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Variable Annuities Offer Investment Choices

With a variable annuity, you choose investments and earn returns based on how those investments perform. You can choose investments that offer different levels of risk and potential growth, depending on your investment goals and tolerance for risk. Watch this video to learn how variable annuities can offer unique benefits for unique characters like you.

Variable immediate annuity features

With an immediate annuity, you begin receiving income payments immediately. Immediate annuities are usually purchased with a lump-sum payment.

Variable deferred annuity features

Some of the advantages of variable deferred annuities include:

•Tax-deferred growth potential in the accumulation phase (Earnings are taxed as ordinary income when withdrawn. There may be a 10% federal tax penalty on withdrawals before age 59½. Naturally, your death benefit and the cash value of the annuity contract will be reduced if you take any early withdrawals.)

•Death benefits for your beneficiaries

•Tax-free/penalty-free transfers among underlying investment options

•A variety of payout options, including systematic withdrawals and annuitization (You may face surrender charges if you withdraw your money early.)

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Immediate Annuities Offer Income Payments That Start Right Away

With an immediate annuity, you immediately begin receiving income payments soon after you purchase it.

Immediate annuities features

•Immediate annuities are usually purchased with a lump-sum payment

•Investments can fixed or variable

•Investments are tax-deferred, so you don't pay taxes on accumulated earnings until you withdraw your money - only your earnings are taxed as ordinary income

•Income options include a guaranteed payment for life or a specified period of time (guarantees subject to the claims-paying ability of the issuing insurance company; they don’t apply to the investment performance or safety of the underlying investment options)

•Options may include death benefits

•Withdrawals before age 59½ are generally subject to a 10% federal income tax penalty as well as ordinary income taxes and early withdrawals are subject to a surrender charge

Immediate annuities limitations and restrictions

Annuitization is the process of converting your accumulated value into a guaranteed stream of income that is irrevocable once payments begin. Immediate annuities are long-term, tax-deferred contracts you purchase from an insurance company that provide immediate regular payments in exchange for a lump-sum investment. These payments are guaranteed to last for life or a specified period of time.

•May be variable or fixed

•Variable annuities will fluctuate in value based on the performance of the underlying investment options you choose

•Withdrawals are taxed as ordinary income

•A 10% tax penalty will be applied on top of ordinary income taxes if you are younger than 59½

•Excess withdrawal, if applicable, will reduce future payments and early withdrawal charges would apply in addition to any applicable taxes

•Annuity guarantees are subject to the claims-paying ability of the issuing insurance companies and don’t cover the investment performance of the variable accounts, which is subject to investment risk

•Remember, investing involves risk, including possible loss of the money you’ve invested

Fixed Annuities Offer an Investment with a Guarantee

Fixed annuities are a popular choice for individuals who want a guaranteed interest rate and a stream of income they can't outlive. With a fixed annuity, the principal investment and a specified interest rate are both guaranteed. Certain restrictions apply. Guarantees are subject to the claims paying ability of Nationwide Life Insurance Company. Annuities are a contract you purchase from an insurance company to help you accumulate assets for retirement. Please keep in mind that annuities have limitations. They are long term vehicles designed for retirement purposes. They are not intended to replace emergency funds, to be used as income for day-to-day expenses, or to fund short-term savings goals.

Fixed annuity features

Some of the advantages of fixed annuities include:

•Minimal investment risk exposure

•A tax deferral on earnings

•Access to your money (Withdrawals made before age 59½ are generally subject to a 10% early withdrawal federal tax penalty, in addition to ordinary income tax, and a contingent deferred sales charge – CDSC – may apply)

•Death benefits for your beneficiaries

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A fixed annuity that can adjust with the market

Fixed annuities that feature a market value adjustment (MVA) offer the flexibility of various guarantee terms combined with the potential for higher interest yields than traditional fixed investments. Guarantee terms are available in a range of time frames – and they typically reward longer-term commitments with higher interest rates. A guaranteed fixed rate is declared for the length of each guarantee term.

Retirement savings in mind

Like other types of deferred annuities – fixed or variable – MVA annuities are long-term contracts purchased from a life insurance company, designed to help you save for retirement. Withdrawals may be subject to contingent deferred surrender charges (CDSC) and an MVA on the withdrawal itself. Early withdrawals, those taken prior to age 59½, may be subject to a 10% federal tax penalty in addition to ordinary income taxes. All withdrawals will reduce the death benefit and contract value.

Features of a Fixed Annuity with an MVA

•Flexibility with a choice of guarantee terms

•Potentially higher interest yield than traditional fixed interest investment offerings due to the MVA feature

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Withdrawals

An MVA may also apply to any withdrawal made before the maturity of a guarantee term. This MVA reflects the impact of changes in Treasury rates between the time the guarantee term was elected and the time of the withdrawal.

An MVA could increase or decrease the amount of the withdrawal. Generally, if Treasury rates have gone up since the guarantee period was elected, the market value adjustment will be unfavorable, while a downward rate movement will usually result in a favorable adjustment to you.

•Withdrawals or surrenders from a guarantee term may be subject to both a CDSC and an MVA

•The amount of the MVA will vary with changes in the Constant Maturity Treasury rate – and can be either positive or negative

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