Nationwide Financial offers one of the only Spousal Protection Features on variable annuities with IRA and non-IRA contracts that benefits both spouses.
The Spousal Protection Feature (SPF) helps your client and their spouse provide for each other no matter who dies first and no matter which spouse owns the contract.
Cost
This feature may be standard with no charge or optional for an additional cost on Nationwide variable annuities. Please see the product prospectus for details.
How it works
With SPF, the surviving spouse:
- Can take the death benefit and walk away without a surrender charge
- Can continue the contract as the owner and name a new beneficiary
- Contract value will be the higher of the death benefit or market value
- Contract owner will realize no current income tax consequences related to the transfer of ownership
Here’s an example of how it works:
Mike bought a Nationwide variable annuity in his IRA contract for $100,000. He named his wife, Sarah, as co-annuitant and primary beneficiary. By the first contract anniversary, Mike’s account value grew to $150,000 due to positive market performance. Because he purchased a rider that stepped up and locked in the increase, his death benefit stayed at $150,000. After that, Mike’s account value fell to $75,000 and Sarah died shortly after.
With the One-year Enhanced Death Benefit Rider, Mike’s death benefit was stepped-up and locked in at the previous year’s higher account value of $150,000. When Sarah passed away, he received the higher death benefit amount – either as a death benefit payout or as an increase to his contract value. If he continued the contract, he could then name a new beneficiary.
Without SPF, nothing would have happened to Mike’s account and a death benefit would not have been paid. That’s because the death of his spouse would not have any impact on his IRA contract.
Remember, with SPF it doesn’t matter who dies first. If Mike had passed away first, Sarah would be given the choice to receive the stepped-up death benefit or continue the contract at the death benefit value – with no current tax consequence.
This example is hypothetical. It does not reflect the performance of any investment. If the owner takes a withdrawal, the death benefit and cash value will be reduced.
Get started
Read more details in the client brochure. For more information contact the Nationwide Sales Desk at 1-800-321-6064.
