Life Insurance | How to Choose a Life Insurance Policy at Nationwide

Learn about life insurance policies

Life insurance policies... Even if you know you need one, are you stumped when it comes to deciding what type of insurance policy to buy, and how much you need?

Thinking about insurance and financial decisions can be challenging – they’re complex topics and weighty decisions.

We want to make it easier for you to choose the life insurance policy that's right for you, so we’re providing information that will help you understand and take the next steps.

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Important information about life insurance

Keep in mind that your insurance needs may change if your personal situation changes, for example if you get married, have a child or get a promotion.

Permanent and variable life insurance

When considering permanent life insurance products, make sure they’re suitable for your long-term needs. If you take a loan, withdrawal or partial or whole surrender, your death benefit may be reduced, your life insurance policy may lapse or you may face tax consequences.

There are fees and charges for life insurance policies, including a cost of insurance based on characteristics of the insured person such as gender, health and age. There may be additional charges if you purchase a rider to customize a life insurance policy for your individual needs.

For products with a market risk component, there may also be underlying fund charges and expenses and you must be able to continue premium payments so your life insurance policy doesn’t lapse if the market goes down.

Before deciding on a variable life insurance policy, you should carefully consider the investment objectives, risks, charges, and expenses of the policy and its investment options. The product prospectus and underlying fund prospectus contain this and other important information. To obtain a product prospectus, life insurance quote, or underlying fund prospectus, contact your investment professional. Read the prospectus carefully before making a purchase.

Loans against your life insurance policy

All references to loans assume that the contract remains in force and qualifies as life insurance under Section 7702 of the Internal Revenue Code and is not a modified endowment contract (MEC) under Section 7702(A). Loans from a MEC will generally be taxable and, if taken prior to age 59½, may be subject to a 10% tax penalty. Unpaid loans will reduce the cash value and death benefit payable, and if the life insurance policy lapses with a loan outstanding, it will be treated as a distribution and may be subject to income tax.

Neither Nationwide^® nor its representatives give legal or tax advice. Please consult your attorney or tax advisor for answers to specific questions.

Guarantees and protections are subject to Nationwide's claims-paying ability. They don't apply to the investment performance or safety of any underlying investment options.

Not a deposit • Not FDIC or NCUSIF insured• Not guaranteed by the institution • Not insured by any federal government agency • May lose value

Life insurance products are issued by Nationwide Life Insurance Company or Nationwide Life and Annuity Life Insurance Company, Columbus, Ohio. The general distributor for variable life insurance products is Nationwide Investment Services Corporation, member FINRA. In MI only: Nationwide Investment Svcs. Corporation.

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How can life insurance help me?

There are different types of life insurance policies that address a wide range of needs and concerns. As your life changes, so may your life insurance needs.

Find your situation below and learn how it may be met using a life insurance policy:

What’s your situation?

I’m single

You may think that you don’t need life insurance if you’re single and don’t have children.

If you’re in any of these situations, you may want to reconsider:

- You financially support siblings, aging parents or someone else

- You have debt (credit card debt, car loans, etc.) that someone else would be responsible for in the event of your death

- You expect to help pay for future educational expenses for a child in your family

I have a young family

Are you tempted to put off buying life insurance because your budget is too tight? Talk with your insurance or investment professional about term life insurance products that are designed for low cost.

If you’re looking for more than simple term insurance, you may be interested in a life insurance product with an investment component or one that allows you to access cash value or loans to pay for expenses like college tuition. Keep in mind that taking money from your policy decreases your policy’s cash value and death benefit and you may need to pay additional premiums in the future.

Of course, life insurance is designed to help with your family’s financial needs in the event of your death. Here are some to consider:

- The mortgage so they can stay in the familiar home and schools

- Debts like car loans and credit card balances that you leave behind

- Final expenses — funeral, cremation or burial, medical bills and attorney fees —can easily total thousands of dollars; a life insurance policy allows you to plan ahead for these expenses by providing a pool of money for loved ones to use, saving them additional stress at a difficult time

Keep in mind that underlying investment options offered by variable universal life products are subject to market risk, including possible loss of principal. Also, these funds are only available in variable insurance products issued by life insurance companies. They’re not available to the general public.

I have an established family

If you’ve already met your basic life insurance needs, it may be time to think of additional ways life insurance can help you and your family. In addition to financial protection for your family, today’s life insurance products also offer flexible features that can help you with long-term goals and concerns.

- Your family could use life insurance proceeds to cover the cost of your mortgage.

- Some types of life insurance give you the opportunity for cash accumulation plus the ability to access a portion of your money for things like college tuition and supplemental retirement income. Keep in mind that taking money from your policy decreases your policy’s cash value and death benefit and you may need to pay additional premiums in the future.

- Certain life insurance policies offer riders that can help you plan for potential long-term care expenses. You typically have to purchase a long-term care rider for an additional charge to get this type of coverage. You can ask your insurance or investment professional for information about life insurance riders.

I’m retired or near retirement

When you’re in or near retirement, your life insurance needs are different from those with young families. You may need insurance to:

- Support adult children with disabilities when you’re gone

- Provide a source of income to help cover health care costs

- Cover long-term care costs through riders available with some policies

- Pay final expenses, such as funeral, medical bills and attorney fees

- Leave tax-advantaged gifts for loved ones and favorite organizations

(Neither Nationwide nor its representatives give legal or tax advice. Please consult your attorney or tax advisor for answers to specific questions.)

Click continue to learn how much is right for you.

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How much life insurance do I need?

Your life and financial circumstances are unique, so there’s no simple formula for determining your life insurance needs.

Your insurance or investment professional can help you do a thorough analysis of your situation. The analysis will consider your income, expenses and assets to determine how much life insurance you need.

Before your meeting, you can start thinking about your financial obligations and coverage. Keep in mind that looking at the factors below is just a starting point. There are many other factors that you and your insurance or investment professional should consider when determining your life insurance needs.

Here are some expenses you may want to cover through life insurance:

Mortgage or rent payments

Personal debts (credit cards and car loans)

Income replacement

Multiply the percentage of your income you need to replace by the number of years your family will need to replace the income.

Here’s a simple example. Let’s say that your family needs 50% of your $60,000 a year income for five years. Here’s the calculation: 50% x $60,000 x 5 years = $150,000.

Education expenses

Tuition averages $6,185 at a four-year public university and $23,712 at a four-year private university (Source: Trends in College Pricing, CollegeBoard, 2007)

Emergency funds

Funds for unexpected expenses like a new roof, auto repairs or tax obligations (many experts recommend three to six months’ income).

Final expenses

Funds for expenses like medical bills, legal expenses and funeral costs (average funeral cost is $6,500 not including cemetery costs according to the National Funeral Directors Association).

Continue to learn about the types of life insurance.

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What type of life insurance policy should I consider?

All types of life insurance provide money to your loved ones when you die – and that money is typically income tax free. Other product features may be important to you as you decide the type of life insurance you want for your specific situation.

Take a look at this side-by-side life insurance comparison or look at details about the product types below.

When you’re done, you’ll have a general idea of the life insurance products that you may want to consider for your situation. Then talk with your insurance or investment professional for help in determining what product may be suitable to your specific situation.

Types of Life Insurance

Learn about the four types of life insurance and how they are designed to meet different needs.

Term life insurance

It provides a death benefit for your family if you die during a specific period or term. It’s one of the least expensive ways to buy life insurance.

- Designed to be affordable

- Guaranteed

death benefit

Whole life insurance

It provides permanent life insurance protection. The premiums and the amount of the death benefit never change, so it may be the way to go if you’re looking for a conservative option.

- Potential for the value to grow

- Guaranteed

death benefit

- Access to my money through loans or withdrawals from my policy

Universal life insurance

It provides permanent life insurance protection as long as the required premiums are paid. The premiums can be flexible, the death benefit is guaranteed if you pay enough premium to cover the cost of insurance and basic policy charges, the value of your policy can grow and you can take money out of the policy through loans and withdrawals.

- Designed to be affordable

- Potential for the value to grow

- Flexible

Premiums

- Guaranteed

death benefit

- Access to my money through loans or withdrawals from my policy

Variable universal life insurance

It can offer permanent life insurance protection paired with the ability to invest in the market. If you’re comfortable with market risk and you’re looking for a combination of coverage and growth potential, this type of life insurance may be for you.

- Potential for the value to grow

- Flexible

Premiums

- Guaranteed

death benefit

- Access to my money through loans or withdrawals from my policy

Continue for tips on meeting with an investment professional.

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Meeting with your insurance or investment professional

Are you ready for the next step? Your insurance or investment professional can help you explore your needs for a life insurance policy and other financial products.

When you meet to talk about your plans for the future, your insurance or investment professional will:

Review your current financial information
Estimate your loved ones’ financial needs in the event of your death
Explore existing sources of income for your family and factor in the impact of inflation and potential growth of assets
Help determine the financial gap that a life insurance policy or other financial products could fill

You can prepare for the meeting by gathering financial documents and information, such as:

Life insurance policy documents (don’t forget group policies from your employer, fraternal organizations or other sources)
Total household income
Total household debt (mortgage, credit cards, car loans, etc.)
Investment and cash account statements (bank accounts, CDs, money market accounts, stocks, bonds, mutual funds, college savings accounts, etc.)
Retirement account statements (IRAs, 401ks, Keogh, pensions, profit-sharing plans, etc.)

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