Nationwide Financial® adds Lifetime Income Ridersm (L-Inc) to living benefits lineup
Nationwide L-Inc provides income, guaranteed growth, upside potential and spousal continuation in one variable annuity rider
FOR IMMEDIATE RELEASE
March 2, 2006
Jeff Whetzel (614) 249-6354
Jeff Botti (614) 249-6339
COLUMBUS, Ohio—Baby Boomers approaching or entering longer, more active retirement horizons are imagining a scary scenario: outliving their income.
With today’s widespread elimination of private pension plans, Social Security that is anything but secure and a volatile stock market, individuals need to look beyond these traditional means to supplement their retirement income.
Consumers now have a link to guaranteed lifetime income with the Nationwide Lifetime Income Rider (L-Inc), from Nationwide Financial Services, Inc. (NYSE: NFS).
“Nationwide L-Inc combines the benefits consumers approaching retirement want – guaranteed lifetime income, guaranteed growth, market participation and guaranteed income for a spouse – into one rider,” said Mark Phelan, senior vice president of Individual Investments for Nationwide Financial.
“We feel the features packaged in Nationwide L-Inc, short for lifetime income, can help simplify the decision process for investment professionals and their clients when choosing a lifetime withdrawal benefit in today’s crowded marketplace.”
Nationwide L-Inc is available with certain variable annuities for an additional cost (.60% of income benefit base) and offers:
- Guaranteed lifetime income through withdrawals of up to 7% of an income base that will never decrease due to market performance even if the contract value does
- Guaranteed growth with the potential to beat inflation
- 100% market participation that provides upside potential without complicated choices or fixed investment restrictions
- Lifelong income continuation for a surviving spouse
Nationwide L-Inc uses a “greater of” value proposition to help give consumers the potential to beat inflation and ensure that they receive the highest withdrawals available according to rider provisions. Guarantees are backed by the claims paying ability of Nationwide.
The income benefit base, the amount on which the lifetime income payments are calculated, is guaranteed to increase at least 5% simple interest annually for the first 10 years, or until the first withdrawal from the contract.
When consumers are ready to begin taking withdrawals, the benefit base used to determine withdrawal amounts will be whichever is higher on the contract rider anniversary date: the contract value or the guaranteed minimum value that was determined by the 5% annual “roll-ups.” The higher income benefit base is then multiplied by an age-based lifetime income percentage to determine the withdrawal amount.
“We designed Nationwide L-Inc with maximization of allowable income in mind,” said Phelan.
Nationwide L-Inc offers spousal continuation at an additional cost (.15% of income benefit base), which allows the surviving spouse to continue to receive lifetime income for the duration of his or her life.
“We realize peace of mind for many couples comes from knowing a spouse will be taken care of financially,” said Phelan. “Nationwide L-Inc guarantees a surviving spouse will receive a lifetime income stream.”
Phelan said Nationwide L-Inc’s flexibility allows consumers to access their lifetime income stream based on their individual needs and circumstances.
“Nationwide L-Inc allows consumers to take withdrawals immediately, as early as age 45, with no waiting periods and without having to annuitize,” said Phelan. “However, those who wish to begin taking withdrawals until a later date can do so knowing they’ll be rewarded through a higher withdrawal percentage.”
Consumers are offered a diverse range of professionally managed investment choices with Nationwide L-Inc, including asset allocation models ranging from conservative to moderately aggressive that are designed to match various risk profiles.
“Due to longer retirement horizons, many consumers in or approaching retirement still want full market participation, which Nationwide L-Inc provides,” said Phelan.
Phelan said the combination of L-Inc and Nationwide’s other living benefit, Capital Preservation Plus Lifetime Income (CPPLI), provides consumers with two income withdrawal options to choose from based on their needs.
“If lifetime income is the primary need and potential inflation protection is secondary, there’s Nationwide L-Inc,” said Phelan. “If principal protection is initially more important with the opportunity to draw lifetime income later, there’s CPPLI.”
Capital Preservation Plus Lifetime Income, available at an additional cost of .60% with certain variable annuities, provides an “all-in-one” rider that guarantees a return of principal (less applicable charges and withdrawals) in as few as five, seven or 10 years. After this Capital Preservation phase, individuals have the flexibility to begin taking guaranteed lifetime withdrawals, enter another Capital Preservation phase or drop the rider and its fee.
Flexibility and simplicity are what Nationwide Financial strives for in the development of its variable annuity riders, according to Phelan.
“With eighty-five percent of annuity contracts sold today offering one or more living benefits1, we realize it’s difficult for investment professionals to keep up with the marketplace,” said Phelan.
“Through the range of features available with Nationwide L-Inc and CPPLI, we’re trying to simplify options for investment professionals by offering two living benefits that can help clients meet their retirement income needs.”
Annuities are long-term, tax-deferred investments designed for retirement and will fluctuate in value. They also allow customers to create a fixed or variable stream of income through a process called annuitization. It also provides a variable rate of return based on the performance of the underlying investments.
But, as with most things in life, annuities do have limitations. If a contract holder decides to take money out early, he or she may face surrender charges. Plus, if a person is not yet 59½, he or she may also have to pay an additional 10% income tax penalty on top of ordinary income taxes. A death benefit is available with most variable annuities. If an early withdrawal is taken, the death benefit and cash value will be reduced.
Annuities contain guarantees and protections that are subject to the claims-paying ability of the issuer. But, while these don’t apply to the actual performance of the variable accounts, they do offer a level of protection against investment loss.
Annuities are contracts bought from an insurance company and they are sold by prospectus. While it may take some time, these documents should be read. They describe risk factors, fees and charges that may apply to the contract holder. Please remember, variable annuities may have fees and charges including mortality and expense, administrative fees, contract fees and the expenses of the underlying investment options.
Variable products are sold by prospectus. Potential clients may obtain both the product prospectus and underlying fund prospectuses from their investment professional or by writing to Nationwide Life Insurance Company, P.O. Box 182150, Columbus, Ohio 43218-2150. Before investing, carefully consider the fund's investment objectives, risks, charges and expenses. The product prospectus and underlying fund prospectus contain this and other important information. Read the prospectus carefully before investing or sending money.
About Nationwide Financial®
Nationwide Financial Services, Inc. (NYSE: NFS), a publicly traded company based in Columbus, Ohio, provides a variety of financial services that help consumers invest and protect their long-term assets, and offers retirement plans and services through both public- and private-sector employers.
It’s part of the Nationwide group of companies, which offers diversified insurance and financial services. The group is led by Nationwide Mutual Insurance Company, which is ranked No. 99 on the Fortune 500 based on 2004 revenue2. For more information, visit www.nationwide.com.
Nationwide, the Nationwide Framemark and Nationwide Financial are federally registered service marks of Nationwide Mutual Insurance Company. Capital Preservation Plus Lifetime Income and the Nationwide Lifetime Income Rider are service marks of Nationwide Life Insurance Company. Capital Reservation Plus is a federally registered service mark of Nationwide Life Insurance Company. On Your Side and Nationwide Allocation Architect are service marks of Nationwide Mutual Insurance Company.
— ### —
1 Morningstar, 2005
2Fortune, April 2005
Nationwide variable annuities are issued by Nationwide Life Insurance Company, Columbus, Ohio. The general distributor is Nationwide Investment Services Corporation, member NASD. In MI only: Nationwide Investment Svcs. Corporation.
© 2006, Nationwide Financial Services, Inc. All rights reserved.
Investments Retirement Insurance www.nationwide.com One Nationwide Plaza Columbus, OH 43215-2220