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Understanding your investment

While variable annuities generally have higher fees than other investment options, typically between 2% to 3% a year, they offer investors death benefit protection and guarantees not provided by other investment products — including the guarantee that they won't outlive their income through optional riders or annuitization.

Straight talk about fees and commission

Fees depend on the annuity product chosen. The following are charges or fees that can be applied to an annuity — along with an explanation of what you get in return. Be sure to talk with your financial professional to understand which fees will apply to your annuity.

Administration of contract maintenance fees

A fee for the costs to manage the account, including accounting and record keeping

Add-on rider benefits

A fee for the optional riders you and your financial professional select to make your annuity more meaningful to you

Contingent deferred sales charge (CDSC)

If you cancel the annuity early, this is the fee that you'd need to pay

Underlying subaccount expenses

A fee to cover management or fund costs, which differ for each fund

Mortality and expense risk charge (M&E risk charge)

A fee to guarantee your cost won't change over time

Additional provisions

Miscellaneous fees

A closer look at commission

Financial professionals get paid on annuities in two ways:

Commission based

The financial professional is paid a commission by the insurance provider based on the dollar amount invested in each individual annuity contract.

Fee based annuity costs

The financial professional is not paid a commission by the insurance company, but instead is paid a percentage of the premium (value of the account) which is deducted by the insurance company on an ongoing basis. This fee typically ranges between 1% and 3%.

Lower liquidity

Annuities are geared toward long-term retirement planning, so they come with a high surrender fee during a specified period of time (typically seven to 10 years). If money is withdrawn after this time period, there are no surrender fees.

The price for a guarantee

Insurance companies take on risk when issuing annuities. Longer surrender periods help mitigate that risk to pay for the guarantees that come with some annuities.

Limited withdrawals

If a contract is annuitized*, the payments are set. That means investors are not able to withdraw any amount at any time. This is because set payments and a set schedule keep investors from outliving their income.

*Annuitization is a one-time process of taking your annuity account and turning it into regular payments that will last for the rest of your life. The annuitized payments continue, regardless of how long you live, even if the total payments exceed the original account value.

Customizing annuities allows for flexibility

There are a wide variety of annuity products and options, which can make understanding them difficult for investors. However, it’s the variety that allows investors the flexibility to customize the annuity to meet their individual needs.


Please remember, required minimum distributions (RDMs) must be taken from qualified plans starting at age 70 ½.


When it comes to annuities, understanding fees is key, and Nationwide® is here to help you understand your investment and know the value of your options.

Annuity resources

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Visit our library of annuities articles in the Learning Center.

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View and download our comprehensive guide.

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Learn about the features and benefits offered by the different annuity types.

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An annuity is a contract you purchase from an insurance company, designed for long-term investing. The values will fluctuate based on investment option performance. Annuities have restrictions and limitations, and fees and charges will vary based on the product. You may be charged a penalty if you take your money out early. Withdrawals may be subject to ordinary income taxes, and if you are under age 59½, you may pay a 10% federal tax penalty. Please remember that investing involves risk, including possible loss of principal. All guarantees and protections are subject to the claims-paying ability of the issuing insurance company.