of Issue or a Contract Anniversary. A Strategy Term ends on its Strategy Term End Date, which will be a Contract Anniversary.
The Strategy Term is one of the Crediting Factors associated with each Strategy. See “Crediting Factors – Strategy Term” for more information.
The Strategies are index-linked investment options. This means that the performance of a Strategy will depend, in part, on the performance of a particular market index (which we refer to as an “Index”) over the course of a Strategy Term. The Indexes among the Strategies may vary. In addition, the Index for a Strategy may change from Strategy Term to Strategy Term.
The Indexes for the Strategies that we are offering for investment currently include:
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J.P. Morgan Mozaic IISM Index –The J.P. Morgan Mozaic IISM Index (or “J.P. Morgan Index”) tracks futures contracts referencing a diversified group of equity and fixed income assets, and indices referencing commodities future.
The index is an “excess return” (rather than “total return”) index as it tracks the value and roll returns on its component futures contracts and indices, but not does include any notional interest earned on cash deposited as collateral for the purchase of the corresponding futures contracts.
The J.P. Morgan Index utilizes a rules-based methodology based on momentum and smoothing volatility. On a monthly basis, the index is rebalanced to strategically adjust its exposure to the components with the greatest returns over the previous six months, and those components are weighted based on the index’s target annualized volatility. The index also includes a “stop-loss” feature. If on any day the overall index’s weekly return is less than-3%, the index removes its market exposure. After one week, the indexre-establishes its market exposure.
Use of the J.P. Morgan Index in connection with annuity contracts has been exclusively licensed to Nationwide.
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We reserve the right to add or remove any Index in the future and to substitute an Index at any time, subject to necessary regulatory approvals. There is no guarantee that a Strategy using any of the Indexes listed above will always be available for investment.
An Index is one of the Crediting Factors associated with each Strategy. See “Crediting Factors – Index” for more information. See also “Risk Factors – Index Risk” for a description of investment risks associated with the Indexes.
Strategy Earnings are the sum of any Term Strategy Earnings and Interim Strategy Earnings.
We credit Strategy Earnings to a Strategy Account on the Strategy Term End Date. We refer to this form of Strategy Earnings as “Term Strategy Earnings.” Term Strategy Earnings represent Strategy Earnings paid on the Strategy Value of a Strategy Account as of the Strategy Term End Date. Term Strategy Earnings take into account the performance of the Strategy’s Index over the course of the entire Strategy Term (except when theLock-In feature has been exercised or in the event that the Index has been substituted).
We also credit Strategy Earnings to a Strategy Account when you take a partial withdrawal or full surrender prior to the Strategy Term End Date. We refer to this form of Strategy Earnings as “Interim Strategy Earnings.” Interim Strategy Earnings represent both (i) any Strategy Earnings paid on any portion of the partial withdrawal or full surrender that is a Strategy Preferred Withdrawal and (ii) any Strategy Earnings paid on any portion of the partial withdrawal or full surrender that is a StrategyNon-Preferred Withdrawal. Interim Strategy Earnings take into account the performance of the Strategy’s Index between the beginning of the Strategy Term and the date on which the partial withdrawal or full surrender was taken (except when theLock-In feature has been exercised or in the event that the Index has been substituted). Interim Strategy Earnings are not credited on a Strategy’s Strategy Term End Date, because only Term Strategy Earnings are credited on a Strategy’s Strategy Term End Date.
If you exercise theLock-In feature for a Strategy Account, Term Strategy Earnings and Interim Strategy Earnings will take into account the performance of the Strategy’s Index since the beginning of the Strategy Term until theLock-In Date. See “Calculation of Strategy Earnings –Lock-In.”
See “Calculation of Strategy Earnings” for information about how Term Strategy Earnings and Interim Strategy Earnings are calculated.
ACTIONS ON STRATEGY TERM END DATES
At the end of a Strategy Term for a Strategy, you may take any of the permissible actions listed below.
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For each of your Strategy Accounts, at least 30 days prior to the end of the Strategy Term, we will send you a notice stating (i) the Strategies that will be available for investment at the end of the Strategy Term, (ii) their respective Crediting Factors, and (iii) how to communicate your instructions to us regarding what to do with the Strategy Value invested in the maturing Strategy Account.
If we do not receive instructions from you prior to the close of business on the Strategy Term End Date (or if the Strategy Term End Date is not a Business Day, then at least one Business Day prior to the Strategy Term End Date), your Strategy Value in the maturing Strategy Account will be treated as follows:
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If your Strategy Value is invested in the same Strategy or the Default Option as described above, and you do not wish to be invested in that Strategy or the Default Option, your only option will be to fully surrender the Contract. You can take a partial withdrawal to mitigate your unwanted investment exposure, but if you are invested in multiple Strategies, you cannot instruct us to take the partial withdrawal solely from the undesired Strategy Account. Instead, your partial withdrawal will be allocated among all of your Strategy Accounts. In addition, taking a partial withdrawal or full surrender may result in aNon-Preferred Withdrawal.
As described above, if you have Strategy Value invested in a Strategy that will not be available for reinvestment for the next Strategy Term, and if we do not receive instructions from you prior to the close of business on the Strategy Term End Date (or if the Strategy Term End Date is not a Business Day, then at least one Business Day prior to the Strategy Term End Date), your entire Strategy Value in the maturing Strategy Account will be transferred to the Default Option. The Default Option is the1-Year S&P 500 100% Protection Level Strategy. The Default Option’s other Crediting Factors, which include the Index Multiplier, Strategy Spread, andNon-Preferred Withdrawal Adjustment Percentage, will be sent to you at least 30 days prior to the end of the Strategy Term.
We will not change the Default Option unless the Index of the Default Option is discontinued or there is a substantial change to the calculation of the Index as described in “Crediting Factors – Indexes.” Any replacement Default Option will have a Strategy Term of 1 year and a Protection Level of 100%.
On a Strategy Term End Date, you may transfer some or all of your Strategy Value in the maturing Strategy Account to another Strategy that is available for investment free of charge.
You are not permitted to transfer Strategy Value from a Strategy Account other than on its Strategy Term End Date. Nor are you permitted to transfer Strategy Value into a Strategy Account if its Strategy Term is ongoing.
If your Strategy Term End Date is a Business Day, a transfer request must be received by our Service Center prior to the close of business on that Business Day. If we do not receive a transfer request from you prior to the close of business on that Business Day, the transfer will not occur. If your Strategy Term End Date is not a Business Day, a transfer request must be received by our Service Center at least one Business Day prior to the Strategy Term End Date. If we do not receive a transfer request from you at least one Business Day prior to the Strategy Term End Date, the transfer will not occur. Transfer requests may be submitted in writing to our Service Center and must be signed by the Contract Owner. At our discretion, we may accept transfer requests by telephone or, if available, by Internet.
Your transfer request will not be deemed to be received by our Service Center until it is in good order. To be in good order, the transfer request must identify:
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STRATEGY ACCOUNT AND CONTRACT VALUES
As reflected in the table below, there are various values associated with each of your Strategy Accounts, and there are related values associated with your entire Contract. This section provides additional detail about each of these values.
In addition to the values included in the table above, your Contract also has a Surrender Value. The Surrender Value is the amount available upon full surrender of the Contract. The Surrender Value is equal to the Modified Contract Value minus any applicable CDSC and after any applicable MVA. We may deduct taxes from the Surrender Value.
See “Appendix B: Surrender Value Examples” for examples of the Surrender Value calculation.
STRATEGY VALUE AND CONTRACT VALUE
Strategy Value
The Strategy Value represents, as of a given date during a Strategy Term, the value of a Strategy Account without taking into account (unlike the Strategy Accumulation Value and Modified Strategy Value) any unrealized Strategy Earnings. The Strategy Value is not a cash value that can be withdrawn. Instead, it is a value that we use to calculate the Strategy Accumulation Value and Modified Strategy Value.
If the first day of a Strategy Term is the Date of Issue, the Strategy Value equals the portion of the Purchase Paymentamounts allocated to the Strategy.
If the first day of a Strategy Term is not the Date of Issue, the Strategy Value equals:
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Each day during a Strategy Term after the first day, we calculate the Strategy Value for a Strategy Account using the following formula:
Strategy Value = A – B + C + D – E, where:
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Examples
Example 1: This example calculates the Strategy Value for a Strategy Account on the 30th day of a Strategy Term, assuming no Death Benefit is paid on or prior to that date during the Strategy Term.
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Assume that the Strategy Value on the first day of the Strategy Term (A) is $100,000. Assume the following occurs during the period starting on the first day of the Strategy TermGTOs in high quality, fixed interest investments (investment grade bonds, mortgages, and ending on the 30th day of the Strategy Term:
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In this example, since there is no Death Benefit, (D) is equal to $0.
Based on the formula described above, the Strategy Value on the 30th day is equal to $90,900 (i.e. $100,000 – $10,000 + $900 + $0 – $0)
Example 2: Continuing Example 1, this example calculates the Strategy Value on the 80th day of the same Strategy Term for the same Strategy Account, assuming the following occurs between the 30th day and the 80th day of the Strategy Term.
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In this example, we calculate the following values:
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Based on the formula described above, the Strategy Value on the 80th day is equal to $81,400(i.e. $100,000 – $30,000 + $3,400 + $8,000 – $0)
Contract Value
Your Contract Value equals the sum of your Strategy Values as of a given date. The Contract Value is not a cash value that can be withdrawn.
STRATEGY ACCUMULATION VALUE AND CONTRACT ACCUMULATION VALUE
Strategy Accumulation Value
The Strategy Accumulation Value represents the value of a Strategy Account if unrealized Strategy Earnings were to be credited to the entire Strategy Value using the Strategy Earnings Percentage (or SEP) as of a given date during a Strategy Term. The Strategy Accumulation Value is not a cash value that can be withdrawn. Instead, it is a value that we use to calculate other values under the Contract, such as the Strategy Remaining Preferred Withdrawal Amount.
Each day during a Strategy Term, we calculate the Strategy Accumulation Value for a Strategy Account using the following formula:
Strategy Accumulation Value = Strategy Value x (1 + SEP)
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Examples
The examples below illustrate the calculation of the Strategy Accumulation Value based on the formula described above.
The following three examples assume a Strategy Value of $50,000.
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Contract Accumulation Value
Your Contract Accumulation Value equals the sum of your Strategy Accumulation Values as of a given date. The Contract Accumulation Value is not a cash value that may be withdrawn. We use your Contract Accumulation Value to calculate other values under the Contract, such as the Death Benefit.
MODIFIED STRATEGY VALUE AND MODIFIED CONTRACT VALUE
Modified Strategy Value
The Modified Strategy Value represents the value of a Strategy Account if unrealized Interim Strategy Earnings were to be credited to the Strategy Value based on the maximum possible Strategy Preferred Withdrawal (using the SEP) and the maximum possible StrategyNon-Preferred Withdrawal (using the IEP). The Modified Strategy Value equals the maximum Gross Withdrawal that may be taken from a Strategy Account as of a given date during a Strategy Term. In that regard, the Modified Strategy Value represents a cash value that may be withdrawn. However, you should understand the following:
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Each day during a Strategy Term, we calculate the Modified Strategy Value for a Strategy Account using the following formula:
Modified Strategy Value = Lesser of A or B, where:
A = Strategy Accumulation Value;
B = C + D, where:
C = Strategy Remaining Preferred Withdrawal Amount
D = E x (F - G), but never less than 0, where:
E = 1 + IEP
F = Strategy Value
G = C / (1 + SEP)
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Examples
The examples below illustrate the calculation of the Modified Strategy Value for two separate Strategy Accounts.
Example for Strategy Account 1: This example assumes a positive SEP and IEP.
Assume the following values:
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The Modified Strategy Value is calculated as follows:
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Example for Strategy Account 2: This example uses a negative SEP and IEP.
Assume the following values:
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The Modified Strategy Value is calculated as follows:
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Modified Contract Value
Your Modified Contract Value equals the sum of your Modified Strategy Values as of a given date. Your Modified Contract Value represents a cash value that may be withdrawn in the sense that it represents the maximum Gross Withdrawal that you may take from your Contract. You should understand the following:
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STRATEGY REMAINING PREFERRED WITHDRAWAL AMOUNT AND REMAINING PREFERRED WITHDRAWAL AMOUNT
Strategy Remaining Preferred Withdrawal Amount
The Strategy Remaining Preferred Withdrawal Amount represents, as of a given day during a Strategy Term, the portion of the Remaining Preferred Withdrawal Amount attributable to a particular Strategy Account. It also represents the maximum possible Gross Withdrawal from the Strategy Account that would be treated as a Strategy Preferred Withdrawal. We use the Strategy Remaining Preferred Withdrawal as part of the calculation of the Modified Strategy Value.
Each day during a Strategy Term, we calculate the Strategy Remaining Preferred Withdrawal Amount for a Strategy Account using the following formula:
Strategy Remaining Preferred Withdrawal Amount = A x B / C, where:
A = Remaining Preferred Withdrawal Amount
B = Strategy Accumulation Value
C = Contract Accumulation Value
Examples
The examples below illustrate the calculation of the Strategy Remaining Preferred Withdrawal Amount based on the formula described above. These examples are a continuation of the examples above illustrating the calculation of Modified Strategy Values.
For the following examples, assume the following:
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Based on these assumptions, the Strategy Remaining Preferred Withdrawal Amount for each Strategy Account is calculated as follows:
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Remaining Preferred Withdrawal Amount
The Remaining Preferred Withdrawal Amount represents the total dollar amount of Gross Withdrawals that may be taken from your Contract during the remainder of a Contract Year without taking aNon-Preferred Withdrawal. Your Remaining Preferred Withdrawal Amount as of a given date equals the sum of your Strategy Remaining Preferred Withdrawal Amounts. The calculation of the Remaining Preferred Withdrawal Amount is also described under “Withdrawals – Calculating the Preferred Withdrawal Amount and the Remaining Preferred Withdrawal Amount.”
CALCULATION OF STRATEGY EARNINGS
Strategy Earnings are the sum of any Term Strategy Earnings and Interim Strategy Earnings. We credit Strategy Earnings to a Strategy Account on the Strategy Term End Date. We refer to this form of Strategy Earnings as “Term Strategy Earnings.” Term Strategy Earnings represent Strategy Earnings paid on the Strategy Value of a Strategy Account as of the Strategy Term End Date. Term Strategy Earnings take into account the performance of the Strategy’s Index and other Crediting Factors over the course of the entire Strategy Term (except when theLock-In feature has been exercised or in the event that the Index has been substituted).
We also credit Strategy Earnings to a Strategy Account when you take a partial withdrawal or full surrender prior to the Strategy Term End Date. We refer to this form of Strategy Earnings as “Interim Strategy Earnings.” Interim Strategy Earnings represent both (i) any Strategy Earnings paid on any portion of the partial withdrawal or full surrender that is a Strategy Preferred Withdrawal and (ii) any Strategy Earnings paid on any portion of the partial withdrawal or full surrender that is a StrategyNon-Preferred Withdrawal. Interim Strategy Earnings take into account the performance of the Strategy’s Index between the beginning of the Strategy Term and the date on which the partial withdrawal or full surrender was taken (except when theLock-In feature has been exercised or in the event that the Index has been substituted). Interim Strategy Earnings are not credited on a Strategy’s Strategy Term End Date, because only Term Strategy Earnings are credited on a Strategy’s Strategy Term End Date.
If you exercise theLock-In feature for a Strategy Account, Term Strategy Earnings and Interim Strategy Earnings will take into account the performance of the Strategy’s Index since the beginning of the Strategy Term until theLock-In Date. See “Calculation of Strategy Earnings –Lock-In.”
All Strategy Earnings may be positive, negative, or equal to zero.
On a Strategy’s Strategy Term End Date, we calculate Term Strategy Earnings to the Strategy Account using the following formula:
Term Strategy Earnings = Strategy Value x SEP
Examples
The examples below illustrate the calculation of Term Strategy Earnings based on the formula above.
The following three examples assume a Strategy Value of $50,000.
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Unlike Interim Strategy Earnings—which may be calculated using the Strategy Earnings Percentage (or SEP) and/or the Interim Earnings Percentage (or IEP), depending on whether you take a Preferred Withdrawal orNon-Preferred Withdrawal—Term Strategy Earnings are always calculated using only the SEP.
Upon taking a partial withdrawal or full surrender prior to the Strategy Term End Date, we calculate Interim Strategy Earnings for a Strategy Account using the following three-step process:
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Interim Strategy Earnings on Strategy Preferred Withdrawals = SEP x amount of the Strategy Preferred Withdrawal / (1 + SEP)
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Interim Strategy Earnings on StrategyNon-Preferred Withdrawals = IEP x amount of the StrategyNon-Preferred Withdrawal / (1 + IEP)
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Please note that the three-step process described above is applied on a Strategy Account by Strategy Account basis. If you are invested in multiple Strategy Accounts, your Strategy Accounts will likely have different Strategy Remaining Preferred Withdrawal Amounts. As a result, it is unlikely that a partial withdrawal or full surrender will result in the same amount of Strategy Preferred Withdrawals and StrategyNon-Preferred Withdrawals across your Strategy Accounts.
As reflected in the three-step process above, Interim Strategy Earnings for a Strategy Account may be calculated using either the SEP, the IEP, or both depending on whether you have taken a Strategy Preferred Withdrawal and/or a StrategyNon-Preferred Withdrawal. The SEP and IEP are percentages that we use to calculate Strategy Earnings, as well as other values under the Contract. For a particular Strategy Account:
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Examples
The examples below illustrate the calculation of Interim Strategy Earnings based on the three-step process described above.
All examples assume the following values:
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Example 1: In this example, the partial withdrawal results in only a Strategy Preferred Withdrawal. This situation will occur if the Gross Withdrawal from the Contract is less than or equal to the Remaining Preferred Withdrawal Amount.
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Assume the following values:
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Then the Interim Strategy Earnings are calculated as follows:
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Example 2: In this example, the partial withdrawal results in only a StrategyNon-Preferred Withdrawal. This situation will occur if the Gross Withdrawal from the Contract occurs when the Remaining Preferred Withdrawal Amount is zero.
Assume the following values:
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Then the Interim Strategy Earnings are calculated as follows:
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Example 3: In this example, the partial withdrawal results in a partial Strategy Preferred Withdrawal and partial StrategyNon-Preferred Withdrawal. This situation will occur if the Gross Withdrawal from the Contract is greater than or equal to the Remaining Preferred Withdrawal Amount, and the Remaining Preferred Withdrawal Amount is greater than zero.
Assume the following values:
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Then the Interim Strategy Earnings are calculated as follows:
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STRATEGY EARNINGS PERCENTAGE (SEP) AND INTERIM EARNINGS PERCENTAGE (IEP)
On each day during a Strategy Term for a Strategy Account, we calculate the SEP and the IEP. The SEP and IEP generally change on aday-to-day basis. Neither the SEP nor the IEP will impact your Strategy Earnings until they are credited to your Strategy Account. However, the SEP and/or the IEP impact your Strategy Accumulation Value and Modified Strategy Value on aday-to-day basis, even if youlock-in the Index Value under theLock-In feature.
We calculate the SEP for a Strategy Account using the following formula:
Strategy Earnings Percentage = Greater of A or B, where:
A = Strategy Change Percentage
B = Protection Level – 100%
Examples
The following examples illustrate the calculation of the SEP based on the formula described above. For the following examples, assume the Protection Level is 90%.
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Please note that if the Contract is continued under the Contract’s Spousal Protection Feature, the calculation of the SEP changes for the remainder of the Strategy Terms that were ongoing when the Contract was continued. See “Death Benefit and Succession Rights – Calculation of the SEP After Continuation of the Contract.”
We calculate the IEP for a Strategy Account using the following formula:
Interim Earnings Percentage = Greater of A or B, where:
A = C x D, where:
C = Strategy Change Percentage
D = 1 if C is less than 0, or (ET / ST) if C is greater than or equal to zero
ET = Elapsed Term (i.e., the number of calendar days elapsed in the Strategy Term divided by 365)
ST = Strategy Term (in whole years, e.g., 1, 2, 3)
B = E – F x (ST – ET), where:
E = Protection Level – 100%
F =Non-Preferred Withdrawal Adjustment Percentage
ST = Strategy Term in years (in whole years, e.g., 1, 2, 3)
ET = Elapsed Term (i.e., the number of calendar days elapsed in the Strategy Term divided by 365)
Examples
The examples below illustrate the calculation of the IEP based on the formula described above. All examples assume the Strategy Term (ST) is 3 years and the Elapsed Term (ET) is 1.25 years. Therefore ST – ET is 1.75 years (i.e., 3 – 1.25).
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First, in order to calculate the IEP, (A) must be calculated in accordance with the formula described above. The following illustrates the calculation of (A) based on different Strategy Change Percentages (SCPs):
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In order to calculate the IEP, (B) must also be calculated in accordance with the formula described above. The following illustrates the calculation of (B) based on different Protection Levels andNon-Preferred Withdrawal Adjustment Percentages:
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Lastly, in order to calculate the IEP, (A) must be compared to (B), the IEP equaling the greater of (A) and (B). The following illustrates the calculation of the IEP based on the calculations of A and B above:
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While the ability to takeNon-Preferred Withdrawals provides an additional level of liquidity, you should generally avoid takingNon-Preferred Withdrawals under the Contract. One reason is thatNon-Preferred Withdrawals may be subject to CDSCs and MVAs. Another reason is that the IEP formula is typically less favorable to you than the SEP formula.
The SEP formula is more favorable to you than the IEP formula for the following reasons:
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The SCP, which is calculated using a specific formula, is an important factor in the calculation of the SEP and IEP. A higher SCP generally correlates to a higher IEP and SEP. Conversely, a lower SCP generally correlates to a lower (and potentially negative) SEP and IEP. If Strategy Earnings are credited at a time when the SCP is positive, you will receive positive Strategy Earnings regardless of whether the Strategy Earnings are credited using the SEP or the IEP. However, unlike the formula for the SEP, the formula for the IEP dampens the impact of a positive SCP because itpro-rates the SCP based on the amount of time that has elapsed during the Strategy Term. As a result, if Strategy Earnings are credited at a time when the SCP is positive, the SEP formula will result in a higher interest rate than the IEP formula.
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The Protection Level is a crediting factor used in the calculation of the SEP and IEP. For the SEP, the Protection Level dictates the most negative SEP possible. The SEP will never be lower than: Protection Level–100%. For example, if the Protection Level for a Strategy is 90%, the SEP for that Strategy will never be lower than-10%, regardless of the length of the Strategy Term or the Elapsed Term.
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For the IEP, the Protection Level does not dictate the most negative IEP possible, but instead dictates the lowest possible percentage before the deduction for theNon-Preferred Withdrawal Adjustment Percentage. The IEP will never be lower than: (Protection Level–100%)–(Non-Preferred Withdrawal Adjustment Percentage x Strategy Term). For example, if a Strategy with aone-year Strategy Term has a Protection Level of 90% and aNon-Preferred Withdrawal Adjustment Percentage of 2%, the IEP for that Strategy will never be lower than-12% (i.e., (90%-100%) – (2% x 1)).
It should be noted that the potential impact of theNon-Preferred Withdrawal Adjustment Percentage on the IEP gradually decreases over the course of a Strategy Term, reaching its least potential impact on the day prior to the Strategy Term End Date. As a result, the lowest possible IEP for a Strategy during a Strategy Term will gradually increase as the Strategy Term elapses. Continuing the example in the preceding paragraph, on the day prior to the Strategy Term End Date, the lowest possible IEP will be approximately-10.01% (i.e., (90% – 100%) - 2% x (1 – 364/365)).
It should also be noted that the potential impact of aNon-Preferred Withdrawal Adjustment Percentage within the IEP formula is directly related to the length of a Strategy Term. For example, if a Strategy with a three-year Strategy Term has a Protection Level of 90% and aNon-Preferred Withdrawal Adjustment Percentage of 2%, the IEP for that Strategy will never be lower than-16% (i.e., (90%-100%) – (2% x 3)). Continuing this example, because the potential impact of theNon-Preferred Withdrawal Adjustment Percentage gradually decreases over the course of a Strategy Term, as previously noted, on the day prior to the Strategy Term End Date, the lowest possible IEP will be approximately-10.01%.
You should understand that if Interim Strategy Earnings are credited based on a negative interest rate (calculated using either the SEP or IEP formulas) and that rate is less negative than the most negative interest rate possible under the SEP formula, that rate will be the same regardless of whether it was calculated using the SEP formula or the IEP formula. Under those circumstances, the SEP formula is no more favorable to you than the IEP formula.
STRATEGY CHANGE PERCENTAGE (SCP)
Each day during a Strategy Term for a Strategy Account, including the Strategy Term End Date, we calculate the SCP. The SCP generally changes on aday-to-day basis. The SCP does not directly affect your Strategy Earnings. Rather the SCP is used in the calculation of the Strategy Earnings Percentage (or SEP) and the Interim Earnings Percentage (or IEP).
We calculate the SCP for a Strategy Account using the following formula:
Strategy Change Percentage = A – B, where:
A = Index Change x Index Multiplier
B = Strategy Spread x Elapsed Term
For examples of how to calculate the Strategy Change Percentage, see the examples included under “Index Multiplier” and “Strategy Spread” under “Crediting Factors.”
You should understand that the SCP does not equal the Index Change (i.e., the percentage change in the value of Strategy’s Index between the beginning of a Strategy Term and a future date during the Strategy Term). Instead, the SCP essentially represents an adjusted Index Change.
In addition to the Index Change, the SCP formula incorporates the Strategy Spread and the Index Multiplier.
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See “Crediting Factors” for important information about the Index Multiplier, the Strategy Spread, and the other Crediting Factors.
When selecting a Strategy for investment, you should not select a Strategy based on any single Crediting Factor in isolation, including the Index Multiplier or the Strategy Spread. While one Crediting Factor for a Strategy may be more or less favorable or attractive to you, the other Crediting Factors also impact whether that Strategy is appropriate for you based on your financial needs and goals. You should consult with a financial professional prior to selecting a Strategy for investment.
Each day during a Strategy Term for a Strategy, including the Strategy Term End Date, we calculate the Index Change. The Index Change generally changes on aday-to-day basis. While the Index Change is important to the amount of Strategy Earnings that are ultimately credited to a Strategy Account, you should understand that we do not calculate Strategy Earnings based solely on the Index Change. Rather, the Index Change is used in the calculation of the SCP.
We calculate the Index Change for a Strategy using the following formula:
Index Change = (A – B) / B, where:
A = Index Value on a specific future date during the Strategy Term
B = Index Value on the first day of a Strategy Term
For example, if the Index Value on the first and last day of a Strategy Term equals 1,000 and 1,100, respectively, the Index Change between those two dates equals +10% (i.e., (1,100 – 1,000) / 1,000). Conversely, if the Index Value on the first and last day of a Strategy Term equals 1,000 and 900, respectively, the Index Change between those two dates equals-10% (i.e., ((900 –1,000) / 1,000).
As described under “Crediting Factors – Indexes,” there are circumstances under which we may substitute an Index during a Strategy Term. If we substitute an Index during a Strategy Term, we will calculate the Index Change for the old Index between the first day of the Strategy Term (or the first day on which the old Index was used, whichever is later) until the date of substitution. After the date of substitution, we will calculate the Index Change for the new Index from the date of substitution until the calculation date. We will then add the Index Change for the old Index (which may be positive, negative, or equal to zero) to the Index Change of the new Index (which may be positive, negative, or equal to zero).
For any Strategy Account, on any Business Day prior to the Strategy Term End Date, you maylock-in the Index Value for that Strategy Account. Thelocked-in Index Value will be used for purposes of calculating the Index Change for the remainder of the Strategy Term. As a result, the Index Change will not change for the remainder of the Strategy Term.
For example, if the Index Value on the first day of a Strategy Term equals 1,000, and then on a given day during the Strategy Term, youlock-in an Index Value of 1,100 (or 900), your Index Change will be +10% (or-10%) for the remainder of the Strategy Term, even if the Index is later valued during the Strategy Term at an amount greater or less than 1,100 (or 900).
For each Strategy Account, theLock-In feature may be exercised only once during a Strategy Term. If you have multiple Strategy Accounts, you may exercise theLock-In feature for any, all, or none of the Strategy Accounts during their respective Strategy Terms, and you may exercise theLock-In feature at different times during the Strategy Accounts’ respective Strategy Terms. Exercise of theLock-In feature is irrevocable.
To exercise theLock-In feature for a Strategy Account, you must submit a request to our Service Center. If we receive your request prior to the close of business on a Business Day, we willlock-in the Index Value for that Strategy Account calculated on that Business Day as of the close of business. If we receive your request on anon-Business Day, or after the close of a Business Day, we willlock-in the Index Value for that Strategy Account calculated on the next Business Day as of the close of business.
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If the Index for a Strategy Account is substituted after you exercise theLock-In feature for that Strategy Account, as described under “Crediting Factors – Index,” changes in the value of the new Index will not impact your Strategy Account. We will use the Index Change for the old Index as of theLock-In Date for purposes of calculating your Strategy Earnings. That Index Change will not change under any circumstances for the remainder of the Strategy Term.
You should fully understand the risks associated with theLock-In feature. See“Lock-In Risk.”
See “Appendix C:Lock-in Examples” for examples of theLock-In.
Each Strategy has Crediting Factors that serve different purposes and impact your investment differently. For example, we use the Crediting Factors to indicate the market index upon which a Strategy’s performance will depend, to indicate the length of time until a Strategy matures, and to calculate the Strategy Earnings credited to a Strategy Account.
Each Strategy has the following six Crediting Factors:
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Each Strategy’s specific combination of Crediting Factors is unique. While each Strategy has the same six Crediting Factors, the specific market indexes or values that those Crediting Factors represent vary among the Strategies.
When selecting a Strategy for investment, you should not select a Strategy based on any single Crediting Factor in isolation. While one Crediting Factor for a Strategy may be more or less favorable or attractive to you, the other Crediting Factors also impact whether that Strategy is appropriate for you based on your financial needs and goals. You should consult with a financial professional prior to selecting a Strategy for investment.
Except in the limited circumstances under which we may substitute an Index (see “Index” below), the Crediting Factors for a Strategy will not change for the duration of a given Strategy Term, but may change from StrategyTerm-to-Strategy Term. More specifically:
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Crediting Factors for a particular Strategy Term may be different for newly issued Contracts than for existing Contracts.
The remainder of this section provides information about the Crediting Factors and the purposes that they serve under the Contract.
The Index for a Strategy is the market index upon which the performance of the Strategy will in part depend. See “Strategies – Indexes” for the Indexes that we currently include in the Strategies. See also “Risk Factors – Index Risks” for a description of investment risks associated with the Indexes.
As part of the process for calculating Strategy Earnings for a Strategy Account and other values under the Contract, we calculate the Index Change. The Index Change is used in the calculation of the Strategy Change Percentage (or SCP), which is then used to calculate the Strategy Earnings Percentage (or SEP) and Interim Earnings Percentage (or IEP). The SEP and IEP are the rates of interest that we may use to credit Strategy Earnings. See “Calculation of Strategy Earnings.”
The Index for a Strategy generally will not change for the duration of an ongoing Strategy Term. However, we may substitute the Index during a Strategy Term in limited circumstances. Subject to regulatory approval, we may substitute the Index if (a) the Index is discontinued or (b) there is a substantial change to the calculation of the Index. If we substitute an Index, the new Index will be similar in composition to the old Index. We will seek to notify you at least 30 days prior to substituting an Index for any Strategy in which you are invested. However, in the event that it is necessary to substitute on less than 30 days’ notice due to circumstances outside of our control, we will provide notice of the substitution as soon as practicable.
The Strategy Term for a Strategy represents the length of time the Strategy will be linked to the performance of an Index, expressed in years. Each Strategy has its own Strategy Term. The lengths of Strategy Terms may vary among Strategies. In addition, the length of a Strategy Term for a Strategy may change from StrategyTerm-to-Strategy Term.
A Strategy Term may begin on the Date of Issue or a Contract Anniversary. A Strategy Term ends on its Strategy Term End Date, which will be a Contract Anniversary. For example, if you purchase the Contract and allocate your Purchase Payment to a Strategy with a three-year Strategy Term, the Strategy will begin on the Date of Issue and end on the third Contract Anniversary. If you then transfer your Contract Value to a Strategy with aone-year Strategy Term, the new Strategy will begin on the third Contract Anniversary and end on your fourth Contract Anniversary.
You should understand that a Strategy with a longer Strategy Term provides less flexibility to allocate your Contract Value than a Strategy with a shorter Strategy Term because, if you invest in Strategies with longer Strategy Terms, you will have fewer opportunities to transfer Contract Value among the Strategies.
In addition to signifying the length of time a Strategy is linked to the performance of an Index, we also use the Strategy Term (and the Elapsed Term) to calculate Strategy Earnings. In particular, we use the Strategy Term (and the Elapsed Term) to calculate the SCP and the IEP. See “Strategy Earnings Percentage (SEP) and Interim Earnings Percentage (IEP)” and “Strategy Change Percentage (SCP)” under “Calculation of Strategy Earnings.”
The length of a Strategy Term for a Strategy will not change for the duration of an ongoing Strategy Term. We may change the length of a Strategy’s Strategy Term for future Strategy Terms, however.
The length of a Strategy Term for a Strategy is guaranteed never to be longer than the applicable “Maximum Strategy Term.” Each Strategy has its own Maximum Strategy Term that will never change. Regardless of the Strategy, a Strategy Term will never be longer than 6 years or shorter than 1 year.
As part of the process for calculating Strategy Earnings for a Strategy Account, we calculate the Strategy Change Percentage (or SCP), which is then used to calculate the SEP and IEP. As described under “Calculation of Strategy Earnings – Strategy Change Percentage (SCP),” the SCP is effectively an adjusted Index Change.
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In addition to the Index Change (and the Strategy Spread), the SCP formula incorporates the Index Multiplier. The Index Multiplier represents the proportion of Index performance that is reflected in the SCP.
Within the formula for calculating the SCP, because the Index Change is multiplied by the Index Multiplier, the Index Multiplier may have the effect of amplifying or dampening the SCP (or neither) as follows:
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Please note that the effect of the Index Multiplier, as described above, does not take into account the effect of the Strategy Spread, which is also used to calculate the SCP. The Strategy Spread always has the effect of reducing the SCP within the formula for calculating the SCP. See “Strategy Spread” below.
Examples
The examples below illustrate the impact of the Index Multiplier on the SCP. Each example is based on the formula for calculating the SCP: SCP = A – B, where (i) A equals the Index Change multiplied by the Index Multiplier and (ii) B equals the Strategy Spread multiplied by the Elapsed Term. For each example, assume that B equals 2%.
The following examples assume an Index Change of 10%, thus illustrating the impact of the Index Multiplier when the Index Change is positive. Based on these assumptions:
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The following examples assume an Index Change of-10%, thus illustrating the impact of the Index Multiplier when the Index Change is negative. Based on these assumptions:
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The following three examples assume an Index Change of 0%, thus illustrating the lack of impact that the Index Multiplier has when the Index Change equals zero. Based on these assumptions:
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The Index Multiplier for a Strategy will not change for the duration of an ongoing Strategy Term. We may change a Strategy’s Index Multiplier for future Strategy Terms.
The Index Multiplier for a Strategy is guaranteed to never be lower than the applicable “Minimum Index Multiplier.” Each Strategy has its own Minimum Index Multiplier that will never change. Regardless of the Strategy, an Index Multiplier will never be lower than 0.05.
As part of the process for calculating Strategy Earnings for a Strategy Account, we calculate the Strategy Change Percentage (or SCP), which is then used to calculate the SEP and IEP. As described under “Calculation of Strategy Earnings – Strategy Change Percentage (SCP),” the SCP is effectively an adjusted Index Change.
A Strategy Spread greater than zero always has the effect of reducing the SCP within the SCP formula. The potential impact of the Strategy Spread increases over the course of a Strategy Term, reaching its full potential impact on the Strategy Term End Date.
A Strategy Spread can result in a loss even if you have positive Index performance. For example, if a Strategy Spread is greater than the Strategy’s Index Change, and the Strategy’s Protection Level is less than 100%, the Strategy Spread will reduce the Strategy Change Percentage to a negative value thereby resulting in a loss.
The Strategy Spread is an annualized percentage. As such, when comparing Strategies with Strategy Terms that differ in length, a higher Strategy Spread will always be more unfavorable to you on an annual basis, but the overall impact of a lower Strategy Spread over a multi-year Strategy Term may be more unfavorable to you than the overall impact of a higher Strategy Spread over a shorter Strategy Term.When comparing Strategies with Strategy Terms that are the same length and all other Crediting Factors are the same, you should understand that a higher Strategy Spread is always more unfavorable to you than a lower Strategy Spread.
If you plan to hold the Contract for multiple Strategy Terms, you should also consider the cumulative effect that Strategy Spreads have over multiple Strategy Terms. For example, assume two Strategies have the same Strategy Spread, but one Strategy has aone-year Strategy Term and the other has a three-year Strategy Term. If you invested in theone-year Strategy for three consecutive Strategy Terms, the cumulative impact of the Strategy Spread(s) for theone-year Strategy (over three consecutive Strategy Terms) and the three-year Strategy Term would be the same.
Examples
The examples below illustrate the impact of the Strategy Spread on the SCP under different circumstances. Each example is based on the formula for calculating the SCP: SCP = A – B, where (i) A equals the Index Change multiplied by the Index Multiplier and (ii) B equals the Strategy Spread multiplied by the Elapsed Term. For each example, assume an Index Multiplier of 1.0 and a Strategy Spread of 2%.
The following examples show the effect of the Strategy Spread on the Strategy Term End Date for aone-year Strategy Term (and therefore assume an Elapsed Term equal to 365/365) based on different Index Changes:
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The following examples show the effect of the Strategy Spread on the Strategy Term End Date for atwo-year Strategy Term (and therefore assume an Elapsed Term equal to 730/365) based on different Index Changes. You should note that even though the Strategy Spread is the same, the Strategy Spread has a greater negative impact than in the first examples because the Elapsed Term is longer than one year.
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The following examples show how the impact of the Strategy Spread gradually increases over the course of a Strategy Term due to the Elapsed Term increasing. For the following examples, further assume (i) the Index Change remains at 0% throughout the Strategy Term and (ii) the Strategy Term is two years long.
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The Strategy Spread for a Strategy will not change for the duration of an ongoing Strategy Term. We may change a Strategy’s Strategy Spread for future Strategy Terms.
The Strategy Spread for a Strategy is guaranteed to never be greater than the applicable “Maximum Strategy Spread.” Each Strategy has its own Maximum Strategy Spread that will never be greater than the initial Strategy Spread at Date of Issue plus 5%.
As part of the process for calculating Strategy Earnings for a Strategy Account, we calculate the SEP and IEP. The Protection Level is a factor in the SEP and IEP formulas. See “Calculation of Strategy Earnings – Strategy Earnings Percentage (SEP) and Interim Earnings Percentage (IEP).”
The Protection Level represents an amount of downside protection under a Strategy. The Protection Level is presented as a percentage (e.g., 95%, 90%, 85%).
For the SEP, the Protection Level dictates the most negative SEP possible. The SEP will never be lower than: Protection Level–100%.
For the IEP, the Protection Level does not dictate the most negative IEP possible, but instead dictates the lowest possible percentage before the deduction for theNon-Preferred Withdrawal Adjustment Percentage (the potential impact of which decreases as a Strategy Term elapses). The IEP will never be lower than: (Protection Level–100%)–(Non-Preferred Withdrawal Adjustment Percentage x Strategy Term).
You should understand that the Protection Level provides only limited protection against downside potential. The Protection Level does not provide absolute protection against negative Strategy Earnings. You may lose money.
When comparing Strategies with different Protection Levels, a higher Protection Level provides more favorable protection against loss than a lower Protection Level.
Examples – Protection Level under the SEP
The examples below illustrate the impact of the Protection Level on the SEP. Each example is based on the formula for calculating the SEP: SEP = the greater of A or B. Within the SEP formula: A equals the Strategy Change Percentage (or SCP) and B equals the Protection Levelminus100%. For the following examples, assume the SCP equals-15%.
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Examples – Protection Level under the IEP
The examples below illustrate the impact of different Protection Levels on the IEP. Each example is based on the formula for calculating the IEP: IEP = the greater of A or B. The formulas for calculating A and B within the IEP formula may be found under “Calculation of Strategy Earnings – Strategy Earnings Percentage (SEP) and Interim Earnings Percentage (IEP).”
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For the following three examples, assume that A equals-15%.
With respect to the calculation of B, assume that F x (ST – ET)—which represents the amount that is deducted for theNon-Preferred Withdrawal Adjustment Percentage—equals 2%.
Based on these assumptions:
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The Protection Level for a Strategy will not change for the duration of an ongoing Strategy Term. We may change a Strategy’s Protection Level for future Strategy Terms.
The Protection Level for a Strategy is guaranteed to never be lower than the applicable “Minimum Protection Level.” Each Strategy has its own Minimum Protection Level. Regardless of the Strategy, a Protection Level will never be lower than 75%.
NON-PREFERRED WITHDRAWAL ADJUSTMENT PERCENTAGE
As part of the process for calculating Strategy Earnings for a Strategy Account, we calculate the SEP and IEP. See “Calculation of Strategy Earnings – Strategy Earnings Percentage (SEP) and Interim Earnings Percentage (IEP).” TheNon-Preferred Withdrawal Adjustment Percentage is a factor in the IEP formula. TheNon-Preferred Withdrawal Adjustment Percentage represents a percentage that may negatively impact the IEP when a StrategyNon-Preferred Withdrawal is taken prior to the end of a Strategy Term.
The IEP for a Strategy will never be lower than: (Protection Level–100%)–(Non-Preferred Withdrawal Adjustment Percentage x Strategy Term).
The potential impact of theNon-Preferred Withdrawal Adjustment Percentage on the IEP gradually decreases over the course of a Strategy Term, reaching its least potential impact on the day prior to the Strategy Term End Date. As a result, the lowest possible IEP for a Strategy during a Strategy Term will gradually increase as the Strategy Term elapses.
Based on the IEP formula, the potential impact of aNon-Preferred Withdrawal Adjustment Percentage within the IEP formula is directly related to the length of a Strategy Term. For example, if two Strategies have the sameNon-Preferred Withdrawal Adjustment Percentage but one Strategy has aone-year Strategy Term and the other has a three-year Strategy Term, the potential impact of theNon-Preferred Withdrawal Adjustment Percentage for the three-year Strategy Term is three times greater than for theone-year Strategy Term. As such, when comparing Strategies with Strategy Terms of the same length but differentNon-Preferred Withdrawal Adjustment Percentages, a higherNon-Preferred Withdrawal Adjustment Percentage is always more unfavorable to you than a lowerNon-Preferred Withdrawal Adjustment Percentage.
If you do not take anyNon-Preferred Withdrawals, theNon-Preferred Withdrawal Adjustment Percentage will not affect your Strategy Earnings. Even if you take aNon-Preferred Withdrawal, theNon-Preferred Withdrawal Adjustment Percentage will not affect your Strategy Earnings unless the IEP is so negative that it triggers your downside protection within the IEP formula.
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Examples
The examples below illustrate the impact of aNon-Preferred Withdrawal Adjustment Percentage over the course of aone-year Strategy Term by reflecting the lowest possible IEP. Each example is based on the formula for calculating the IEP: IEP = the greater of A or B. The formulas for calculating A and B may be found under “Calculation of Strategy Earnings – Strategy Earnings Percentage (SEP) and Interim Earnings Percentage (IEP).”
For the following examples, assume that B is greater than A, as theNon-Preferred Withdrawal Adjustment Percentage is a factor in the calculation of B and not A. As a result, under these examples, the IEP will equal B.
B is calculated using the following formula:
B = E – F x (ST – ET), where:
E = Protection Level – 100%
F =Non-Preferred Withdrawal Adjustment Percentage
ET = Elapsed Term
ST = Strategy Term in years
Further assume for the following examples that (i) E—which represents the Protection Levelminus100%—equals-10%, (ii) theNon-Preferred Withdrawal Adjustment Percentage equals 2%, and (iii) ST equals 1.
Based on these assumptions:
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TheNon-Preferred Withdrawal Adjustment Percentage for a Strategy will not change for the duration of an ongoing Strategy Term. We may change a Strategy’sNon-Preferred Withdrawal Adjustment Percentage for future Strategy Terms.
TheNon-Preferred Withdrawal Adjustment Percentage for a Strategy is guaranteed to never be higher than the applicable “MaximumNon-Preferred Withdrawal Adjustment Percentage.” Each Strategy has its own MaximumNon-Preferred Withdrawal Adjustment Percentage that will never be higher than the initialNon-Preferred Withdrawal Adjustment Percentage at Date of Issue plus 2%.
At any time prior to the Annuitization Date you may take a partial withdrawal or full surrender of the Contract.
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If you are invested in multiple Strategies at the time that you request a partial withdrawal, you cannot select the specific Strategy Account(s) from which a partial withdrawal is to be taken. Instead, your partial withdrawals are allocated among all of your Strategy Accounts in the manner described under “Strategy Preferred Withdrawals and StrategyNon-Preferred Withdrawals” below.
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All partial withdrawals and any full surrender under your Contract—even if taken on a Strategy Term End Date—will be treated as a Preferred Withdrawal, aNon-Preferred Withdrawal, or a combination of both, depending on the total dollar amount of your Gross Withdrawals during the Contract Year.
You should carefully consider the consequences of takingNon-Preferred Withdrawals before you purchase the Contract.Non-Preferred Withdrawals may be subject to CDSCs and MVAs, and the interest crediting formula forNon-Preferred Withdrawals is typically less favorable to you than the formula for Preferred Withdrawals.
You must submit a request for a partial withdrawal or full surrender to our Service Center. We will not process a request until it is received by us in good order. We will not consider the request to be in good order unless the request (i) is in writing or another form that we deem acceptable and (ii) includes all the information necessary for us to process the request.
We reserve the right to:
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AMOUNTS AVAILABLE TO BE WITHDRAWN
If you wish to take a partial withdrawal, you may withdraw any portion of your Modified Contract Value. Your Modified Contract Value represents the maximum Gross Withdrawal that you may take from your Contract on a given date. Your Modified Strategy Value represents the maximum Gross Withdrawal that may be taken from a Strategy Account on a given date. See “Strategy Account and Contract Values – Modified Strategy Value and Modified Contract Value.” However, you should note the following:
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If you wish to fully surrender the Contract, you will receive the Surrender Value. The Surrender Value equals your Modified Contract Value minus any applicable CDSC and after the application of any MVA. We may also deduct taxes from the amount payable to you.
Nationwide may treat a request for a partial withdrawal as a request for a full surrender of the Contract if the following three criteria exist: (i) any portion of the partial withdrawal is aNon-Preferred Withdrawal; (ii) the partial withdrawal would reduce the Contract Value to an amount less than $5,000; and (iii) the Purchase Payment minus the sum of any Gross Withdrawals since the Date if Issue is less than $5,000.
If you take a partial withdrawal or full surrender prior to a Strategy Term End Date, we credit Interim Strategy Earnings to your Contract. Specifically:
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For an explanation of how Interim Strategy Earnings are calculated, see “Calculation of Strategy Earnings – Interim Strategy Earnings.”
The amount of Interim Strategy Earnings that you receive, if any, when you take a partial withdrawal or full surrender may differ depending on whether the transaction is treated as a Preferred Withdrawal, aNon-Preferred Withdrawal, or a combination of both. Interim Strategy Earnings on Preferred Withdrawals are calculated using the Strategy Earnings Percentage (SEP). Interim Strategy Earnings onNon-Preferred Withdrawals are calculated using the Interim Earnings Percentage (IEP). The SEP formula is more favorable to you than the IEP formula. See “Calculation of Strategy Earnings – Strategy Earnings Percentage (SEP) and Interim Earnings Percentage (IEP).”
GROSS WITHDRAWALS, NET WITHDRAWALS, AND CASH WITHDRAWALS
When you take a partial withdrawal or full surrender, we calculate the Gross Withdrawal(s), Net Withdrawal(s), and Cash Withdrawal(s) associated with that transaction.
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When you take a partial withdrawal, you must indicate the dollar amount of the withdrawal. You must also indicate whether that dollar amount should be taken in the form of a Gross Withdrawal or a Cash Withdrawal under the Contract.
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PREFERRED WITHDRAWALS ANDNON-PREFERRED WITHDRAWALS
General
Each Contract Year, your total Gross Withdrawals (if any) up to your Preferred Withdrawal Amount will be treated as Preferred Withdrawals. Any Gross Withdrawal in excess of your Preferred Withdrawal Amount will be treated as aNon-Preferred Withdrawal.
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At any given time during a Contract Year, your Remaining Preferred Withdrawal Amount represents the total amount of Gross Withdrawals that may be taken from your Contract during the remainder of the Contract Year without taking aNon-Preferred Withdrawal. If only a portion of a Gross Withdrawal exceeds your Remaining Preferred Withdrawal Amount, thenon-excess portion of the Gross Withdrawal will be treated as a Preferred Withdrawal and the excess portion will be treated as aNon-Preferred Withdrawal.
You should carefully consider the consequences of takingNon-Preferred Withdrawals.Non-Preferred Withdrawals may be subject to CDSCs and MVAs. In addition, Interim Strategy Earnings credited on a StrategyNon-Preferred Withdrawal are calculated using the IEP. The calculation of Interim Strategy Earnings using the IEP will result in a lower positive interest rate, or potentially a more negative interest rate, than the calculation of Interim Strategy Earnings using the SEP. As such, you should generally avoid takingNon-Preferred Withdrawals under the Contract.
Calculating the Preferred Withdrawal Amount and the Remaining Preferred Withdrawal Amount
At the beginning of each Contract Year prior to the Annuitization Date we calculate your Preferred Withdrawal Amount for that Contract Year using the following formula:
Preferred Withdrawal Amount = Greater of A or B, where:
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The table below sets forth the Preferred Withdrawal Percentages under the Contract. The applicable Preferred Withdrawal Percentage will depend on the number of completed Contract Years. As reflected in the table below, the Preferred Withdrawal Percentage increases after you have completed six Contract Years.
Number of Completed Contract Years | Preferred Withdrawal Percentage | |
0 | 7.00% | |
1 | 7.00% | |
2 | 7.00% | |
3 | 7.00% | |
4 | 7.00% | |
5 | 7.00% | |
6+ | 10.00% |
On any day during a Contract Year, your Remaining Preferred Withdrawal Amount equals the Preferred Withdrawal Amount for that Contract Yearminus the total dollar amount of all Gross Withdrawals already taken during the Contract Year. The Remaining Preferred Withdrawal Amount will never be less than zero.
Each Contract Year’s Preferred Withdrawal Amount isnon-cumulative. If you have a Remaining Preferred Withdrawal Amount greater than zero at the end of a Contract Year, that Remaining Preferred Withdrawal Amount will not be added to your Preferred Withdrawal Amount for the next Contract Year or any later Contract Year.
Strategy Preferred Withdrawals and StrategyNon-Preferred Withdrawals
When you take a withdrawal, we determine how the Gross Withdrawal (and the associated Preferred Withdrawal and/orNon-Preferred Withdrawal) is allocated among your Strategy Accounts. The portion of a Preferred Withdrawal that is attributable to a particular Strategy Account is referred to as a “Strategy Preferred Withdrawal.” The portion of aNon-Preferred Withdrawal attributable to a particular Strategy Account is referred to as a “StrategyNon-Preferred Withdrawal.”
Determining your Strategy Preferred Withdrawals and StrategyNon-Preferred Withdrawals is important for the purpose of calculating your Interim Strategy Earnings, if any. Interim Strategy Earnings are credited on the amount withdrawn whenever you take a partial withdrawal or full surrender prior to a Strategy Term End Date. Interim Strategy Earnings on a Strategy Preferred Withdrawal are credited using the SEP. Interim Strategy Earnings on a StrategyNon-Preferred Withdrawal are credited using the IEP. Interim Strategy Earnings could be positive, negative, or equal to zero.
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When you take a Preferred Withdrawal orNon-Preferred Withdrawal, for each of your Strategy Accounts, we determine the Strategy Preferred Withdrawal and StrategyNon-Preferred Withdrawal using the followingtwo-step process:
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Strategy Preferred Withdrawal = A x B / C, where:
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StrategyNon-Preferred Withdrawal = A x (B – C) / (D – E), where:
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Example
The example below illustrates the two-step calculation for Strategy Preferred Withdrawals and Strategy Non-Preferred Withdrawals for two separate Strategy Accounts. These examples are a continuation of the examples illustrating the calculation of Modified Strategy Values and Strategy Remaining Preferred Withdrawal Amounts.
For the following examples, assume the following:
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Step One:
The Contract Accumulation Value is calculated as the sum of the Strategy Accumulation Values. In this example, it is $102,900 (i.e., $73,500 + $29,400). Therefore, C is $102,900.
The Preferred Withdrawal is the portion of the Gross Withdrawal from the Contract that is less than or equal to the Remaining Preferred Withdrawal Amount. In this example, it is $7,000. Therefore, A is $7,000.
Then the Strategy Preferred Withdrawal for each Strategy Account is calculated as follows:
For Strategy Account 1:
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For Strategy Account 2:
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Step 2:
The Modified Contract Value is calculated as the sum of the Modified Strategy Values. In this example, it is $101,595.24 (i.e., $72,195.24 + $29,400). Therefore, D is $101,595.24.
The Non-Preferred Withdrawal is the portion of the Gross Withdrawal from the Contract that is in excess of the Remaining Preferred Withdrawal Amount. In this example, it is $3,000 (i.e., $10,000 - $7,000). Therefore, A is $3,000.
E is the dollar amount of the Preferred Withdrawal in Step 1. Therefore, E is $7,000.
For Strategy Account 1:
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For Strategy Account 2:
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CONTINGENT DEFERRED SALES CHARGE AND MARKET VALUE ADJUSTMENT
CONTINGENT DEFERRED SALES CHARGE
When you take aNon-Preferred Withdrawal under the Contract during the first six Contract Years, theNon-Preferred Withdrawal will be subject to a Contingent Deferred Sales Charge (or CDSC). After the sixth Contract Year,Non-Preferred Withdrawals will not be subject to CDSCs. A CDSC always has the effect of reducing your Cash Withdrawal.
When a CDSC is imposed on aNon-Preferred Withdrawal, the CDSC will be calculated using the following formula:
CDSC = CDSC Base x CDSC Percentage
In the formula above, the CDSC Base will equal the dollar amount of theNon-Preferred Withdrawal. If only a portion of a Gross Withdrawal is treated as aNon-Preferred Withdrawal, the CDSC Base will equal the portion of the Gross Withdrawal that is aNon-Preferred Withdrawal.
The CDSC Percentage will depend on the number of Contract Years that you have completed when you take aNon-Preferred Withdrawal. The CDSC Percentage schedule is set forth below. The CDSC Percentage schedule starts at 6.00% and declines with each completed Contract Year until it reaches 0% after six completed Contract Years.
Number of Completed Contract Years | CDSC Percentage (as a percentage of the CDSC Base) | |
0 | 6.00% | |
1 | 5.00% | |
2 | 4.00% | |
3 | 3.00% | |
4 | 2.00% | |
5 | 1.00% | |
6+ | 0.00% |
No CDSC is charged on the payment of the Death Benefit, any partial withdrawals or full surrender after the Death Benefit is paid, or annuity payments.
CDSCs are intended to reimburse us for expenses that we incur in connection with the sale of the Contract.
When you take aNon-Preferred Withdrawal under the Contract during the MVA Period, which is the first six Contract Years, theNon-Preferred Withdrawal will be subject to a Market Value Adjustment (or MVA). After the sixth Contract Year,Non-Preferred Withdrawals will not be subject to MVAs.
An MVA, when applied, may be positive, negative, or equal to zero. If an MVA is negative, it will decrease your Cash Withdrawal. If an MVA is positive, it will increase your Cash Withdrawal. If an MVA is equal to zero, it will have no effect on your Cash Withdrawal.
The MVA is intended to approximate, without duplicating, our experience when we liquidate fixed-income assets in order to satisfy our payment obligations under the Contract. When liquidating assets, Nationwide may realize either a gain or a loss. In rising interest rate environments relative to the interest rate environment on the Date of Issue, the MVA will be negative. Conversely, in declining interest rate environments relative to the interest rate environment on the Date of Issue, the MVA will be positive.
When an MVA is imposed on aNon-Preferred Withdrawal, the MVA will be calculated using the following formula:
MVA = MVA Base x MVA Factor
In the formula above, the MVA Base will equal the dollar amount of theNon-Preferred Withdrawal. If only a portion of a Gross Withdrawal is treated as aNon-Preferred Withdrawal, the MVA Base will equal the portion of the Gross Withdrawal that is aNon-Preferred Withdrawal.
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We calculate the MVA Factor using the following formula:
MVA Factor = MVA Scaling Factor x (A – B) x N/12, where:
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In the formula above, the MVA Scaling Factor will be greater or less than, or equal to, 1.0. Within the formula, the MVA Scaling Factor serves to amplify or dampen the MVA Factor for purposes of the MVA calculation. An MVA Scaling Factor greater than 1.0 increases the magnitude of the MVA, an MVA Scaling Factor less than 1.0 dampens the magnitude of the MVA. An MVA Scaling Factor equal to 1 has no effect on the MVA.
The Market Value Reference Rate refers to the yield of the MVA Index, which is the Bloomberg Barclays U.S. Corporate Index. The Market Value Reference Rate of the MVA Index as of the Date of Issue (the Initial Market Value Reference Rate) is included in your Contract. The daily Market Value Reference Rate may be obtained thereafter by contacting the Service Center. If the daily Market Value Reference Rate is not available on any day on which the value is needed, we will use the Market Value Reference Rate for the previous Business Day.
If the Market Value Reference Rate is no longer available, or if we at our sole discretion determine that the Market Value Reference Rate is no longer appropriate for purposes of calculating the MVA, we will substitute another method for determining the MVA, subject to any required regulatory approval. We will notify you of any such change.
Examples
We calculate the MVA Factor using the following formula:
MVA Factor = MVA Scaling Factor x (A – B) x N/12, where:
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Both examples assume the following:
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Example 1:
Assume:
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Then the MVA Factor is calculated using the following values:
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The MVA Factor on that date is -2.46% (i.e. 1.00 x (3.50% - 4.00%) x 59/12
Example 2:
Assume:
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Then the MVA Factor is calculated using the following values:
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The MVA Factor on that date is 1.10% (i.e. 1.00 x (3.50% - 3.10%) x 33/12
WAIVER OR REDUCTION OF THE CDSC OR MVA
Nationwide may waive (or reduce) any applicable CDSC and waive some or part of the MVA for the following transactions:
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INCREASE IN REMAINING PREFERRED WITHDRAWAL AMOUNT AFTER A LONG-TERM CARE AND TERMINAL ILLNESS OR INJURY (CDSC AND MVA WAIVER)
General
If the Contract Owner and Annuitant are the same person, and as of the Date of Issue that person is no older than 80 years old, all partial withdrawals and any full surrender will be treated entirely as Preferred Withdrawals (thereby requiring us to waive any otherwise applicable CDSCs and MVAs) after the occurrence of a Long-Term Care Event (“LTC Event”) or Terminal Illness or Injury Event (“TI Event”) for the current and all subsequent Contract Years.
In addition, please note:
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There are no charges associated with these waivers.
Long-Term Care Event
An LTC Event occurs if at any time after the first Contract Anniversary, the Contract Owner (or Annuitant if the Contract Owner is not a natural person) is confined to a Long-Term Care Facility or Hospital beginning after the Date of Issue and is confined for a continuous period of 90 days or more. If there is a Joint Owner, the confinement of the
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Contract Owner or Joint Owner may qualify as an LTC Event. An LTC Event waiver claim (including written proof of confinement) must be received by us while the confinement is ongoing or within 90 days after the confinement ends. If it was not reasonably possible to give written proof of confinement in the time required, we will not reduce or deny the waiver if such proof is given as soon as reasonably possible. In any event, the written proof required must be given no later than one year from after the confinement ends unless the Contract Owner was legally incapacitated.
A “Hospital” is defined as a state licensed facility which is operated as a hospital according to the law of the jurisdiction in which it is located; operates primarily for the care and treatment of sick or injured persons as inpatients; provides continuous 24 hours a day nursing service by or under the supervision of a registered graduate professional nurse (R.N.) or a licensed practical nurse (L.P.N.); is supervised by a staff of physicians; and has medical and diagnostic facilities.
A “Long-Term Care Facility” is defined as a state licensed skilled nursing facility or intermediate care facility that does not include: a home for the aged or mentally ill, a community living center, or a place that primarily provides domiciliary, residency, or retirement care; or a place owned or operated by a member of the Contract Owner’s immediate family.
Terminal Illness or Injury Event
A TI Event occurs if at any time after the first Contract Anniversary, the Contract Owner (or Annuitant if the Contract Owner is not a natural person) is diagnosed by a physician (who is not a party to the Contract nor an immediate family member of a party to the Contract) as having a Terminal Illness or Injury beginning after the Date of Issue. If there is a Joint Owner, the Terminal Illness or Injury of the Contract Owner or Joint Owner may qualify as a TI Event.
A “Terminal Illness or Injury” is defined as an illness or injury diagnosed after the Date of Issue by a physician that is expected to result in death within 12 months of diagnosis.
DEATH BENEFIT AND SUCCESSION RIGHTS
Death of Contract Owner who is not the Annuitant
If the deceased Contract Owner (or Joint Owner) is not an Annuitant, and the deceased Contract Owner (or Joint Owner) dies before the Annuitization Date while the Contract is in force, no Death Benefit is payable. Under such circumstances, contractual rights under the Contract will succeed as follows:
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Death of Contract Owner who is the Annuitant
If the deceased Contract Owner (or Joint Owner) is an Annuitant, and the deceased Contract Owner (or Joint Owner) dies before the Annuitization Date while the Contract is in force, the Death Benefit may or may not become payable depending on whether there is a Contingent Annuitant.
If there is Contingent Annuitant, the Contingent Annuitant takes the place of the deceased Annuitant under the Contract and no Death Benefit is payable. There will no longer be a Contingent Annuitant under the Contract.
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If there is no Contingent Annuitant, the Death Benefit becomes payable. Rights to the Death Benefit will be as follows:
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Death of Annuitant who is not the Contract Owner
If the deceased Annuitant is not the Contract Owner (or Joint Owner), and the deceased Annuitant dies before the Annuitization Date while the Contract is in force, the Death Benefit may or may not become payable depending on whether there is a Contingent Annuitant.
If there is a Contingent Annuitant, the Contingent Annuitant takes the place of the deceased Annuitant under the Contract and no Death Benefit is payable. The Contract otherwise continues without interruption and there will no longer be a Contingent Annuitant under the Contract.
If there is no Contingent Annuitant, the Death Benefit becomes payable. Rights to the Death Benefit will be as follows:
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After the Annuitization Date, under no circumstances will the Death Benefit become payable. All payments under the Contract depend on the annuity payment option selected.
When the Death Benefit becomes payable, we will not pay the Death Benefit until we receive in writing at our Service Center each of the following:
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Proper proof of death includes:
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The methods of distribution depend on the person (or people) to whom the Death Benefit will be paid. Under all circumstances, the method of distribution selected must comply with any applicable requirements under the Code.
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The following applies to the payment of the Death Benefit:
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If the Contract has more than one Beneficiary entitled to the Death Benefit, the Contract Value will continue to be allocated to the applicable Strategies until the first Beneficiary provides Nationwide with all the information necessary to pay that Beneficiary’s portion of the Death Benefit. At the time the first Beneficiary’s proceeds are paid, the remaining portion(s) of the Death Benefit that is allocated to the Strategies will be reallocated to the Transition Account until instructions are received from the remaining Beneficiary(ies).
The Transition Account is a short-term liquid investment account. We establish interest rates for all amounts in the Transition Account on a monthly basis, but we do not guarantee any specific minimum rate. The Transition Account is not designed for long-term investing. Withdrawals from the Transition Account are not subject to any CDSCs or MVAs.
CALCULATION OF THE DEATH BENEFIT
Except as provided below, the Death Benefit will equal the Contract Accumulation Value as of the date that the Death Benefit becomes payable. The Contract Accumulation Value may be less than, greater than, or equal to your Contract Value.
If the Contract Owner is changed, or if the Contract is assigned, prior to the Death Benefit becoming payable, the Death Benefit will equal the Surrender Value rather than the Contract Accumulation Value, except in any of the following circumstances:
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Taxes may be deducted from the Death Benefit in all circumstances.
SPOUSAL CONTINUATION DEATH BENEFIT
The Spousal Continuation Death Benefit permits a surviving spouse to continue the Contract in the available Strategies and provides for the payment of a second Death Benefit at the death of the surviving spouse. The following requirements must be met in order for the Spousal Continuation Death Benefit to be available under a Contract:
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Under the Spousal Continuation Death Benefit, upon the death of one spouse, the surviving spouse may continue the Contract as the sole Contract Owner and the Annuitant. If the surviving spouse elects to continue the Contract under the Spousal Continuation Death Benefit, the Strategy Value for each Strategy Account will be adjusted to equal the Strategy Accumulation Value as of the date that the Death Benefit became payable. As a result, the Contract Value will also be adjusted to equal the Contract Accumulation Value on the date the Death Benefit became payable. The adjustment to the Contract Value is considered payment of the Death Benefit. The surviving spouse may name a new Beneficiary but may not name anotherCo-Annuitant. Upon the death of the surviving spouse, a second Death Benefit is payable to the surviving spouse’s beneficiaries. Then, on the date Nationwide receives notification of the surviving spouse’s death, a second Death Benefit will be payable. Any person entitled to the Death Benefit will have the following options:
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If the Contract has more than one Beneficiary entitled to the Death Benefit, the Contract Value will continue to be allocated to the applicable Strategies until the first Beneficiary provides Nationwide with all the information necessary to pay that Beneficiary’s portion of the Death Benefit. At the time the first Beneficiary’s proceeds are paid, the remaining portion(s) of the Death Benefit that is allocated to the Strategies will be reallocated to the Transition Account until instructions are received from the remaining Beneficiary(ies).
In no event will Nationwide pay the Death Benefit more than twice.
Please note that if the Spousal Continuation Death Benefit is exercised, all future partial withdrawals and any full surrender under the Contract will be treated as Preferred Withdrawals (i.e., no CDSCs or MVAs will apply, and all Interim Strategy Earnings will be credited using the SEP). In addition, throughout the duration of any Strategy Terms that are ongoing as of the date the first Death Benefit is paid under the Spousal Continuation Death Benefit, the SEP will be calculated as described under “Calculation of the SEP after Continuation of the Contract” below.
The election of the Spousal Continuation Death Benefit may not provide a benefit and may even result in a lesser amount payable upon the death of the surviving spouse than if the Spousal Continuation Death Benefit had not been elected. This occurs when the Contract Accumulation Value on the date the second Death Benefit is paid is less than the Contract Accumulation Value on the date the first Death Benefit was paid.
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CALCULATION OF THE SEP AFTER CONTINUATION OF THE CONTRACT
If the Spousal Continuation Death Benefit was elected and the person receiving the Death Benefit is a surviving spouse of the deceased Contract Owner who elects to continue the Contract, the SEP for each Strategy in which the Contract is invested will be calculated for the duration of its Strategy Term during which the Death Benefit was paid using the following formula:
SEP = (1 + B) / (1+ C) - 1, but never less than zero, where:
B = SEP for that date (computed as described under “Calculation of Strategy Earnings”)
C = SEP on the date the Death Benefit was paid (computed as described under “Calculation of Strategy Earnings”)
The purpose of calculating the SEP in this manner is to prevent Strategy Earnings credited in connection with the Death Benefit to be credited again as part of the SEP calculation for duration of the ongoing Strategy Term(s).
For each Strategy Term following the Strategy Term(s) during which the first Death Benefit was paid, the SEP will be calculated as described under “Calculation of Strategy Earnings.”
Annuity Commencement Date
The Annuity Commencement Date is the date on which annuity payments are scheduled to begin. Generally, the Contract Owner designates the Annuity Commencement Date at the time of application. If no Annuity Commencement Date is designated at the time of application, Nationwide will establish the Annuity Commencement Date as the date the Annuitant, or the older of theCo-Annuitants if applicable, reaches age 90. The Contract Owner may initiate a change to the Annuity Commencement Date at any time. Additionally, Nationwide will notify the Contract Owner approximately 90 days before the impending Annuity Commencement Date of the opportunity to change the Annuity Commencement Date or annuitize the contract.
Any request to change the Annuity Commencement Date must meet the following requirements:
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Generally, Nationwide will not initiate annuitization until specifically directed to do so. However, forNon-Qualified Contracts only, Nationwide will automatically initiate annuitization within 45 days after the Annuity Commencement Date (whether default or otherwise), unless (1) Nationwide has had direct contact with the Contract Owner (indicating that the contract is not abandoned); or (2) the Contract Owner has taken some type of action which is inconsistent with the desire to annuitize.
Annuitization
Annuitization is the period during which annuity payments are received. Annuitization is irrevocable once annuity payments have begun. Upon Annuitization Date, the Annuitant must elect an annuity payment option.
Annuity purchase rates are used to determine the amount of the annuity payments based upon the annuity payment option elected. Actual purchase rates used to determine annuity payments will be those in effect on the Annuitization Date. Annuity benefits at the time of their commencement will not be less than those that would be provided by the application of the Surrender Value to purchase a single premium immediate annuity contract at purchase rates offered by Nationwide at the time to the same class of annuitants.
Fixed Annuity Payments
Fixed annuity payments provide for level annuity payments. Premium taxes are deducted prior to determining fixed annuity payments. The fixed annuity payments will remain level unless the annuity payment option provides otherwise.
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Frequency and Amount of Payments
Annuity payments are based on the annuity payment option elected.
If the net amount to be annuitized is less than $2,000, Nationwide reserves the right to pay this amount in a lump sum instead of periodic annuity payments.
Nationwide reserves the right to change the frequency of payments if the amount of any payment becomes less than $100. The payment frequency will be changed to an interval that will result in payments of at least $100. Nationwide will send annuity payments no later than 10 Business Days after each annuity payment date.
Annuity Payment Options
The Annuitant must elect an annuity payment option before the Annuitization Date. If the Annuitant does not elect an annuity payment option, the fixed single life annuity with 240 monthly payments guaranteed annuity payment option will be assumed as the automatic form of payment upon annuitization. Once elected or assumed, the annuity payment option may not be changed.
Not all of the annuity payment options may be available in all states. Additionally, the annuity payment options available may be limited based on the Annuitant’s age (and the joint annuitant’s age, if applicable) or requirements under the Code.
Nationwide reserves the right to refuse any purchase payment that would result in the cumulative total for all contracts issued by Nationwide on the life of any one Annuitant or owned by any one Contract Owner to exceed $1,000,000. If a Contract Owner does not submit purchase payments in excess of $1,000,000, or if Nationwide has refused to accept purchase payments in excess of $1,000,000, the references in this provision to purchase payments in excess of $1,000,000 will not apply. If the Contract Owner is permitted to submit purchase payments in excess of $1,000,000, additional restrictions apply, as follows.
Annuity Payment Options for Contracts with Total Purchase Payments and/or Surrender Value Annuitized Less Than or Equal to $2,000,000
If, at the Annuitization Date, the total of the purchase payment made to the contract and/or the Surrender Value annuitized is less than or equal to $2,000,000, the annuity payment options available are:
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Each of the annuity payment options is discussed more thoroughly below.
Single Life
The single life annuity payment option provides for annuity payments to be paid during the lifetime of the Annuitant. This option is not available if the Annuitant is 86 or older on the Annuitization Date.
Payments will cease with the last payment before the Annuitant’s death. For example, if the Annuitant dies before the second annuity payment date, the Annuitant will receive only one payment. The Annuitant will only receive two annuity payments if he or she dies before the third payment date, and so on. No death benefit will be paid.
No withdrawals other than the scheduled annuity payments are permitted.
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Joint and Survivor
The joint and survivor annuity payment option provides for annuity payments to continue during the joint lifetimes of the Annuitant and joint annuitant. After the death of either the Annuitant or joint annuitant, payments will continue for the life of the survivor. This option is not available if the Annuitant or joint annuitant is 86 or older on the Annuitization Date.
Payments will cease with the last payment due prior to the death of the last survivor of the Annuitant and joint annuitant. As is the case of the single life annuity payment option, there is no guaranteed number of payments. Therefore, it is possible that if the Annuitant dies before the second annuity payment date, the Annuitant will receive only one annuity payment. No death benefit will be paid.
No withdrawals other than the scheduled annuity payments are permitted.
Single Life with a 10 or 20 Year Term Certain
The single life with a 10 or 20 year term certain annuity payment option provides that monthly annuity payments will be paid during the Annuitant’s lifetime or for the term selected, whichever is longer. The term may be either 10 or 20 years.
If the Annuitant dies before the end of the 10 or 20 year term, payments will be paid to the beneficiary for the remainder of the term.
No withdrawals other than the scheduled annuity payments are permitted.
Any Other Option
Annuity payment options not set forth in this provision may be available. Any annuity payment option not set forth in this provision must be approved by Nationwide.
Annuity Payment Options for Contracts with Total Purchase Payments and/or Surrender Value Annuitized Greater Than $2,000,000
If, at the Annuitization Date, the total of the purchase payment made to the contract and/or the Surrender Value to be annuitized is greater than $2,000,000, Nationwide may limit the annuity payment option to the longer of:
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Annuitization of Amounts Greater than $5,000,000
Additionally, Nationwide may limit the amount that may be annuitized on a single life to $5,000,000. If the total amount to be annuitized is greater than $5,000,000 under this contract and/or for all Nationwide issued annuity contracts with the same Annuitant, the Contract Owner must:
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CONTRACT TYPES AND FEDERAL TAX CONSIDERATIONS
Types of Contracts
The contracts described in this prospectus are classified according to the tax treatment to which they are subject under the Code. Following is a general description of the various contract types. Eligibility requirements, tax benefits (if any), limitations, and other features of the contracts will differ depending on contract type.
Non-Qualified Contracts
ANon-Qualified Contract is a contract that does not qualify for certain tax benefits under the Code, such as deductibility of purchase payments, and which is not an IRA, Roth IRA, SEP IRA, Simple IRA, or tax sheltered annuity.
Upon the death of the owner of aNon-Qualified Contract, mandatory distribution requirements are imposed to ensure distribution of the entire balance in the contract within a required period.
Non-Qualified Contracts that are owned by natural persons allow the deferral of taxation on the income earned in the contract until it is distributed or deemed to be distributed.Non-Qualified Contracts that are owned bynon-natural persons, such as trusts, corporations, and partnerships are generally subject to current income tax on the income earned inside the contract, unless thenon-natural person owns the contract as an agent of a natural person.
Charitable Remainder Trusts
Charitable Remainder Trusts are trusts that meet the requirements of Section 664 of the Code.Non-Qualified Contracts that are issued to Charitable Remainder Trusts will differ from otherNon-Qualified Contracts in three respects:
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While these provisions are intended to facilitate a Charitable Remainder Trust’s ownership of this contract, the rules governing Charitable Remainder Trusts are numerous and complex. A Charitable Remainder Trust that is considering purchasing this contract should seek the advice of a qualified tax and/or financial advisor prior to purchasing the contract. An annuity that has a Charitable Remainder Trust endorsement is not a Charitable Remainder Trust; the endorsement is merely to facilitate ownership of the contract by a Charitable Remainder Trust.
Individual Retirement Annuities (IRAs)
IRAs are contracts that satisfy the provisions of Section 408(b) of the Code, including the following requirements:
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Depending on the circumstance of the owner, all or a portion of the contributions made to the account may be deducted for federal income tax purposes.
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IRAs may receive rollover contributions from other individual retirement accounts, other individual retirement annuities, tax sheltered annuities, certain 457 governmental plans, and qualified retirement plans (including 401(k) plans).
When the owner of an IRA attains the age of 701⁄2, the Code requires that certain minimum distributions be made. In addition, upon the death of the owner of an IRA, mandatory distribution requirements are imposed by the Code to ensure distribution of the entire contract value within the required statutory period. Due to recent changes in Treasury Regulations, the amount used to compute the mandatory distributions may exceed the contract value.
Failure to make the mandatory distributions can result in an additional penalty tax of 50% of the excess of the amount required to be distributed over the amount that was actually distributed.
For further details regarding IRAs, refer to the disclosure statement provided when the IRA was established and the annuity contract’s IRA endorsement.
As used herein, the term _individual retirement plans_ shall refer to both individual retirement annuities and individual retirement accounts that are described in Section 408 of the Code.
One-Rollover-Per-Year Limitation
A contract owner can receive a distribution from an IRA and roll it into another IRA within 60 days from the date of the distribution and not have the amount of the distribution included in taxable income. Only one rollover per year from a contract owner’s IRA is allowed. The one year period begins on the date the contract owner receives the IRA distribution, and not on the date the IRA was rolled over. The Internal Revenue Service (_IRS_) has interpreted thisone-rollover-per-year limitation as applying separately to each IRA a contract owner owns.
However, on March 20, 2014, the IRS issued Announcement2014-15 in which it decided to follow the Tax Court’s interpretation of the one rollover per year rule in the Bobrow case. In Bobrow, the Tax Court interpreted theone-rollover-per-year limitation as applying in the aggregate to all the IRAs that a taxpayer owns. This means that a contract owner cannot make an IRA rollover distribution if, within the previous one year period, an IRA rollover distribution was taken from any other IRAs owned. Also, rollovers between an individual’s Roth IRAs would prevent a separate rollover within the1-year period between the individual’s traditional IRAs, and vice versa. The IRS began applying this new interpretation to any IRA rollover distribution that occurs on or after January 1, 2015.
Direct transfers IRA funds between IRA trustees are not subject to the one rollover per year limitation because such transfers are not considered rollover distributions. Also, a rollover from a traditional IRA to a Roth IRA (a conversion) is not subject to the one roll over per year limitation, and such a rollover is disregarded in applying the one rollover per year limitation to other rollovers.
Roth IRAs
Roth IRA contracts are contracts that satisfy the provisions of Section 408A of the Code, including the following requirements:
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A Roth IRA can receive a rollover from an individual retirement plan or another eligible retirement plan; however, the amount rolled over from the individual retirement plan or other eligible retirement plan to the Roth IRA is required to be included in the owner’s federal gross income at the time of the rollover, and will be subject to federal income tax. However, a rollover or conversion of an amount from an IRA or eligible retirement plan after December 31, 2017 cannot be recharacterized back to an IRA.
For further details regarding Roth IRAs, please refer to the disclosure statement provided when the Roth IRA was established and the annuity contract’s IRA endorsement.
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Simplified Employee Pension IRAs (SEP IRA)
A SEP IRA is a written plan established by an employer for the benefit of employees which permits the employer to make contributions to an IRA established for the benefit of each employee.
An employee may make deductible contributions to a SEP IRA subject to the same restrictions and limitations as an IRA. In addition, the employer may make contributions to the SEP IRA, subject to dollar and percentage limitations imposed by both the Code and the written plan.
A SEP IRA plan must satisfy:
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In addition, the plan cannot restrict withdrawals ofnon-elective contributions, and must restrict withdrawals of elective contributions before March 15th of the following year.
When the owner of a SEP IRA attains the age of 701⁄2, the Code requires that certain minimum distributions be made. Due to recent changes in Treasury Regulations, the amount used to compute the minimum distributions may exceed the contract value. In addition, upon the death of the owner of a SEP IRA, mandatory distribution requirements are imposed by the Code to ensure distribution of the entire contract value within the required statutory period.
Simple IRAs
A Simple IRA is an Individual Retirement Annuity that is funded exclusively by a qualified salary reduction arrangement and satisfies:
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The funds contributed to a Simple IRA cannot be commingled with funds in other individual retirement plans or SEP IRAs.
A Simple IRA cannot receive rollover distributions except from another Simple IRA.
When the owner of a Simple IRA attains the age of 701⁄2, the Code requires that certain minimum distributions be made. Due to recent changes in Treasury Regulations, the amount used to compute the minimum distributions may exceed the contract value. In addition, upon the death of the owner of a Simple IRA, mandatory distribution requirements are imposed by the Code to ensure distribution of the entire contract value within the required statutory period.
Investment Only (Qualified Plans)
Contracts that are owned by Qualified Plans are not intended to confer tax benefits on the beneficiaries of the plan; they are used as investment vehicles for the plan. The income tax consequences to the beneficiary of a Qualified Plan are controlled by the operation of the plan, not by operation of the assets in which the plan invests.
Beneficiaries of Qualified Plans should contact their employer and/or trustee of the plan to obtain and review the plan, trust, summary plan description and other documents for the tax and other consequences of being a participant in a Qualified Plan.
Federal Tax Considerations
The tax consequences of purchasing a contract described in this prospectus will depend on:
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SeeSynopsis of the Contracts for a brief description of the various types of contracts and the different purposes for which the contracts may be purchased.
Existing tax rules are subject to change, and may affect individuals differently depending on their situation. Nationwide does not guarantee the tax status of any contracts or any transactions involving the contracts.
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If the contract is purchased as an investment of certain retirement plans (such as qualified retirement plans, IRAs, and custodial accounts as described in Sections 401, 408(a), and 403(b)(7) of the Internal Revenue Code), the tax advantages enjoyed by the contract owner and/or annuitant may relate to participation in the plan rather than ownership of the annuity contract. Such plans are permitted to purchase investments other than annuities and retaintax-deferred status.
The following is a brief summary of some of the federal income tax considerations related to the contracts. In addition to the federal income tax, distributions from annuity contracts may be subject to state and local income taxes. The tax rules across all states and localities are not uniform and therefore will not be discussed in this prospectus. Tax rules that may apply to contracts issued in U.S. territories such as Puerto Rico and Guam are also not discussed. Nothing in this prospectus should be considered to be tax advice. Contract owners and prospective contract owners should consult a financial consultant, tax advisor or legal counsel to discuss the taxation and use of the contracts.
The Internal Revenue Code sets forth different income tax rules for the following types of annuity contracts:
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IRAs, SEP IRAs and Simple IRAs
Distributions from IRAs, SEP IRAs and Simple IRAs are generally taxed when received. If any portion of the amount contributed to the IRA was nondeductible for federal income tax purposes, then a portion of each distribution is excludable from income.
If distributions of income from an IRA are made prior to the date that the owner attains the age of 591⁄2 years, the income is subject to both the regular income tax and an additional penalty tax of 10%. (For Simple IRAs, the 10% penalty is increased to 25% if the distribution is made during the two year period beginning on the date that the individual first participated in the Simple IRA.) The 10% penalty tax can be avoided if the distribution is:
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If the contract owner dies before the contract is completely distributed, the balance will be included in the contract owner’s gross estate for estate tax purposes.
One-Rollover-Per-Year-Limitation
A contract owner can receive a distribution from an IRA and roll it into another IRA within 60 days from the date of the IRA distribution and not have the amount of the distribution included in your taxable income. Only one rollover per year from a contract owner’s IRA is allowed. The one year period begins on the date the contract owner receives the IRA distribution and not on the date that it was rolled over. The IRS has interpreted this one rollover per year limitation as applying separately to each IRA that a contract owner owns.
However, on March 20, 2014, the IRS issued Announcement2014-15 in which it decided to follow the Tax Court’s interpretation of the one rollover per year rule in the Bobrow case. In Bobrow, the Tax Court interpreted the one rollover per year limitation as applying in the aggregate to all the IRAs that a taxpayer owns. This means that a contract owner cannot make an IRA rollover distribution from his or her IRA if within the previous one year period he or she has made an IRA rollover distribution from any other IRA that the he owns. Also, rollovers between an individual’s Roth IRAs would prevent a separate rollover within the1-year period between the individual’s traditional IRAs, and vice versa. The IRS began applying this new interpretation to any IRA rollover distribution that occurs on or after January 1, 2015.
Direct transfers IRA funds between IRA trustees are not subject to the one rollover per year limitation because such transfers are not considered rollover distributions and are therefore not subject to the one rollover per year limitation. Also, a rollover from a traditional IRA to a Roth IRA (a conversion) is not subject to theone-rollover-per-year limitation, and such a rollover is disregarded in applying theone-rollover-per year limitation to other rollovers.
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Roth IRAs
Distributions of earnings from Roth IRAs are taxable ornon-taxable depending upon whether they are “qualified distributions” or “nonqualified distributions.” A “qualified distribution” is one that is made after the Roth IRA has satisfied the five-year rule and meets one of the following requirements:
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The five year rule is satisfied if a five-taxable year period has passed. The five taxable-year period begins with the first taxable year in which a contribution is made to any Roth IRA established for the owner.
A qualified distribution is not included in gross income for federal income tax purposes.
Anon-qualified distribution is not includable in gross income to the extent that the distribution, when added to all previous distributions, does not exceed the total amount of contributions made to the Roth IRA. Anynon-qualified distribution in excess of the total contributions is includable in the contract owner’s gross income in the year that is distributed to the contract owner.
Special rules apply for Roth IRAs that have proceeds received from an IRA prior to January 1, 1999 if the owner elected the special four-year income averaging provisions that were in effect for 1998.
Ifnon-qualified distributions of income from a Roth IRA are made prior to the date that the owner attains the age of 591⁄2 years, the income is subject to both the regular income tax and an additional penalty tax of 10%. The penalty tax can be avoided if the distribution is:
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If the contract owner dies before the contract is completely distributed, the balance will be included in the contract owner’s gross estate for tax purposes.
Tax Sheltered Annuities
Distributions from Tax Sheltered Annuities are generally taxed when received. If nondeductible contributions are made, then a portion of each distribution is excludable from income based on a formula established pursuant to the Internal Revenue Code. The formula excludes from income the amount invested in the contract divided by the number of anticipated payments until the full investment in the contract is recovered. Thereafter all distributions are fully taxable.
If a distribution of income is made from a Tax Sheltered Annuity prior to the date that the owner attains the age of 591⁄2 years, the income is subject to both the regular income tax and an additional penalty tax of 10%. The penalty tax can be avoided if the distribution is:
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A loan from a Tax Sheltered Annuity generally is not considered to be a distribution, and is therefore generally not taxable. However, if the loan is not repaid in accordance with the repayment schedule, the entire balance of the loan would be treated as being in default, and the defaulted amount would be treated as being distributed to the participant as a taxable distribution.
If the contract owner dies before the contract is completely distributed, the balance will be included in the contract owner’s gross estate for estate tax purposes
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Non-Qualified Contracts - Natural Persons as Contract Owners
Generally, the income earned inside aNon-Qualified Annuity Contract that is owned by a natural person is not taxable until it is distributed from the contract.
Distributions before the Annuitization Date are taxable to the contract owner to the extent that the cash value of the contract exceeds the contract owner’s investment at the time of the distribution. In general, the investment in the contract is equal to the purchase payments made withafter-tax dollars, reduced by any nontaxable distributions. Distributions, for this purpose, include partial surrenders, any portion of the contract that is assigned or pledged; or any portion of the contract that is transferred by gift. For these purposes, a transfer by gift may occur upon annuitization if the contract owner and the annuitant are not the same individual.
With respect to annuity distributions on or after the Annuitization Date, a portion of each annuity payment is excludable from taxable income. The amount excludable is based on the ratio between the contract owner’s investment in the contract and the expected return on the contract. Once the entire investment in the contract is recovered, all distributions are fully includable in income. The maximum amount excludable from income is the investment in the contract. If the annuitant dies before the entire investment in the contract has been excluded from income, and as a result of the annuitant’s death no more payments are due under the contract, then the unrecovered investment in the contract may be deducted on his or her final tax return.
Commencing after December 31, 2010, the Internal Revenue Code provides that if only a portion of a nonqualified annuity contract is annuitized for either (a) a period of 10 years or greater, or (b) for the life or lives of one or more persons, then the portion of the contract that has been annuitized would be treated as if it were a separate annuity contract. This means that an Annuitization Date can be established for a portion of the annuity contract (rather than requiring the entire contract to be annuitized at once) and the above description of the taxation of annuity distributions after the Annuitization Date would apply to the portion of the contract that has been annuitized. The investment in the contract is required to be allocated pro rata between the portion of the contract that is annuitized and the portion that is not. All other benefits under the contract (e.g., death benefit) would also be reduced pro rata. For example, if 1/3 of the cash value of the contract were to be annuitized, the death benefit would also be reduced by 1/3.
In determining the taxable amount of a distribution that is made prior to the annuitization date, all annuity contracts issued after October 21, 1988 by the same company to the same contract owner during the same calendar year will be treated as one annuity contract.
A special rule applies to distributions from contracts that have investments that were made prior to August 14, 1982. For those contracts, distributions that are made prior to the Annuitization Date are treated first as the nontaxable recovery of the investment in the contract as of that date. A distribution in excess of the amount of the investment in the contract as of August 14, 1982, will be treated as taxable income.
The Internal Revenue Code imposes a penalty tax if a distribution is made before the contract owner reaches age 591⁄2. The amount of the penalty is 10% of the portion of any distribution that is includable in gross income. The penalty tax does not apply if the distribution is:
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If the contract owner dies before the contract is completely distributed, the balance will be included in the contract owner’s gross estate for estate tax purposes.
Non-Qualified Contracts -Non-Natural Persons as Contract Owners
The previous discussion related to the taxation ofNon-Qualified Contracts owned by individuals. Different rules (theso-called“non-natural persons” rules) apply if the contract owner is not a natural person.
Generally, contracts owned by corporations, partnerships, trusts, and similar entities are not treated as annuity contracts under the Internal Revenue Code. Therefore, income earned under aNon-Qualified Contract that is owned by anon-natural person is taxed as ordinary income during the taxable year that it is earned. Taxation is not deferred, even if the income is not distributed out of the contract. The income is taxable as ordinary income, not capital gain.
Thenon-natural persons rules do not apply to all entity-owned contracts. For purposes of the rule that annuity contracts that are owned bynon-natural persons are not treated as annuity contracts for tax purposes, a contract that is owned by anon-natural person as an agent of an individual is treated as owned by the individual. This would cause the contract to be treated as an annuity under the Internal Revenue Code, allowing tax deferral. However, this exception does not apply when thenon-natural person is an employer that holds the contract under anon-qualified deferred compensation arrangement for one or more employees.
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Thenon-natural persons rules also do not apply to contracts that are:
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If the annuitant, who is the individual treated as owning the contract, dies before the contract is completely distributed, the balance may be included in the annuitant’s gross estate for estate tax purposes, depending on the obligations that thenon-natural owner may have owed to the annuitant.
Exchanges
As a general rule, federal income tax law treats exchanges of propertycollateralized mortgage obligations) in the same manner as a saleNationwide invests its general account assets. Nationwide takes into account the various maturity durations of the property. However, pursuant to Section 1035 of the Internal Revenue Code, an annuity contract may be exchangedtax-free for another annuity contract, provided that the obligee (the person to whom the annuity obligation is owed) is the same for both contracts. If the exchange includes the receipt of other property, such as cash, in addition to another annuity contract special rules may cause a portion of the transaction to be taxable to the extent of the value of the other property.
In June, 2011 the IRS issued Rev. Proc.2011-38, which addresses the income tax consequences of the direct transfer of a portion of the cash value of an annuity contract in exchange for the issuance of a second annuity contract. Rev. Proc.2011-38 modifiedGTOs (1, 3, 5, 7 and superseded prior guidance that was contained in Rev. Proc.2008-24. A direct transfer that satisfies the revenue procedure will be treated as atax-free exchange under Section 1035 of the Code if, for a period of at least 180 from the date of the direct transfer, there are no distributions or surrenders from either annuity contract involved in the exchange. In addition, the 180 day period will be deemed to have been satisfied with respect to amounts received as an annuity for a period of 10 years or more, or as an annuity for the life of one or more persons. The taxation of distributions (other than distributions described in the immediately preceding sentence) received from either contract within the 180 day period will be determined using general tax principles to determine the substance of those payments. For example, they could be treated as taxable “boot” in an otherwisetax-free exchange, or as a distribution from the new contract. Rev. Proc.2011-38 also removed numerous exceptions to the 180 waiting period that Rev. Proc.2008-11 provided for its 12 month waiting period. Please discuss any tax consequences concerning any contemplated or completed transactions with a professional tax advisor. See, also,Non-Qualified Contracts - Natural Persons as Contract Owners, above.
Additional Medicare Tax
Effective January 1, 2013, Section 1411 of the Internal Revenue Code imposes a surtax of 3.8% on certain net investment income received by individualsyears) and certain trusts and estates. The surtax is imposed on the lesser of (a) net investment income or (b) the excess of the modified adjusted gross income over a threshold amount. For individuals, the threshold amount is $250,000 (married filing jointly); $125,000 (married filing separately); or $200,000 (single, head of household with qualifying person, or qualifying widow(er) with dependent child). The threshold for an estate or trust that is subject to the surtax is generally equal to the dollar amount at which the highest tax bracket under Internal Revenue Code Section 1(e) begins for the taxable year. For 2017, that amount is $12,500.
Modified adjusted gross income is equal to gross income with several modifications. Consult with a qualified tax advisor regarding how to determine modified adjusted gross income for purposes of determining the applicability of the surtax.
Net investment income includes, but is not limited to, interest, dividends, capital gains, rent and royalty income, and income from nonqualified annuities. It may include taxable distributions from, and gain from the sale or surrenders of, life insurance contracts. Net investment income does not include, among other things, distributions from certain qualified plans (such as IRAs, Roth IRAs, and plans described in Internal Revenue Code Sections 401(a), 401(k), 403(a), 403(b) or 457(b)); however, such distributions, to the extent that they are includible in income for federal income tax purposes, are includible in modified adjusted gross income.
Same-Sex Marriages, Domestic Partnership and Other Similar Relationships
The Treasury issued final regulations that address what relationships are considered a marriage for federal tax purposes. The final regulations definition of marriage reflects the United States Supreme Court holdings inWindsor andObergefell, as well as Rev. Proc.2017-13.
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The final regulations define the terms “spouse”, “husband”, “wife”, and “husband and wife” to be gender neutral so that such terms can apply equally to same sex couples and opposite sex couples. The regulations adopt the “place of celebration” rule to determine marital status for federal tax purposes. A marriage of two individuals is recognized for federal tax purposes if the marriage is recognized by a state, possession, or territory of the US in which the marriage was entered into, regardless of the couples place of domicile. Also a marriage entered into in a foreign jurisdiction will be recognized for federal tax purposes if that marriage would be recognized in at least one state, possession, or territory of the US.
Finally, the regulations adopts Rev. Proc.2013-17 holding that relationships entered into as civil unions, or registered domestic partnerships that is not denominated as marriages under state law are not marriages for federal tax purposes. Therefore, the favorableincome-tax deferral options afforded by federal tax law to a married spouse under Code Sections 72 and 401(a)(9) are not available to individuals who have entered into these formal relationships.
Withholding
Pre-death distributions from the contracts are subject to federal income tax. Nationwide will withhold the tax from the distributions unless the contract owner requests otherwise. Under some circumstances, the Code will not permit contract owners to waive withholding. Such circumstances include:
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If a contract owner is prohibited from waiving withholding, as described above, the distribution will be subject withholding rates established by Section 3405 of the Internal Revenue Code and is applied against the amount of income that is distributed.
If the distribution is from a Tax Sheltered Annuity, it will be subject to mandatory 20% withholding that cannot be waived, unless:
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Non-Resident Aliens
Generally, apre-death distribution from a contract to anon-resident alien is subject to federal income tax at a rate of 30% of the amount of income that is distributed. Nationwide is required to withhold this amount and send it to the Internal Revenue Service. Some distributions tonon-resident aliens may be subject to a lower (or no) tax if a treaty applies. In order to obtain the benefits of such a treaty, thenon-resident alien must:
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If thenon-resident alien does not meet the above conditions, Nationwide will withhold 30% of income from the distribution.
Another exemption from the 30% withholding is available if thenon-resident alien provides Nationwide with sufficient evidence that:
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Note that for the preceding exemption, the distributions would be subject to the same withholding rules that are applicable to payments to United States persons.
This prospectus does not address any tax matters that may arise by reason of application of the laws of anon-resident alien’s country of citizenship and/or country of residence. Purchasers and prospective purchasers should consult a financial consultant, tax advisor or legal counsel to discuss the applicability of laws of those jurisdictions to the purchase or ownership of a contract.
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FATCA
Under Sections 1471 through 1474 of the Internal Revenue Code (commonly referred to as FATCA), distributions from a Contract to a foreign financial institution or to a nonfinancial foreign entity, each as described by FATCA, may be subject to United States tax withholding at a flat rate equal to 30% of the taxable amount of the distribution, irrespective of the status of any beneficial owner of the Contract or of the distribution. Nationwide may require you to provide certain information or documentation (e.g., FormW-9 or FormW-8BEN) to determine its withholdinganticipated cash-flow requirements under FATCA.
Federal Estate, Gift, and Generation Skipping Transfer Taxes
The following transfers may be considered a gift for federal gift tax purposes:
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Upon the contract owner’s death, the value of the contract may subject to estate taxes, even if all or a portion of the value is also subject to federal income taxes.
Section 2612 of the Internal Revenue Code may require Nationwide to determine whether a death benefit or other distribution is a “direct skip” and the amount of the resulting generation skipping transfer tax, if any. A direct skip is when property is transferred to, or a death benefit or other distribution is made to:
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If the contract owner is not an individual, then for this purpose only, “contract owner” refers to any person:
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If a transfer is a direct skip, Nationwide will deduct the amount of the transfer tax from the death benefit, distribution or other payment, and remit it directly to the Internal Revenue Service.
Charge for Tax
making investments. Nationwide is not requiredobligated to maintain a capital gain reserve liability onNon-Qualified Contracts. If tax laws change requiring a reserve, Nationwide may implement and adjust a tax charge.
Tax Changes
The foregoing tax information is based on Nationwide’s understanding of federal tax laws. It is NOT intended as tax advice. All information is subject to change without notice. You should consult with your personal tax and/or financial advisor for more information.
In 2001, the Economic Growth and Tax Relief Reconciliation Act (“EGTRRA”) was enacted. EGTRRA made numerous changes to the Internal Revenue Code, including the following:
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In 2006, the Pension Protection Act of 2006 made permanent the EGTRRA provisions noted above that increase the amounts that may be contributed to various retirement plans and that expanded the portability of various retirement plans. However, all of the other changes resulting from EGTRRA were scheduled to “sunset,” or become ineffective, after December 31, 2010 unless they are extended by additional legislation. The American Taxpayer Relief Act (ATRA) was enacted on January 1, 2013 and made permanent the lower federal income tax rates established under EGTRRA, except for individuals with taxable income above $400,000 ($450,000 for married couples) whose tax rate will revert to thepre-EGTRRA tax rate of 39.6%. ATRA also permanently provides for a maximum federal estate tax rate of 40% with an annually inflation-adjusted $5 million exclusion for estates of persons dying after December 31, 2012. Consult a qualified tax or financial advisor for further information relating to these and other tax issues.
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State Taxation
The tax rules across the various states and localities are not uniform and therefore are not discussed in this prospectus. Tax rules that may apply to contracts issued in U.S. territories such as Puerto Rico and Guam are also not discussed. Contract owners and prospective contract owners should consult a financial consultant, tax advisor or legal counsel to discuss the taxation and use of the contracts.
The Internal Revenue Code requires that certain distributions be made from the contracts issued in conjunction with this prospectus. Following is an overview of the required distribution rules applicable to each type of contract. Please consult a qualified tax or financial advisor for more specific required distribution information.
Required Distributions - General Information
In general, a beneficiary is an individual or other entity that the contract owner designates to receive death proceeds upon the contract owner’s death. The distribution rules in the Internal Revenue Code make a distinction between “beneficiary” and “designated beneficiary” when determining the life expectancy that may be used for payments that are made from IRAs, SEP IRAs, Simple IRAs, Roth IRAs, and Tax Sheltered Annuities after the death of the annuitant, or that are made fromNon-Qualified Contracts after the death of the contract owner. A designated beneficiary is a natural person who is designated by the contract owner as the beneficiary under the contract.Non-natural beneficiaries (e.g. charities or certain trusts) are not designated beneficiaries for the purpose of required distributions and the life expectancy of such a beneficiary is zero.
Life expectancies and joint life expectancies will be determinedinvest GTO allocations in accordance with any particular investment objective, but will generally adhere to Nationwide's overall investment philosophy. The Specified Interest Rates declared by Nationwide for the relevant guidance provided by the Internal Revenue Service and the Treasury Department, including butvarious GTOs will not limited to Treasury Regulation1.72-9 and Treasury Regulation1.401(a)(9)-9.
Required distributions paid upon the death of the contract owner are paidnecessarily correspond to the beneficiary or beneficiaries stipulated by the contract owner. How quickly the distributions must be made may be determined with respect to the life expectancies of the beneficiaries. ForNon-Qualified Contracts, the beneficiaries used in the determination of the distribution period are those in effect on the date of the contract owner’s death. For contracts other thanNon-Qualified Contracts, the beneficiaries used in the determination of the distribution period do not have to be determined until September 30th of the year following the contract owner’s death. If there is more than one beneficiary, the life expectancy of the beneficiary with the shortest life expectancy is used to determine the distribution period. Any beneficiary that is not a designated beneficiary has a life expectancy of zero.
Required Distributions forNon-Qualified Contracts
Internal Revenue Code Section 72(s) requires Nationwide to make certain distributions when a contract owner dies. The following distributions will be made in accordance with the following requirements:
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In the event that the contract owner is not a natural person (e.g., a trust or corporation), for purposes of these distribution provisions:
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These distribution provisions do not apply to any contract exempt from Section 72(s) of the Internal Revenue Code by reason of Section 72(s)(5) or any other law or rule.
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Required Distributions for Tax Sheltered Annuities, IRAs, SEP IRAs, Simple IRAs, and Roth IRAs
Distributions from a Tax Sheltered Annuity, IRA, SEP IRA or Simple IRA must begin no later than April 1 of the calendar year following the calendar year in which the contract owner reaches age 701⁄2. Distributions may be paid in a lump sum or in substantially equal payments over:
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For Tax Sheltered Annuities, required distributions do not have to be withdrawn from this contract if they are being withdrawn from another Tax Sheltered Annuity of the contract owner.
For IRAs, SEP IRAs, and Simple IRAs, required distributions do not have to be withdrawn from this contract if they are being withdrawn from another IRA, SEP IRA, or Simple IRA of the contract owner.
If the contract owner’s entire interest in a Tax Sheltered Annuity, IRA, SEP IRA, or Simple IRA will be distributed in equal or substantially equal payments over a period described in (a) or (b) above, the payments must begin on or before the required beginning date. The required beginning date is April 1 of the calendar year following the calendar year in which the contract owner reaches age 701⁄2. The rules for Roth IRAs do not require distributions to begin during the contract owner’s lifetime, therefore, the required beginning date is not applicable to Roth IRAs.
Due to recent changes in Treasury Regulations, the amount used to compute the minimum distribution requirement may exceed the Contract Value.
If the contract owner dies before the required beginning date (in the case of a Tax Sheltered Annuity, IRA, SEP IRA, or Simple IRA) or before the entire Contract Value is distributed (in the case of Roth IRAs), any remaining interest in the contract must be distributed by December 31 of the fifth year following the contract owner’s death or over a period not exceeding the applicable distribution period, which is determined as follows:
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If the contract owner dies on or after the required beginning date, the interest in the Tax Sheltered Annuity, IRA, SEP IRA, or Simple IRA must be distributed over a period not exceeding the applicable distribution period, which is determined as follows:
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If distribution requirements are not met, a penalty tax of 50% is levied on the difference between the amount that should have been distributed for that year and the amount that actually was distributed for that year.
For IRAs, SEP IRAs, and Simple IRAs, all or a portion of each distribution will be included in the recipient’s gross income and taxed at ordinary income tax rates. The portion of a distribution that is taxable is based on the ratio between the amount by whichnon-deductible purchase payments exceed priornon-taxable distributions and total account balances at the time of the distribution. The owner of an IRA, SEP IRA, or Simple IRA must annually report the amount ofnon-deductible purchase payments, the amount of any distribution, the amount by whichnon-deductible purchase payments for all years exceed non taxable distributions for all years, and the total balance of all IRAs, SEP IRAs, or Simple IRAs.
Distributions from Roth IRAs may be either taxable or nontaxable, depending upon whether they are “qualified distributions” or“non-qualified distributions.”
CONTACTING THE SERVICE CENTER
All inquiries, paperwork, information requests, service requests, and transaction requests should be made to the Service Center:
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Nationwide will use reasonable procedures to confirm that instructions are genuine and will not be liable for following instructions that it reasonably determined to be genuine. Nationwide may record telephone requests. Telephone and computer systems may not always be available. Any telephone system or computer can experience outages or slowdowns for a variety of reasons. The outages or slowdowns could prevent or delay processing. Although Nationwide has taken precautions to support heavy use, it is still possible to incur an outage or delay. To avoid technical difficulties, submit transaction requests by mail.
We may be required to provide information about your Contract to government regulators. If mandated under applicable law, Nationwide may be required to reject a Purchase Payment and to refuse to process transaction requests under the Contract until instructed otherwise by the appropriate regulator.
DISTRIBUTION
Nationwide Investment Services Corporation (“NISC”), acts as the national distributor of the contracts sold through this prospectus. NISC is registered as a broker-dealer under the Securities Exchange Act of 1934 (“1934 Act”), and is a member of the Financial Industry Regulatory Authority (“FINRA”). NISC’s address is One Nationwide Plaza, Columbus, Ohio 43215. In Michigan only, NISC refers to Nationwide Investment Svcs. Corporation. NISC is a wholly owned subsidiary of Nationwide.
Contracts sold through this prospectus can be purchased through registered representatives, appointed by Nationwide, of FINRA broker-dealer firms. Nationwide pays broker-dealers compensation for promoting, marketing and selling the contracts it sponsors. In turn, the broker-dealers pay a portion of the compensation to their registered representatives, under their own arrangements.
Nationwide does not expect the compensation paid to such broker-dealers (including NISC) to exceed 8% of Purchase Payments (on a present value basis) for sales of the contracts described in this prospectus.
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ABOUT NATIONWIDE
Nationwide is a stock life insurance company organized under Ohio law in March 1929, with its home office at One Nationwide Plaza, Columbus, Ohio 43215. Nationwide is a provider of life insurance, annuities and retirement products. It is admitted to do business in all states, the District of Columbia, Guam, the U.S. Virgin Islands, and Puerto Rico.
Nationwide is a member of the Nationwide group of companies. Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company (the “Companies”) are the ultimate controlling persons of the Nationwide group of companies. The Companies were organized under Ohio law in December of 1925 and 1933 respectively. The Companies engage in a general insurance and reinsurance business, except life insurance.
To request additional information about Nationwide, contact the Service Center.
See “Nationwide Life Insurance Company and Subsidiaries” for additional information.
Nationwide may use the proceeds from this offering for any legitimate corporate purpose.
GENERAL ACCOUNT AND SEPARATE ACCOUNTS
The assets in our general account are chargeable with claims by any of our contract owners and creditors, and are subject to the liabilities arising from any of our businesses. Our general account is comprised of all of our assets. Our general account assets do not include the assets in the Index-Linked Annuity Separate Account, an insulated separate account where we place assets allocated to the Strategies. Our general account assets also do not include the assets in any other insulated Nationwide separate accounts.
We exercise sole discretion over the investment of our general account assets, and we bear the associated investment risk. You will not share in the investment experience of our general account assets. We invest our general account assets in accordance with state insurance law.
The Index-Linked Annuity Separate Account is not registered with the U.S. Securities and Exchange Commission under the Investment Company Act of 1940. We own and control the assets in the separate account. You do not share in the investment performance of the assets innon-unitized separate account.
Where permitted by applicable law, we reserve the right to make certain changes to the structure and operationDistribution (Marketing) of the Index-Linked Annuity Separate Account. We will not make any such changes without receiving any necessary approvalGTOs
EXEMPTION FROM PERIODIC REPORTING
Nationwide is relying onAdditional Information should be consulted for information regarding the exemption provided by Rule12h-7 under the 1934 Act. In reliance on that exemption, Nationwide does not file periodic reports that would be otherwise required under the 1934 Act.
STATEMENTS TO CONTRACT OWNERS
Prior to the Annuitization Date, statements will be sent to the Contract Owner’s last known address. You should promptly notify the Service Center of any address change.
We will mail the following statements to you:
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You can receive information from Nationwide faster and reduce the amount of mail they receive by signing up for Nationwide’s eDelivery program. Nationwide will notify you by email when important documents (statements, prospectuses and other documents) are ready for you to view, print, or download from Nationwide’s secure server. To choose this option, go to nationwide.com/login.
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You should review statements carefully. All errors or corrections must be reported to Nationwide immediately to assure proper crediting to the Contract. Unless Nationwide is notified within 30 days of receiptdistribution of the statement, Nationwide will assume statements are correct.
MISTATEMENTS OF AGE OR SEX
If the age or sex of the Contract Owner, Joint Owner, Annuitant, Contingent Annuitant,Co-Annuitant, Beneficiary or Contingent Beneficiary is misstated, all payments and benefits under the Contract will be adjusted. Payments and benefits will be based on the correct age or sex. Proof of age of any of these individuals may be required at any time, in a form satisfactory to Nationwide. When the age or sex of any individual named in the application, including any supplemental applications, has been misstated, the dollar amount of any overpayment will be deducted from the next payment or payments due under the Contract.
The dollar amount of any underpayment made by Nationwide as a result of an age or sex misstatement will be paid in full with the next payment due under the Contract. The dollar amount of any overpayment made by Nationwide as a result of an age or sex misstatement will reduce the next payment due under the Contract, and will continue to reduce subsequent payments under the Contract, until all of the overpayment is recouped. Any adjustment for overpayment or underpayment will include interest charged or credited, as applicable, at the rate required by law, but not exceeding 6%.
EXPERTS
To be filed by a subsequentPre-Effective Amendment.
LEGAL OPINION
variable contracts.
LEGAL PROCEEDINGS
To be filed
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
basis of accounting other than U.S. generally accepted accounting principles. Accordingly, the KPMG LLP audit report states that the financial statements are not presented fairly in accordance with U.S. generally accepted accounting principles and further states that those statements are presented fairly, in all material respects, in accordance with statutory accounting practices prescribed or permitted by the Ohio Department of Insurance.
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APPENDIX A: ADDITIONAL INDEX DISCLOSURES
S&P 500 INDEX
The “S&P 500”
[ | ] | d | |||
1 + a | 365.25 | ||||
MVA Factor | = | 1 + b + 0.0025 | |||
[ | ] | 985 | |||
1 + 0.08 | 365.25 | ||||
MVA Factor | = | 1 + 0.07 + 0.0025 | |||
MVA Factor | = | 1.01897 | |||
Surrender Value | = | Specified Value | x | MVA Factor | |
Surrender Value | = | $12,067.96 | x | 1.01897 | |
*Surrender Value | = | $12,296.89 |
* | Assumes no variable annuity contract contingent deferred sales charges are applicable. In jurisdictions where the .0025 is not permitted in the denominator, the Surrender Value is $12,374.52. |
a | = | The CMT rate published on Friday, and placed in effect by Nationwide for allocations made to the GTO on the following Wednesday through Tuesday. |
b | = | The CMT rate published on Friday, and placed in effect by Nationwide for withdrawals, transfers or other distributions giving rise to a Market Value Adjustment on the following Wednesday through Tuesday. |
d | = | The number of days remaining in the Guaranteed Term. |
[ | ] | d | |||
1 + a | 365.25 | ||||
MVA Factor | = | 1 + b + 0.0025 | |||
[ | ] | 985 | |||
1 + 0.08 | 365.25 | ||||
MVA Factor | = | 1 + 0.09 + 0.0025 | |||
MVA Factor | = | 0.96944 | |||
Surrender Value | = | Specified Value | x | MVA Factor | |
Surrender Value | = | $12,067.96 | x | 0.96944 | |
*Surrender Value | = | $11,699.17 |
* | Assumes no variable annuity contract contingent deferred sales charges are applicable. In jurisdictions where the .0025 is not permitted in the denominator, the Surrender Value is $11,771.69. |
a | = | The CMT rate published on Friday, and placed in effect by Nationwide for allocations made to the GTO on the following Wednesday through Tuesday. |
b | = | The CMT rate published on Friday, and placed in effect by Nationwide for withdrawals, transfers or other distributions giving rise to a Market Value Adjustment on the following Wednesday through Tuesday. |
d | = | The number of days remaining in the Guaranteed Term. |
[ | ] | d | |||
1 + a | 365.25 | ||||
MVA Factor | = | 1 + b + 0.0025 | |||
[ | ] | 985 | |||
1 + 0.08 | 365.25 | ||||
MVA Factor | = | 1 + 0.07 + 0.0025 | |||
MVA Factor | = | 1.01897 | |||
Surrender Value | = | Specified Value | x | MVA Factor | |
Surrender Value | = | $12,067.96 | x | 1.01897 | |
*Surrender Value | = | $12,296.89 |
* | Assumes no variable annuity contract contingent deferred sales charges are applicable. In jurisdictions where the .0025 is not permitted in the denominator, the Surrender Value is $12,374.52. |
a | = | The interest rate swap published two days before the date the allocation to the GTO was made. If no interest rate swap is available for this date, then the most recent available rate prior to that date will be used. |
b | = | The interest rate swap published two days before the date of withdrawal, transfer or other distribution giving rise to a Market Value Adjustment. If no interest rate swap is available for this date, then the most recent available rate prior to that date will be used. |
d | = | The number of days remaining in the Guaranteed Term. |
[ | ] | d | |||
1 + a | 365.25 | ||||
MVA Factor | = | 1 + b + 0.0025 | |||
[ | ] | 985 | |||
1 + 0.08 | 365.25 | ||||
MVA Factor | = | 1 + 0.09 + 0.0025 | |||
MVA Factor | = | 0.96944 | |||
Surrender Value | = | Specified Value | x | MVA Factor | |
Surrender Value | = | $12,067.96 | x | 0.96944 | |
*Surrender Value | = | $11,699.17 |
* | Assumes no variable annuity contract contingent deferred sales charges are applicable. In jurisdictions where the .0025 is not permitted in the denominator, the Surrender Value is $11,771.69. |
a | = | The interest rate swap published two days before the date the allocation to the GTO was made. If no interest rate swap is available for this date, then the most recent available rate prior to that date will be used. |
b | = | The interest rate swap published two days before the date of the withdrawal, transfer or other distribution giving rise to a Market Value Adjustment. If no interest rate swap is available for this date, then the most recent available rate prior to that date will be used. |
d | = | The number of days remaining in the Guaranteed Term. |
Current Yield | Time Remaining to the End of the Guaranteed Term | Specified Value | Market Value Adjustment | Market Value | ||||
12.00% | 9 Years | $10,850 | -29.35% | $7,665 | ||||
7 Years | $12,776 | -23.68% | $9,751 | |||||
5 Years | $15,040 | -17.56% | $12,399 | |||||
2 Years | $19,215 | -7.43% | $17,786 | |||||
180 Days | $21,733 | -1.88% | $21,323 | |||||
10.00% | 9 Years | $10,850 | -16.94% | $9,012 | ||||
7 Years | $12,776 | -13.44% | $11,059 | |||||
5 Years | $15,040 | -9.80% | $13,566 | |||||
2 Years | $19,215 | -4.04% | $18,438 | |||||
180 Days | $21,733 | -1.01% | $21,513 | |||||
9.00% | 9 Years | $10,850 | -9.84% | $9,782 | ||||
7 Years | $12,776 | -7.74% | $11,787 | |||||
5 Years | $15,040 | -5.59% | $14,199 | |||||
2 Years | $19,215 | -2.28% | $18,777 | |||||
180 Days | $21,733 | -0.57% | $21,610 | |||||
8.00% | 9 Years | $10,850 | -2.06% | $10,627 | ||||
7 Years | $12,776 | -1.61% | $12,571 | |||||
5 Years | $15,040 | -1.15% | $14,867 | |||||
2 Years | $19,215 | -0.46% | $19,126 | |||||
180 Days | $21,733 | -0.11% | $21,708 | |||||
7.00% | 9 Years | $10,850 | 6.47% | $11,552 | ||||
7 Years | $12,776 | 5.00% | $13,414 | |||||
5 Years | $15,040 | 3.55% | $15,573 | |||||
2 Years | $19,215 | 1.40% | $19,484 | |||||
180 Days | $21,733 | 0.34% | $21,808 | |||||
6.00% | 9 Years | $10,850 | 15.84% | $12,569 | ||||
7 Years | $12,776 | 12.11% | $14,324 | |||||
5 Years | $15,040 | 8.51% | $16,321 | |||||
2 Years | $19,215 | 3.32% | $19,853 | |||||
180 Days | $21,733 | 0.81% | $21,909 | |||||
4.00% | 9 Years | $10,850 | 37.45% | $14,914 | ||||
7 Years | $12,776 | 28.07% | $16,362 | |||||
5 Years | $15,040 | 19.33% | $17,948 | |||||
2 Years | $19,215 | 7.32% | $20,623 | |||||
180 Days | $21,733 | 1.76% | $22,115 |
December 31, | ||||||
(in millions) | 2019 | 2018 | 2017 | |||
Total revenues | $883 | $895 | $911 | |||
Pre-tax operating earnings | $10 | $28 | $32 |
December 31, | ||||||
(in millions) | 2019 | 2018 | 2017 | |||
Total revenues | $6,010 | $5,656 | $6,183 | |||
Pre-tax operating earnings | $434 | $375 | $379 |
December 31, | ||||||
(in millions) | 2019 | 2018 | 2017 | |||
Total revenues | $5,470 | $5,181 | $5,336 | |||
Pre-tax operating earnings | $128 | $118 | $118 |
December 31, | ||||||
(in millions) | 2019 | 2018 | 2017 | |||
Total revenues | $2,089 | $2,263 | $2,372 | |||
Pre-tax operating earnings | $461 | $489 | $456 |
S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE S&P 500 OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY NATIONWIDE, OWNERS OF THE CONTRACT, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND NATIONWIDE, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
J.P. MORGAN MOZAIC II INDEX
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The J.P. Morgan Index has been designed and is compiled, calculated, maintained and sponsored by J.P. Morgan without regard to the Licensee, the Product or any Contract Owner. The ability of the Licensee to make use of the J.P. Morgan Indexunrealized loss position. Investment losses, however, may be terminated on short notice and it is the responsibility of the Licensee to provide for the consequences of that in the design of the Product. J.P. Morgan does not accept any legal obligation to take the needs of any person who may invest in a Product into account in designing, compiling, calculating, maintaining or sponsoring the J.P. Morgan Index or in any decision to cease doing so.
J.P. Morgan does not give any representation, warranty or undertaking, of any type (whether express or implied, statutory or otherwise) in relation to the J.P. Morgan Index, as to condition, satisfactory quality, performance or fitness for purpose or as to the results to be achieved by an investment in the Product or any data included in or omissions from the J.P. Morgan Index, or the use of the J.P. Morgan Index in connection with the Product or the veracity, currency, completeness or accuracy of the information on which the J.P. Morgan Index is based (and without limitation, J.P. Morgan accepts no liability to any Contract Owner for any errors or omissions in that information or the results of any interruption to it and J.P. Morgan shall be under no obligation to advise any person of any such error, omission or interruption). To the extent any such representation, warranty or undertaking could be deemed to have been given by J.P. Morgan, it is excluded saverealized to the extent that such exclusion is prohibitedliquidity needs require the disposition of bonds and stocks in unfavorable interest rate, liquidity or credit spread environments.
The J.P. Morgan Index is the exclusive property of J.P. Morgan. J.P. Morgan is under no obligation to continue compiling, calculating, maintaining or sponsoring the J.P. Morgan Indexresidential and may delegate or transfer to a third party some or all of its functions in relation to the J.P. Morgan Index.
J.P. Morgan may independently issue or sponsor other indices or products that are similar to and may compete with the J.P. Morgan Index and the Product. J.P. Morgan may also transact in assets referencedcommercial mortgage sector could cause declines in the J.P. Morgan Index (orvalue of that portion of the Company’s investment portfolios.
No actual investment which allowed trackingequity method of accounting in the performance of the Index was possible before December 2016. Any hypothetical “back-tested” information provided is illustrative only and derived from proprietary models designed with the benefit of hindsight based on certain data (which may or may not correspond with the data that someone else would use to back-test the Indices) and assumptions and estimates (not all ofCompany’s statutory financial statements, which may be specified hereinsignificantly different than the values at which the investments may ultimately be realized.
• | Bonds are generally stated at amortized cost, except those with an NAIC designation of "6", which are stated at the lower of amortized cost or fair value. Changes in fair value of bonds stated at fair value are charged to capital and surplus. |
• | Loan-backed and structured securities, which are included in bonds in the statutory financial statements, are stated in a manner consistent with the bond guidelines, but with additional consideration given to the special valuation rules implemented by the NAIC applicable to residential mortgage-backed securities that are not backed by U.S. government agencies, commercial mortgage-backed securities and certain other structured securities. Under these guidelines, an initial and adjusted NAIC designation is determined for each security. The initial NAIC designation, which takes into consideration the security’s amortized cost relative to an NAIC-prescribed valuation matrix, is used to determine the reporting basis (i.e., amortized cost or lower of amortized cost or fair value). |
• | Preferred stocks are generally stated at amortized cost, except those with an NAIC designation of "4" through "6", which are stated at the lower of amortized cost or fair value. Common stocks are stated at fair value. Changes in fair value of stocks stated at fair value are charged to capital and surplus. |
• | The investment in the Company’s wholly-owned insurance subsidiaries, NLAIC and Eagle, and wholly-owned noninsurance subsidiaries, NISC and NIA, are carried using the equity method of accounting. The Company’s investment in JNF, an unaudited downstream noninsurance holding company, is based on the individual audited subsidiary, controlled and affiliated entities owned by the holding company in accordance with the "look through" provisions of Statements of Statutory Accounting Principles ("SSAP") No. 97, Investments in Subsidiary, Controlled and Affiliated Entities. Investments in NLAIC, JNF and NISC are included in stocks, and the investment in Eagle is included in other invested assets on the statutory statements of admitted assets, liabilities, capital and surplus. |
• | Commercial mortgage loans are recorded at unpaid principal balance, adjusted for premiums and discounts, less a valuation allowance. |
• | Policy loans, which are collateralized by the related insurance policy, are carried at the outstanding principal balance and do not exceed the cash surrender value of the policy. As such, no valuation allowance for policy loans is required. |
• | Short-term investments consist primarily of government agency discount notes with maturities of twelve months or less at acquisition and are carried at amortized cost, which approximates fair value. |
Each of the above paragraphs is severable. If the contents of any such paragraph is held to be or becomes invalid or unenforceable in any respect in any jurisdiction, it shall have no effect in that respect, but without prejudice to the remainder of this notice.
MSCI EAFE INDEX
The product referred to herein is not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such product or any index on which such product is based. The Contract contains a more detailed description of the limited relationship MSCI has with Nationwide and any related funds.
THIS PRODUCT IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY MSCI INC.(“MSCI”), ANY OF ITS AFFILIATES, ANY OF ITS INFORMATION PROVIDERS OR ANY OTHER THIRD PARTY INVOLVED IN, OR RELATED TO, COMPILING, COMPUTING OR CREATING ANY MSCI INDEX (COLLECTIVELY, THE“MSCI PARTIES”). THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX
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NAMES ARE SERVICE MARK(S) OF MSCI OR ITS AFFILIATES AND HAVE BEEN LICENSED FOR USE FOR CERTAIN PURPOSES BY NATIONWIDE. NONE OF THE MSCI PARTIES MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, TO THE ISSUER OR OWNERS OF THIS PRODUCT OR ANY OTHER PERSON OR ENTITY REGARDING THE ADVISABILITY OF INVESTING IN PRODUCTS GENERALLY OR IN THIS PRODUCT PARTICULARLY OR THE ABILITY OF ANY MSCI INDEX TO TRACK CORRESPONDING STOCK MARKET PERFORMANCE. MSCI OR ITS AFFILIATES ARE THE LICENSORS OF CERTAIN TRADEMARKS, SERVICE MARKS AND TRADE NAMES AND OF THE MSCI INDEXES WHICH ARE DETERMINED, COMPOSED AND CALCULATED BY MSCI WITHOUT REGARD TO THIS PRODUCT OR THE ISSUER OR OWNERS OF THIS PRODUCT OR ANY OTHER PERSON OR ENTITY. NONE OF THE MSCI PARTIES HAS ANY OBLIGATION TO TAKE THE NEEDS OF THE ISSUER OR OWNERS OF THIS PRODUCT OR ANY OTHER PERSON OR ENTITY INTO CONSIDERATION IN DETERMINING, COMPOSING OR CALCULATING THE MSCI INDEXES. NONE OF THE MSCI PARTIES IS RESPONSIBLE FOR OR HAS PARTICIPATED IN THE DETERMINATION OF THE TIMING OF, PRICES AT, OR QUANTITIES OF THIS PRODUCT TO BE ISSUED OR IN THE DETERMINATION OR CALCULATION OF THE EQUATION BY OR THE CONSIDERATION INTO WHICH THIS PRODUCT IS REDEEMABLE. FURTHER, NONE OF THE MSCI PARTIES HAS ANY OBLIGATION OR LIABILITY TO THE ISSUER OR OWNERS OF THIS PRODUCT OR ANY OTHER PERSON OR ENTITY IN CONNECTION WITH THE ADMINISTRATION, MARKETING OR OFFERING OF THIS FUND.
ALTHOUGH MSCI SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE IN THE CALCULATION OF THE MSCI INDEXES FROM SOURCES THAT MSCI CONSIDERS RELIABLE, NONE OF THE MSCI PARTIES WARRANTS OR GUARANTEES THE ORIGINALITY, ACCURACY AND/OR THE COMPLETENESS OF ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN. NONE OF THE MSCI PARTIES MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ISSUER OF THE PRODUCT, OWNERS OF THE FUND, OR ANY OTHER PERSON OR ENTITY, FROM THE USE OF ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN. NONE OF THE MSCI PARTIES SHALL HAVE ANY LIABILITY FOR ANY ERRORS, OMISSIONS OR INTERRUPTIONS OF OR IN CONNECTION WITH ANY MSCI INDEX OR ANY DATA INCLUDED THEREIN. FURTHER, NONE OF THE MSCI PARTIES MAKES ANY EXPRESS OR IMPLIED WARRANTIES OF ANY KIND, AND THE MSCI PARTIES HEREBY EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO EACH MSCI INDEX AND ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL ANY OF THE MSCI PARTIES HAVE ANY LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
NYSE® ZEBRA EDGE® INDEX
The mark NYSE® is a registered trademark of NYSE Group, Inc., Intercontinental Exchange Inc. or their affiliates and is being utilized by ICE Data Indices, LLC under license and agreement. The marks Zebra® and Zebra Edge® are trademarks of Zebra Capital Management, LLC, may not be used without prior authorization from Zebra Capital Management, LLC, and are being utilized by ICE Data Indices, LLC under license and agreement.
ICE Data Indices, LLC owns all intellectual and other property rights to the NYSE® Zebra Edge® Index (the “Index”), including the composition and the calculation of the Index, excluding the methodology and formula for the Index. Zebra Capital Management, LLC owns all intellectual and other property rights to the methodology and formula for the Index, which are being used by ICE Data Indices, LLC under license from Zebra Capital Management, LLC (together with its subsidiaries and affiliates, “Zebra”).
The Index has been licensed by ICE Data Indices, LLC (together with its subsidiaries and affiliates, “IDI”) to UBS AG andsub-licensed by UBS AG (together with its subsidiaries and affiliates, “UBS”) to Nationwide Life Insurance Company (“Nationwide”). Neither Nationwide nor the Contract (the “Product”) is sponsored, operated, endorsed, recommended, sold or promoted by Zebra, IDI or UBS. Neither Zebra, IDI nor UBS makes any representation or gives any warranty, express or implied, regarding the advisability or possible benefits of purchasing the Product or any other financial product. Clients should undertake their own due diligence and seek appropriate professional advice before purchasing any financial product, including the Product.
The Index and other information disseminated by IDI are for informational purposes only, are provided on an “as is” basis, and are not intended for trading purposes. Neither Zebra nor IDI makes any warranty, express or implied, as to, without limitation, (i) the correctness, accuracy, reliabilityCommission or other characteristics of the Index, (ii) the results to be obtained by any person or entity from the use of the Index for any purpose, or (iii) relating to the use of the Index and other information covered by the Product, including, but not limited to, express or implied warranties of merchantability, fitness for a particular purpose or use, title ornon-infringement. IDI does not warrant that the Index will be uninterrupted and is under no obligation to continue compiling, calculating, maintaining or sponsoring the Index.
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The Index (including the methodology(ies) and formula(s) therefor) has been designed and is compiled, calculated, maintained and sponsored without regard to any financial products that reference the Index (including the Product), any licensee,sub-licensor orsub-licensee of the Index, any client or any other person. Zebra, IDI and UBS may independently issue and/or sponsor other indices and products that are similar to and/or may compete with the Index and the Product. Zebra, IDI and UBS may also transact in assets referenced in the Index (or in financial instruments such as derivatives that reference those assets), including those whichstandard-setting bodies could have a positive or negative effectmaterial adverse impact on the valueCompany’s financial condition or results of operations.
None of Zebra, IDI or UBS shall bear any responsibility or liability, whether for negligence or otherwise, with respect to (i) any inaccuracies, omissions, mistakes or errors in the methodology(ies) and formula(s) for, or computation of, the Index (and shall not be obligated to advise any person of and/or to correct any such inaccuracies, omissions, mistakes or errors), (ii) the use of and/or reference to the Index by Zebra, IDI, UBS or any other person in connection with any financial product or otherwise, or (iii) any economic or other loss which may be directly or indirectly sustained by any client or other person dealing with any such financial product or otherwise. Any client or other person dealing with such financial products does so, therefore, in full knowledge of this disclaimer and can place no reliance whatsoever on Zebra, IDI or UBS nor bring claims, actions or legal proceedings in any manner whatsoever against any of them.
Bloomberg Barclays U.S. Corporate Index
BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. BARCLAYS® is a trademark and service mark of Barclays Bank Plc, used under license. Bloomberg Finance L.P.NAIC and its affiliates, including Bloomberg Index Services Limited (“BISL”) (collectively, “Bloomberg”),task forces and committees, as well as by state insurance departments, in an effort to address emerging issues and otherwise improve or Bloomberg’s licensors own all proprietary rightsalter financial reporting. Calculations made in the “Bloomberg Barclays U.S. Corporate Index.”
Neither Barclays Bank PLC, Barclays Capital Inc., nor any affiliate (collectively “Barclays”) nor Bloomberg is the issuer or producer of Nationwide Defined ProtectionSM Annuity and neither Bloomberg nor Barclays has any responsibilities, obligations or duties to purchasers in Nationwide Defined ProtectionSM Annuity. The Bloomberg Barclays U.S. Corporate Index is licensed for use by Nationwide Life Insurance Company (“Nationwide”) as the Issuer of Nationwide Defined ProtectionSM Annuity. The only relationship of Bloomberg and Barclaysaccordance with the Issuer in respect of Bloomberg Barclays U.S. Corporate Index is the licensing of the Bloomberg Barclays U.S. Corporate Index, which is determined, composed and calculated by BISL, or any successor thereto, without regard to the Issuer of Nationwide Defined ProtectionSM Annuity or the owners of Nationwide Defined ProtectionSM Annuity.
Additionally, Nationwide may for itself execute transaction(s) with Barclays in or relating to Bloomberg Barclays U.S. Corporate Index in connection with Nationwide Defined ProtectionSM Annuity. Purchasers acquire Nationwide Defined ProtectionSM Annuity from Nationwide and purchasers neither acquire any interest in Bloomberg Barclays U.S. Corporate Index nor enter into any relationship of any kind whatsoever with Bloomberg or Barclays upon making a purchase in Nationwide Defined ProtectionSM Annuity. Nationwide Defined ProtectionSM Annuity is not sponsored, endorsed, sold or promoted by Bloomberg or Barclays. Neither Bloomberg nor Barclays makes any representation or warranty, express or implied, regarding the advisability of the purchase of Nationwide Defined ProtectionSM Annuity or the advisability of purchasing securities generally orSAP also govern the ability of the Bloomberg Barclays U.S. Corporate IndexCompany’s insurance entities to track correspondingpay dividends to their respective parent companies. The NAIC is working to reform state regulation in various areas, including comprehensive reforms relating to life insurance reserves and the accounting for such reserves. The Company cannot predict whether or relative market performance. Neither Bloomberg nor Barclays has passed onin what form reforms will be enacted and, if so, whether the legalityenacted reforms will positively or suitabilitynegatively affect the Company’s insurance entities.
The licensing agreement between Bloomberga trust account by Union Hamilton Reinsurance Ltd. and Barclays is solely for the benefit of Bloomberg and Barclays and notheld for the benefit of the ownersceding insurer, under a reinsurance agreement that increased NLAIC’s valuation of Nationwide Defined ProtectionSM Annuity, investorsOlentangy by $67 million as of December 31, 2019 and 2018. Eagle applies prescribed practices from the State of Ohio that allow an alternative reserve basis on assumed obligations, with respect to specified GMDB and GLWB contract riders provided under substantially all of the variable annuity contracts issued and to be issued by NLIC, and effective December 31, 2019, an alternative reserve basis on assumed obligations with respect to specified GLWB contract riders provided under certain fixed indexed annuity contracts issued and to be issued by NLAIC. The prescribed practice related to NLIC guaranteed risks decreased NLIC’s valuation of this subsidiary by $411 million and $183 million as of December 31, 2019 and 2018, respectively. The prescribed practice related to NLAIC guaranteed risks increased NLIC’s valuation of this subsidiary by $226 million as of December 31, 2019.
Year ended or as of December 31, | ||||||||||
(in millions) | 2019 | 2018 | 2017 | 2016 | 2015 | |||||
Statutory Statements of Operations Data | ||||||||||
Total revenues | $14,452 | $13,995 | $14,802 | $14,213 | $15,149 | |||||
Total benefits and expenses | $13,419 | $12,985 | $13,817 | $13,245 | $14,420 | |||||
Net income | $629 | $711 | $1,039 | $751 | $167 | |||||
Statutory Statements of Admitted Assets, Liabilities, Capital and Surplus Data | ||||||||||
Total invested assets | $48,044 | $45,020 | $42,507 | $41,115 | $38,520 | |||||
Total admitted assets | $155,133 | $139,341 | $145,670 | $133,345 | $126,861 | |||||
Total liabilities | $146,311 | $132,496 | $139,721 | $128,137 | $122,294 | |||||
Total capital and surplus | $8,822 | $6,845 | $5,949 | $5,208 | $4,567 |
(a) | Fluctuations in the results of operations or financial condition; |
(b) | actual claims losses exceeding reserves for claims; |
(c) | difficult economic and business conditions, including financial, capital and credit market conditions as a result of changes in interest rates or prolonged periods of low interest rates, equity prices, volatility, yields and liquidity in the equity and credit markets, as well as geopolitical conditions and the impact of political, regulatory, judicial, economic or financial events, including terrorism, epidemics or pandemics, impacting financial markets generally and companies in the Company’s investment portfolio specifically; |
(d) | the degree to which the Company chooses not to hedge risks, or the potential ineffectiveness or insufficiency of hedging or risk management strategies the Company does implement; |
(e) | changes in certain accounting and/or financial reporting standards issued by the Financial Accounting Standards Board ("FASB"), SEC, NAIC or other standard-setting bodies; |
(f) | the inability to maintain the availability of systems and facilities in the event of a disaster, natural or man-made catastrophe, blackout, terrorist attack or war; |
(g) | heightened competition that affects the cost of, and demand for, the Company’s products, specifically including the intensification of price competition, the entry of new competitors, consolidation, technological innovation and the development of new products by new and existing competitors; |
(h) | adverse state and federal legislation and regulation, including, among other things, tax law changes impacting the federal estate tax and tax treatment of life insurance and investment products; limitations on premium levels; restrictions on product approval and policy issuance; increases in minimum capital and reserves and other financial viability requirements; restrictions on mutual fund service fee payments; changes affecting sales practices, including investigations and/or claims handling and escheat investigations; and regulatory actions of the DOL under ERISA, in particular proposed rule-making with respect to fiduciary obligations, rule-making adopted by regulatory authorities under the Dodd-Frank Act and the Federal Deposit Insurance Act, including SEC comprehensive rulemaking and guidance regarding standards of conduct for broker dealers and investment advisers; |
(i) | the inability to mitigate the capital impact associated with statutory reserving and capital requirements; |
(j) | failure to maintain or expand distribution channels; |
(k) | possible difficulties in executing, integrating and realizing projected results of acquisitions, divestitures and restructurings; |
(l) | loss of key vendor relationships or failure of a vendor to protect confidential and proprietary information; |
(m) | changes in interest rates and the equity markets causing a reduction in the market value of the Company’s investment portfolio, investment income and/or asset fees; an acceleration of other expenses; a reduction in separate account assets or a reduction in the demand for the Company’s products; increased liabilities related to living benefits and death benefit guarantees; or an impact on ultimate realizability of deferred tax assets; |
(n) | outlook changes and downgrades in the financial strength and claims-paying ability ratings of the Company assigned by NRSROs; |
(o) | competitive, regulatory or tax changes that affect the cost of, or demand for, products; |
(p) | fluctuations in RBC levels |
(q) | settlement of tax liabilities for amounts that differ significantly from those recorded on the balance sheets; |
(r) | deviations from assumptions regarding future persistency, mortality and morbidity rates (including as a result of natural and man-made catastrophes, pandemics, epidemics, malicious acts, terrorist acts and climate change), and interest rates used in calculating reserve amounts and in pricing products; |
(s) | adverse results and/or resolution of litigation, arbitration, regulatory investigation and/or inquiry; |
(t) | the availability, pricing and effectiveness of reinsurance; |
(u) | the effectiveness of policies and procedures for managing risk; |
(v) | interruption in telecommunication, information technology or other operational systems or failure to maintain the security, confidentiality or privacy of sensitive data on such systems; |
(w) | adverse consequences, including financial and reputational costs, regulatory problems and potential loss of customers resulting from a breach of information security, a failure to meet privacy regulations, or inability to secure and maintain the confidentiality of proprietary or customers’ personal information; |
(x) | the inability to protect intellectual property and defend against claims of infringement; |
(y) | realized losses with respect to impairments of assets in the investment portfolio of the Company; |
(z) | exposure to losses related to variable annuity guarantee benefits, including from downturns and volatility in equity markets; |
(aa) | statutory reserve requirements associated with term and universal life insurance policies under Regulation XXX, Guideline AXXX and principles-based reserving requirements; |
(ab) | lack of liquidity in certain investments, access to credit facilities, or other inability to access capital; and |
(ac) | defaults on commercial mortgages and volatility in their performance. |
December 31, | ||||||
(in millions) | 2019 | 2018 | Change | |||
Revenues | ||||||
Premiums and annuity considerations | $10,168 | $9,829 | 3% | |||
Net investment income | 1,974 | 1,927 | 2% | |||
Amortization of interest maintenance reserve | (2) | (1) | (100%) | |||
Other revenues | 2,312 | 2,240 | 3% | |||
Total revenues | $14,452 | $13,995 | 3% | |||
Benefits and expenses | ||||||
Benefits to policyholders and beneficiaries | $14,782 | $13,961 | 6% | |||
Increase in reserves for future policy benefits and claims | 1,501 | 736 | 104% | |||
Net transfers from separate accounts | (3,747) | (2,468) | (52%) | |||
Commissions | 674 | 670 | 1% | |||
Dividends to policyholders | 38 | 40 | (5%) | |||
Reserve adjustment on reinsurance assumed | (246) | (352) | 30% | |||
Other expenses | 417 | 398 | 5% | |||
Total benefits and expenses | $13,419 | $12,985 | 3% | |||
Income before federal income tax expense and net realized capital losses on investments | $1,033 | $1,010 | 2% | |||
Federal income tax (benefit) expense | (73) | 64 | (214%) | |||
Income before net realized capital losses on investments | $1,106 | $946 | 17% | |||
Net realized capital losses on investments, net of tax and transfers to the interest maintenance reserve | (477) | (235) | (103%) | |||
Net income | $629 | $711 | (12%) |
December 31, | ||||||
(in millions) | 2018 | 2017 | Change | |||
Revenues | ||||||
Premiums and annuity considerations | $9,829 | $10,403 | (6%) | |||
Net investment income | 1,927 | 1,958 | (2%) | |||
Amortization of interest maintenance reserve | (1) | (2) | 50% | |||
Other revenues | 2,240 | 2,443 | (8%) | |||
Total revenues | $13,995 | $14,802 | (5%) | |||
Benefits and expenses | ||||||
Benefits to policyholders and beneficiaries | $13,961 | $12,879 | 8% | |||
Increase in reserves for future policy benefits and claims | 736 | 1,246 | (41%) | |||
Net transfers from separate accounts | (2,468) | (950) | (160%) | |||
Commissions | 670 | 683 | (2%) | |||
Dividends to policyholders | 40 | 46 | (13%) | |||
Reserve adjustment on reinsurance assumed | (352) | (553) | 36% | |||
Other expenses | 398 | 466 | (15%) | |||
Total benefits and expenses | $12,985 | $13,817 | (6%) | |||
Income before federal income tax expense and net realized capital losses on investments | $1,010 | $985 | 3% | |||
Federal income tax expense (benefit) | 64 | (455) | 114% | |||
Income before net realized capital losses on investments | $946 | $1,440 | (34%) | |||
Net realized capital losses on investments, net of tax and transfers to the interest maintenance reserve | (235) | (401) | 41% | |||
Net income | $711 | $1,039 | (32%) |
December 31, | ||||||
(in millions) | 2019 | 2018 | Change | |||
Results of Operations | ||||||
Revenues | ||||||
Premiums and annuity considerations | $413 | $410 | 1% | |||
Net investment income | 262 | 270 | (3%) | |||
Amortization of interest maintenance reserve | - | 1 | (100%) |
December 31, | ||||||
(in millions) | 2019 | 2018 | Change | |||
Other revenues | 208 | 214 | (3%) | |||
Total revenues | $883 | $895 | (1%) | |||
Benefits and expenses | ||||||
Benefits to policyholders and beneficiaries | $756 | $713 | 6% | |||
Increase in reserves for future policy benefits and claims | 21 | 4 | 425% | |||
Net transfers from separate accounts | (105) | (71) | (48%) | |||
Commissions | 30 | 27 | 11% | |||
Dividends to policyholders | 38 | 40 | (5%) | |||
Other expenses | 133 | 154 | (14%) | |||
Total benefits and expenses | $873 | $867 | 1% | |||
Pre-tax operating earnings | $10 | $28 | (64%) |
December 31, | ||||||
(in millions) | 2018 | 2017 | Change | |||
Results of Operations | ||||||
Revenues | ||||||
Premiums and annuity considerations | $410 | $413 | (1%) | |||
Net investment income | 270 | 279 | (3%) | |||
Amortization of interest maintenance reserve | 1 | 1 | 0% | |||
Other revenues | 214 | 218 | (2%) | |||
Total revenues | $895 | $911 | (2%) | |||
Benefits and expenses | ||||||
Benefits to policyholders and beneficiaries | $713 | $761 | (6%) | |||
Increase (decrease) in reserves for future policy benefits and claims | 4 | (8) | 150% | |||
Net transfers from separate accounts | (71) | (97) | 27% | |||
Commissions | 27 | 26 | 4% | |||
Dividends to policyholders | 40 | 46 | (13%) | |||
Other expenses | 154 | 151 | 2% | |||
Total benefits and expenses | $867 | $879 | (1%) | |||
Pre-tax operating earnings | $28 | $32 | (13%) |
December 31, | ||||||
(in millions) | 2019 | 2018 | Change | |||
Results of Operations | ||||||
Revenues | ||||||
Premiums and annuity considerations | $4,202 | $3,868 | 9% | |||
Net investment income | 319 | 319 | 0% | |||
Amortization of interest maintenance reserve | 1 | 1 | 0% | |||
Other revenues | 1,488 | 1,468 | 1% | |||
Total revenues | $6,010 | $5,656 | 6% | |||
Benefits and expenses | ||||||
Benefits to policyholders and beneficiaries | $7,993 | $7,980 | 0% | |||
Increase (decrease) in reserves for future policy benefits and claims | 25 | (211) | 112% | |||
Net transfers from separate accounts | (2,695) | (2,618) | (3%) | |||
Commissions | 442 | 434 | 2% | |||
Reserve adjustment on reinsurance assumed | (246) | (352) | 30% | |||
Other expenses | 57 | 48 | 19% | |||
Total benefits and expenses | $5,576 | $5,281 | 6% | |||
Pre-tax operating earnings | $434 | $375 | 16% |
December 31, | ||||||
(in millions) | 2018 | 2017 | Change | |||
Results of Operations | ||||||
Revenues | ||||||
Premiums and annuity considerations | $3,868 | $4,424 | (13%) | |||
Net investment income | 319 | 324 | (2%) | |||
Amortization of interest maintenance reserve | 1 | 1 | 0% | |||
Other revenues | 1,468 | 1,434 | 2% | |||
Total revenues | $5,656 | $6,183 | (9%) | |||
Benefits and expenses | ||||||
Benefits to policyholders and beneficiaries | $7,980 | $7,297 | 9% | |||
Decrease in reserves for future policy benefits and claims | (211) | (311) | 32% | |||
Net transfers from separate accounts | (2,618) | (1,149) | (128%) | |||
Commissions | 434 | 466 | (7%) | |||
Reserve adjustment on reinsurance assumed | (352) | (553) | 36% | |||
Other expenses | 48 | 54 | (11%) |
December 31, | ||||||
(in millions) | 2018 | 2017 | Change | |||
Total benefits and expenses | $5,281 | $5,804 | (9%) | |||
Pre-tax operating earnings | $375 | $379 | (1%) |
December 31, | ||||||
(in millions) | 2019 | 2018 | Change | |||
Results of Operations | ||||||
Revenues | ||||||
Premiums and annuity considerations | $4,324 | $4,095 | 6% | |||
Net investment income | 824 | 798 | 3% | |||
Amortization of interest maintenance reserve | (4) | (3) | (33%) | |||
Other revenues | 326 | 291 | 12% | |||
Total revenues | $5,470 | $5,181 | 6% | |||
Benefits and expenses | ||||||
Benefits to policyholders and beneficiaries | $5,308 | $4,685 | 13% | |||
Increase in reserves for future policy benefits and claims | 1,135 | 876 | 30% | |||
Net transfers from separate accounts | (1,319) | (725) | (82%) | |||
Commissions | 96 | 95 | 1% | |||
Other expenses | 122 | 132 | (8%) | |||
Total benefits and expenses | $5,342 | $5,063 | 6% | |||
Pre-tax operating earnings | $128 | $118 | 8% |
December 31, | ||||||
(in millions) | 2018 | 2017 | Change | |||
Results of Operations | ||||||
Revenues | ||||||
Premiums and annuity considerations | $4,095 | $3,986 | 3% | |||
Net investment income | 798 | 807 | (1%) | |||
Amortization of interest maintenance reserve | (3) | (2) | (50%) | |||
Other revenues | 291 | 545 | (47%) | |||
Total revenues | $5,181 | $5,336 | (3%) | |||
Benefits and expenses | ||||||
Benefits to policyholders and beneficiaries | $4,685 | $4,237 | 11% | |||
Increase in reserves for future policy benefits and claims | 876 | 1,329 | (34%) | |||
Net transfers from separate accounts | (725) | (595) | (22%) | |||
Commissions | 95 | 96 | (1%) | |||
Other expenses | 132 | 151 | (13%) | |||
Total benefits and expenses | $5,063 | $5,218 | (3%) | |||
Pre-tax operating earnings | $118 | $118 | 0% |
December 31, | ||||||
(in millions) | 2019 | 2018 | Change | |||
Results of Operations | ||||||
Revenues | ||||||
Premiums and annuity considerations | $1,229 | $1,456 | (16%) | |||
Net investment income | 569 | 540 | 5% | |||
Amortization of interest maintenance reserve | 1 | - | 0% | |||
Other revenues | 290 | 267 | 9% | |||
Total revenues | $2,089 | $2,263 | (8%) | |||
Benefits and expenses | ||||||
Benefits to policyholders and beneficiaries | $725 | $583 | 24% | |||
Increase in reserves for future policy benefits and claims | 320 | 67 | 378% | |||
Net transfers to separate accounts | 372 | 946 | (61%) |
December 31, | ||||||
(in millions) | 2019 | 2018 | Change | |||
Commissions | 106 | 114 | (7%) | |||
Other expenses | 105 | 64 | 64% | |||
Total benefits and expenses | $1,628 | $1,774 | (8%) | |||
Pre-tax operating earnings | $461 | $489 | (6%) |
December 31, | ||||||
(in millions) | 2018 | 2017 | Change | |||
Results of Operations | ||||||
Revenues | ||||||
Premiums and annuity considerations | $1,456 | $1,580 | (8%) | |||
Net investment income | 540 | 548 | (1%) | |||
Amortization of interest maintenance reserve | - | (2) | 100% | |||
Other revenues | 267 | 246 | 9% | |||
Total revenues | $2,263 | $2,372 | (5%) | |||
Benefits and expenses | ||||||
Benefits to policyholders and beneficiaries | $583 | $584 | (0%) | |||
Increase in reserves for future policy benefits and claims | 67 | 236 | (72%) | |||
Net transfers to separate accounts | 946 | 891 | 6% | |||
Commissions | 114 | 95 | 20% | |||
Other expenses | 64 | 110 | (42%) | |||
Total benefits and expenses | $1,774 | $1,916 | (7%) | |||
Pre-tax operating earnings | $489 | $456 | 7% |
Payments due by period | ||||||||||
(in millions) | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | Total | |||||
Future policy benefits and claims1,2,3,4 | $5,137 | 8,336 | 7,422 | 80,877 | 101,772 | |||||
Policyholders dividends accumulation5 | 452 | - | - | - | 452 | |||||
Short-term debt6 | 203 | - | - | - | 203 | |||||
Securities lending payable7 | 133 | 133 | ||||||||
Surplus notes8 | 70 | 141 | 141 | 2,100 | 2,452 | |||||
Total | $5,995 | $8,477 | $7,563 | $82,977 | $105,012 |
1 | A significant portion of policy contract benefits and claims to be paid do not have stated contractual maturity dates and may not result in any ultimate payment obligation. Amounts reported represent estimated undiscounted cash flows out of the Company’s general account related to death, surrender, annuity and other benefit payments under policy contracts in force as of December 31, 2019. Separate account payments are not reflected due to the matched nature of these obligations and because the contract owners bear the investment risk of such deposits. Estimated payment amounts were developed based on the Company’s historical experience and related contractual provisions. Significant assumptions incorporated in the reported amounts include future policy |
lapse rates (including the impact of customer decisions to make future premium payments to keep the related policies in force); coverage levels remaining unchanged from those provided under contracts in force as of December 31, 2019; future interest crediting rates; and estimated timing of payments. Actual amounts will vary, potentially by a significant amount, from the amounts indicated due to deviations between assumptions and actual results and the addition of new business in future periods. | |
2 | Contractual provisions exist which could adjust the amount and/or timing of those obligations reported. Key assumptions related to payments due by period include customer lapse and withdrawal rates (including timing of death), exchanges to and from the fixed and separate accounts of the variable annuities, claim experience with respect to guarantees, and future interest crediting levels. Assumptions for future interest crediting levels were made based on processes consistent with the Company’s past practices, which are at the discretion of the Company, subject to guaranteed minimum crediting rates in many cases and/or subject to contractually obligated increases for specified time periods. Many of the contracts with potentially accelerated payments are subject to surrender charges, which are generally calculated as a percentage of deposits made and are assessed at declining rates during the first seven years after a deposit is made. Amounts disclosed include an estimate of those accelerated payments, net of applicable surrender charges. See Note 2 to the audited statutory financial statements, included in the F pages of this report for a description of the Company’s method for establishing life and annuity reserves. |
3 | Certain assumptions have been made about mortality experience and retirement patterns in the amounts reported. Actual deaths and retirements may differ significantly from those projected, which could cause the timing of the obligations reported to vary significantly. In addition, contractual surrender provisions exist on an immaterial portion of these contracts that could accelerate those obligations presented. Amounts disclosed do not include an estimate of those accelerated payments. Most of the contracts with potentially accelerated payments are subject to surrender charges, which are generally calculated as a percentage of the commuted value of the remaining term certain benefit payments and are assessed at declining rates during the first seven policy years. |
4 | Contractual provisions exist that could increase those obligations presented. The process for determining future interest crediting rates, as described in Note 2 above, was used to develop the estimates of payments due by period. |
5 | The provision for policyholders' dividends payable represents the liabilities related to dividends payable in the following year on participating policies. As such, the obligations related to these liabilities are presented in the table above in the less than one year category in the amounts of the liabilities presented in the Company's Statement of Admitted Assets, Liabilities, Capital and Surplus. |
6 | No contractual provisions exist that could create, increase or accelerate those obligations presented. The amount presented includes contractual principal payments and interest based on rates in effect on December 31, 2019. See Note 9 to the audited statutory financial statements, included in the F pages of this report for more details. |
7 | Since the timing of the return is uncertain, these obligations have been reflected in payments due in less than one year. |
8 | See Note 10 to the audited statutory financial statements, included in the F pages of this report, for a discussion of the Company’s surplus notes. |
December 31, 2019 | December 31, 2018 | |||||||
(in millions) | Carrying value | % of total | Carrying value | % of total | ||||
Invested assets: | ||||||||
Bonds | $35,124 | 73% | $32,348 | 72% | ||||
Stocks | 2,622 | 6% | 1,820 | 4% | ||||
Mortgage loans, net of allowance | 7,655 | 16% | 7,764 | 17% | ||||
Policy loans | 903 | 2% | 905 | 2% | ||||
Derivative assets | 94 | 0% | 100 | 0% | ||||
Cash, cash equivalents and short-term investments | 556 | 1% | 1,099 | 3% |
December 31, 2019 | December 31, 2018 | |||||||
(in millions) | Carrying value | % of total | Carrying value | % of total | ||||
Securities lending collateral assets | 132 | 0% | 101 | 0% | ||||
Other invested assets | 958 | 2% | 883 | 2% | ||||
Total invested assets | $48,044 | 100% | $45,020 | 100% |
(in millions) | December 31, 2019 | December 31, 2018 | ||||||||||
NAIC designation | Carrying value | Fair value | % of total statement value | Carrying value | Fair value | % of total statement value | ||||||
1 | $19,561 | $21,185 | 55% | $17,760 | $18,054 | 56% | ||||||
2 | 13,933 | 14,919 | 40% | 13,075 | 12,944 | 40% | ||||||
3 | 1,115 | 1,119 | 3% | 1,085 | 1,013 | 3% | ||||||
4 | 296 | 299 | 1% | 324 | 282 | 1% | ||||||
5 | 199 | 170 | 1% | 82 | 79 | 0% | ||||||
6 | 20 | 43 | 0% | 22 | 47 | 0% | ||||||
$35,124 | $37,735 | 100% | $32,348 | $32,419 | 100% |
(in millions) | December 31, 2019 | December 31, 2018 | ||||||||||
NAIC designation | Statement Value | Fair Value | % of total statement value | Statement Value | Fair Value | % of total statement value | ||||||
1 | $5,035 | $5,200 | 94% | $4,560 | $4,625 | 91% | ||||||
2 | 231 | 260 | 4% | 233 | 281 | 5% | ||||||
3 | 67 | 62 | 1% | 112 | 109 | 3% | ||||||
4 | 63 | 60 | 1% | 67 | 59 | 1% | ||||||
5 | 19 | 18 | 0% | 14 | 16 | 0% | ||||||
6 | 18 | 40 | 0% | 19 | 44 | 0% | ||||||
$5,433 | $5,640 | 100% | $5,005 | $5,134 | 100% |
December 31, | ||||
(in millions) | 2019 | 2018 | ||
Alternative investments: | ||||
Private equity funds | $267 | $197 | ||
Real estate partnerships | 299 | 215 | ||
Tax credit funds | 192 | 187 | ||
Investment in Eagle | 65 | 60 | ||
Total alternative investments | $823 | $659 | ||
Derivatives collateral and receivables | 135 | 224 | ||
Total other invested assets | $958 | $883 |
Life Insurance1 | Annuities2 | Corporate Solutions and Other | Workplace Solutions3 | |||||||||||||||
(in millions) | Account value | Weighted average crediting rate | Account value | Weighted average crediting rate | Account value | Weighted average crediting rate | Account value | Weighted average crediting rate | ||||||||||
December 31, 2019 | ||||||||||||||||||
Minimum guaranteed crediting rate of 3.51% or greater | $607 | 4.00 % | $- | - % | $- | - % | $280 | 3.66 % | ||||||||||
Minimum guaranteed crediting rate of 3.01% to 3.50% | $- | - % | $203 | 3.54 % | $- | - % | $13,800 | 3.31 % | ||||||||||
Minimum guaranteed crediting rate of 2.01% to 3.00% | $562 | 3.13 % | $1,459 | 3.01 % | $2,336 | 3.12 % | $2,195 | 2.80 % | ||||||||||
Minimum guaranteed crediting rate of 0.01% to 2.00% | $37 | 2.79 % | $539 | 1.22 % | $919 | 3.25 % | $1,610 | 2.47 % | ||||||||||
No minimum guaranteed crediting rate4 | $- | - % | $10 | 2.27 % | $- | - % | $2,882 | 2.29 % | ||||||||||
December 31, 2018 | ||||||||||||||||||
Minimum guaranteed crediting rate of 3.51% or greater | $632 | 4.00 % | $- | - % | $- | - % | $85 | 4.03 % | ||||||||||
Minimum guaranteed crediting rate of 3.01% to 3.50% | $- | - % | $206 | 3.56 % | $- | - % | $14,301 | 3.01 % | ||||||||||
Minimum guaranteed crediting rate of 2.01% to 3.00% | $547 | 3.13 % | $1,499 | 2.99 % | $2,279 | 3.18 % | $2,185 | 2.38 % | ||||||||||
Minimum guaranteed crediting rate of 0.01% to 2.00% | $22 | 3.00 % | $576 | 1.03 % | $653 | 3.30 % | $1,082 | 2.20 % | ||||||||||
No minimum guaranteed crediting rate4 | $- | - % | $12 | 2.58 % | $- | - % | $1,980 | 3.40 % |
1 | Includes universal life products and the fixed investment options selected within variable life products. |
2 | Includes individual fixed annuity products and the fixed investment options selected within variable annuity and indexed products. |
3 | Includes group fixed annuity products. |
4 | Includes certain products with a stated minimum guaranteed crediting rate of 0%. |
Name | Age | Date Service Began | ||
John L. Carter | 56 | April 2013 | ||
Timothy G. Frommeyer | 55 | January 2009 | ||
Steven A. Ginnan | 52 | June 2018 | ||
Eric S. Henderson | 57 | March 2012 | ||
Mark R. Thresher | 63 | January 2009 | ||
Kirt A. Walker | 56 | December 2009 |
Name | Age | Position with NLIC | ||
Kirt A. Walker | 56 | NMIC Chief Executive Officer1 | ||
Gale V. King | 63 | Executive Vice President-Chief Administrative Officer | ||
Mark R. Thresher | 63 | Executive Vice President | ||
James R. Fowler | 48 | Executive Vice President-Chief Information Officer | ||
Tina Ambrozy | 49 | Senior Vice President-NF Strategic Customer Solutions | ||
Ann S. Bair | 52 | Senior Vice President-Marketing-Financial Services | ||
Pamela A. Biesecker | 58 | Senior Vice President-Head of Taxation | ||
John L. Carter | 56 | President and Chief Operating Officer-Nationwide Financial | ||
Rae Ann Dankovic | 52 | Senior Vice President-Nationwide Financial Services Legal | ||
Timothy G. Frommeyer | 55 | Senior Vice President-Chief Financial Officer | ||
Steven A. Ginnan | 52 | Senior Vice President-Chief Financial Officer-Nationwide Financial | ||
Mia S. Hairston | 51 | Senior Vice President-Nationwide Financial Human Resources | ||
Harry H. Hallowell | 59 | Senior Vice President | ||
Craig A. Hawley | 52 | Senior Vice President-Annuity Distribution | ||
Eric S. Henderson | 57 | Senior Vice President-Nationwide Annuities | ||
David LaPaul | 54 | Senior Vice President and Treasurer | ||
Jennifer B. MacKenzie | 50 | Senior Vice President-Enterprise Brand Marketing | ||
Kevin G. O’Brien | 51 | Senior Vice President-IT Chief Financial Officer, Procurement & BTO | ||
Sandra L. Rich | 59 | Senior Vice President | ||
Michael A. Richardson | 51 | Senior Vice President-Chief Information Officer Nationwide Financial Systems | ||
Denise L. Skingle | 49 | Senior Vice President-Chief Counsel-Emerging Businesses, Governance & Corporate Secretary | ||
Holly R. Snyder | 52 | Senior Vice President-Nationwide Life | ||
Michael S. Spangler | 53 | Senior Vice President-Investment Management Group | ||
Joseph D. Sprague | 59 | Senior Vice President-Nationwide Financial Network | ||
Eric Stevenson | 56 | Senior Vice President-Retirement Plan sales |
Name and address of beneficial owner | Amount and nature of beneficial ownership | Percent of class | ||
Nationwide Financial Services, Inc. 1 Nationwide Plaza Columbus, Ohio 43215 | 3,814,779 shares | 100% |
• | using position at Nationwide or affiliation with any Nationwide company for personal gain or advantage; and |
• | any interest or association that interferes with independent exercise of judgment in the best interest of Nationwide. |
83
NEITHER BLOOMBERG NOR BARCLAYS SHALL HAVE ANY LIABILITY TO THE ISSUER, INVESTORS OR OTHER THIRD PARTIES FOR THE QUALITY, ACCURACY AND/OR COMPLETENESS OF THE BLOOMBERG BARCLAYS U.S. CORPORATE INDEX OR ANY DATA INCLUDED THEREIN OR FOR INTERRUPTIONS IN THE DELIVERY OF THEBLOOMBERG BARCLAYS U.S. CORPORATE INDEX. NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ISSUER, THE INVESTORS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE BLOOMBERG BARCLAYS U.S. CORPORATE INDEX OR ANY DATA INCLUDED THEREIN. NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY EXPRESS OR IMPLIED WARRANTIES, AND EACH HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE BLOOMBERG BARCLAYS U.S. CORPORATE INDEX OR ANY DATA INCLUDED THEREIN. BLOOMBERG RESERVES THE RIGHT TO CHANGE THE METHODS OF CALCULATION OR PUBLICATION, OR TO CEASE THE CALCULATION OR PUBLICATION OF THE BLOOMBERG BARCLAYS U.S. CORPORATE INDEX, AND NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE FOR ANY MISCALCULATION OF OR ANY INCORRECT, DELAYED OR INTERRUPTED PUBLICATION WITH RESPECT TO ANY OF THE BLOOMBERG BARCLAYS U.S. CORPORATE INDEX. NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE FOR ANY DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, OR ANY LOST PROFITS, EVEN IF ADVISED OF THE POSSIBLITY OF SUCH, RESULTING FROM THE USE OF THE BLOOMBERG BARCLAYS U.S. CORPORATE INDEX OR ANY DATA INCLUDED THEREIN OR WITH RESPECT TO NATIONWIDE DEFINED PROTECTIONSM ANNUITY.
None ofelected officers is submitted to the information supplied by Bloomberg or Barclays and used in this publication may be reproduced in any manner without the prior written permission of both Bloomberg and Barclays Capital, the investment banking division of Barclays Bank PLC. Barclays Bank PLC is registered in England No. 1026167, registered office 1 Churchill Place London E14 5HP.
84
APPENDIX B: SURRENDER VALUE EXAMPLES
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85
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86
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87
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88
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
Information required under Item 11 of FormS-1 will be filed by subsequentPre-Effective Amendment.
89
Dealer Prospectus Delivery Obligations
All dealers that effect transactions in these securities are required to deliver a prospectus.
90Chief Legal Officer.
Item 13. | Other Expenses of Issuance and Distribution |
Item 14. | Indemnification of Directors and Officers |
• | any threatened, pending or completed civil action, suit or proceeding; |
• | any threatened, pending or completed criminal action, suit or proceeding; |
• | any threatened, pending or completed administrative action or proceeding; |
• | any threatened, pending or completed investigative action or proceeding. |
Item 15. | Recent Sales of Unregistered Securities. |
Item 16. | Exhibits and Financial Statement Schedules |
(A) | Exhibits |
(3) | (a) | Amended Articles of Incorporation Nationwide Life Insurance Company - filed previously on October 2, 2008, with Pre-Effective Amendment 3 to Form S-1 for Nationwide Life Insurance Company, Registration No. 333-149613. |
https://www.sec.gov/Archives/edgar/data/205695/000119090308001157/articlesofincorp.htm | ||
(3) | (b) | Nationwide Life Insurance Company Amended and Restated Code of Regulations - filed previously on January 4, 2010, with Form N-4, Registration No. 333-164125. |
https://www.sec.gov/Archives/edgar/data/904817/000119090309001829/exhibit6b.htm | ||
(4) | Annuity Endorsement to Contracts - filed previously on May 2, 1995, as Exhibit 4 to Form S-1 for Nationwide Life Insurance Company, Registration No. 033-58997. | |
https://www.sec.gov/Archives/edgar/data/205695/0000950152-95-000810.txt | ||
(5) | Opinion Regarding Legality - Attached hereto. | |
(6) | Not applicable | |
(7) | Not applicable | |
(8) | ||
(9) | Not applicable | |
(10) | (a) | Tax Sharing Agreement dated as of January 2, 2009 between Nationwide Life Insurance Company and any corporation that is or may hereafter become a subsidiary of Nationwide Life Insurance Company |
https://www.sec.gov/Archives/edgar/data/205695/000119312512134652/d323974dex10.htm | ||
(10) | (b) | Third Amended and Restated Cost Sharing Agreement dated January 1, 2014 by and among Nationwide Mutual Insurance Company, Nationwide Mutual Fire Insurance Company, and their respective direct and indirect subsidiaries and affiliates - Attached hereto. |
(11) | Not applicable | |
(12) | Not applicable | |
(13) | Not applicable | |
(14) | Not applicable | |
(15) | Not applicable | |
(16) | Not applicable | |
(17) | Not applicable | |
(18) | Not applicable | |
(19) | Not applicable | |
(20) | Not applicable | |
(21) | Subsidiaries of the Registrant - Attached hereto. | |
(22) | Not applicable | |
(23) | (a) | Consent of Independent Registered Public Accounting Firm |
(23) | (b) | Consent of |
(24) | Power of | |
(25) | Not applicable | |
(26) | Not applicable | |
(27) | Not applicable | |
Item 17. | Undertakings |
(1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(a) | To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; |
(b) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of |
prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; | |
(c) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
(2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
(5) | That, for the purpose of determining liability of the Registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
(a) | Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424; |
(b) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant; |
(c) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and |
(d) | Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser. |
(B) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 ("Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officers or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being |
NATIONWIDE LIFE INSURANCE COMPANY |
(Registrant) |
By: /s/ JAMIE RUFF CASTO |
Jamie Ruff Casto Attorney-in-Fact |
MARK R. THRESHER | |
Mark R. Thresher, Executive Vice President and Director | |
TIMOTHY G. FROMMEYER | |
Timothy G. Frommeyer, Senior Vice President-Chief Financial Officer and Director | |
ERIC S. HENDERSON | |
Eric S. Henderson, Senior Vice | |
STEVEN A. GINNAN | |
Steven A. Ginnan, Senior Vice President-Chief Financial Officer-Nationwide Financial and Director | |
KIRT A. WALKER | |
Director | |
By /s/ | |
Jamie Ruff Casto Attorney-in-Fact |