<PAGE> 1
Registration No. __________
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
----------------------------
NATIONWIDE VLI SEPARATE ACCOUNT-5
(EXACT NAME OF TRUST)
----------------------------
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA
COLUMBUS, OHIO 43215
(EXACT NAME AND ADDRESS OF DEPOSITOR AND REGISTRANT)
PATRICIA R. HATLER
SECRETARY
ONE NATIONWIDE PLAZA
COLUMBUS, OHIO 43215
(NAME AND ADDRESS OF AGENT FOR SERVICE)
----------------------------
Approximate date of proposed public offering: (Upon the effective date of this
Registration Statement. November 1, 2000 requested.)
The Registrant hereby agrees to amend this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall therefore become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such a date as the Commission, acting pursuant to Section 8(a), may
determine.
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CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
<TABLE>
<CAPTION>
N-8B-2 ITEM CAPTION IN PROSPECTUS
<S> <C>
1.....................................................................Nationwide Life Insurance Company
The Variable Account
2.....................................................................Nationwide Life Insurance Company
3.....................................................................Custodian of Assets
4.....................................................................Distribution of the Policies
5.....................................................................The Variable Account
6.....................................................................Not Applicable
7.....................................................................Not Applicable
8.....................................................................Not Applicable
9.....................................................................Legal Proceedings
10.....................................................................Information About the Policies; How the
Cash Value Varies; Right to Exchange for a
Fixed Benefit Policy; Reinstatement; Other
Policy Provisions
11.....................................................................Investments of the Variable Account
12.....................................................................The Variable Account
13.....................................................................Policy Charges
Reinstatement
14.....................................................................Underwriting and Issuance - Premium
Payments, Minimum Requirements for
Issuance of a Policy
15.....................................................................Investments of the Variable Account;
Premium Payments
16.....................................................................Underwriting and Issuance - Allocation of
Cash Value
17.....................................................................Surrendering the Policy for Cash
18.....................................................................Reinvestment
19.....................................................................Not Applicable
20.....................................................................Not Applicable
21.....................................................................Policy Loans
22.....................................................................Not Applicable
23.....................................................................Not Applicable
24.....................................................................Not Applicable
25.....................................................................Nationwide Life Insurance Company
26.....................................................................Not Applicable
27.....................................................................Nationwide Life Insurance Company
28.....................................................................Company Management
29.....................................................................Company Management
30.....................................................................Not Applicable
31.....................................................................Not Applicable
32.....................................................................Not Applicable
33.....................................................................Not Applicable
34.....................................................................Not Applicable
35.....................................................................Nationwide Life Insurance Company
36.....................................................................Not Applicable
37.....................................................................Not Applicable
</TABLE>
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<TABLE>
<CAPTION>
N-8B-2 ITEM CAPTION IN PROSPECTUS
<S> <C>
38.....................................................................Distribution of the Policies
39.....................................................................Distribution of the Policies
40.....................................................................Not Applicable
41(a)..................................................................Distribution of the Policies
42.....................................................................Not Applicable
43.....................................................................Not Applicable
44.....................................................................How the Cash Value Varies
45.....................................................................Not Applicable
46.....................................................................How the Cash Value Varies
47.....................................................................Not Applicable
48.....................................................................Custodian of Assets
49.....................................................................Not Applicable
50.....................................................................Not Applicable
51.....................................................................Summary of the Policies;
Information About the Policies
52.....................................................................Substitution of Securities
53.....................................................................Taxation of the Company
54.....................................................................Not Applicable
55.....................................................................Not Applicable
56.....................................................................Not Applicable
57.....................................................................Not Applicable
58.....................................................................Not Applicable
59.....................................................................Financial Statements
</TABLE>
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NATIONWIDE LIFE INSURANCE COMPANY
Flexible Premium Variable Universal Life Insurance Policies
Issued by Nationwide Life Insurance Company through its Nationwide VLI Separate
Account-5
The date of this prospectus is November 1, 2000
This prospectus contains basic information you should know about the policies
before investing. Please read it and keep it for future reference
The following underlying mutual funds are available under the policies:
TARGET/UNITED FUNDS, INC.
- Asset Strategy Portfolio
- Balanced Portfolio
- Bond Portfolio
- Growth Portfolio
- High Income Portfolio
- Income Portfolio
- International Portfolio
- Limited-Term Bond Portfolio
- Money Market Portfolio
- Science and Technology Portfolio
- Small Cap Portfolio
For general information or to obtain FREE copies of the:
- prospectus, annual report or semi-annual report for any underlying
mutual fund; and
- any required Nationwide forms,
call: 1-800-547-7548
TDD 1-800-238-3035
or write:
NATIONWIDE LIFE INSURANCE COMPANY
P.O. BOX 182150
COLUMBUS, OHIO 43218-2150
Material incorporated by reference in this prospectus can be found on the SEC
website at:
www.sec.gov
Information about this and other Best of America products can be found on the
world-wide web at:
www.bestofamerica.com
This policy is NOT:
- a bank deposit;
- endorsed by a bank or government agency;
- federally insured; or
- available in every state.
The life insurance policies offered by this prospectus are flexible premium
variable universal life insurance policies (flexible premium variable adjustable
life insurance policies in Puerto Rico). They provide flexibility to vary the
amount and frequency of premium payments. A cash surrender value may be offered
if the policy is terminated during the lifetime of the insured.
The purpose of this policy is to provide life insurance protection for the
beneficiary named in the policy. No claim is made that the policy is in any way
similar or comparable to a systematic investment plan of a mutual fund.
The death benefit and cash value of this policy may vary to reflect the
experience of the Nationwide VLI Separate Account-5 (the "variable account") or
the fixed account, depending on how premium payments are invested.
Investors assume certain risks when investing in the policies, including the
risk of losing money.
Nationwide guarantees the death benefit for as long as the policy is in force.
The cash surrender value is not guaranteed. The policy will lapse if the cash
surrender value is insufficient to cover policy charges.
Nationwide guarantees to keep the policy in force so long as minimum premium
requirements have been met.
Benefits described in this prospectus may not be available in every jurisdiction
- refer to your policy for specific benefit information.
THIS PROSPECTUS IS NOT AN OFFERING IN ANY JURISDICTION WHERE SUCH OFFERING MAY
NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO
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MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE
SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
2
<PAGE> 6
GLOSSARY OF SPECIAL TERMS
ATTAINED AGE- The insured's age on the policy date, plus the number of full
years since the policy date.
ACCUMULATION UNIT- An accounting unit of measure used to calculate the cash
value of the variable account.
FIXED ACCOUNT- An investment option which is funded by the general account of
Nationwide.
GENERAL ACCOUNT- All assets of Nationwide other than those of the variable
account or in other separate accounts that have been or may be established by
Nationwide.
MATURITY DATE- The policy anniversary on or next following the insured's 100th
birthday.
MINIMUM REQUIRED DEATH BENEFIT- The lowest death benefit which will qualify the
policy as life insurance under Section 7702 of the Internal Revenue Code.
NATIONWIDE- Nationwide Life Insurance Company.
NET AMOUNT AT RISK- The death benefit minus the cash value. On a monthly
anniversary day, the net amount at risk is the death benefit minus the cash
value prior to subtraction of the base policy cost of insurance charge.
NET PREMIUMS- The actual premiums minus the percent of premium charges. The
percent of premium charges are shown on the policy data page.
SEC GUIDELINE LEVEL PREMIUM- The level annual premiums required to mature the
policy under reasonable mortality and expense charges with an annual effective
interest rate of 5%. It is calculated pursuant to Rule 6e-3(T) of the Investment
Company Act of 1940.
SUB-ACCOUNTS- Divisions of the variable account to which underlying mutual fund
shares are allocated and for which accumulation units are separately maintained.
VALUATION PERIOD- Each day the New York Stock Exchange is open.
VARIABLE ACCOUNT- Nationwide VLI Separate Account-5, a separate account of
Nationwide Life Insurance Company that contains variable account allocations.
The variable account is divided into sub-accounts, each of which invests in
shares of a separate underlying mutual fund.
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TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS.........................4
SUMMARY OF POLICY EXPENSES........................7
UNDERLYING MUTUAL FUND ANNUAL EXPENSES............8
SYNOPSIS OF THE POLICIES.........................10
NATIONWIDE LIFE INSURANCE COMPANY................11
WADDELL & REED, INC..............................11
INVESTING IN THE POLICY..........................11
The Variable Account and Underlying Mutual Funds
The Fixed Account
INFORMATION ABOUT THE POLICIES...................13
Minimum Requirements for Policy Issuance
Premium Payments
Pricing
POLICY CHARGES...................................14
Sales Load
Tax Expense Charges
Surrender Charges
Monthly Cost of Insurance
Monthly Administrative Charge
Mortality and Expense Risk Charge
Income Tax
Reduction of Charges
SURRENDERING THE POLICY FOR CASH.................18
Surrender (Redemption)
Cash Surrender Value
Partial Surrenders
Income Tax Withholding
VARIATION IN CASH VALUE..........................19
POLICY PROVISIONS................................19
Policy Owner
Beneficiary
Changes in Existing Insurance Coverage
OPERATION OF THE POLICY..........................20
Allocation of Net Premium and Cash Value
How the Investment Experience is Determined
Net Investment Factor
Determining the Cash Value
Transfers
RIGHT TO REVOKE..................................22
POLICY LOANS.....................................23
Taking a Policy Loan
Effect on Investment Performance
Interest
Effect on Death Benefit and Cash Value
Repayment
ASSIGNMENT.......................................24
POLICY OWNER SERVICES............................24
Dollar Cost Averaging
DEATH BENEFIT INFORMATION........................25
Calculation of the Death Benefit
Changes in the Death Benefit Option
Proceeds Payable on Death
Incontestability
Error in Age or Sex
Suicide
Maturity Proceeds
EXCHANGE RIGHTS..................................26
GRACE PERIOD AND GUARANTEED POLICY CONTINUATION
PERIOD......................................26
Grace Period
Guaranteed Policy Continuation Period
Reinstatement
TAX MATTERS......................................27
Policy Proceeds
Withholding
Federal Estate and Generation-Skipping
Transfers Taxes
Non-Resident Aliens
Taxation of Nationwide
Tax Changes
LEGAL CONSIDERATIONS.............................30
STATE REGULATION.................................31
REPORTS TO POLICY OWNERS.........................31
ADVERTISING......................................31
LEGAL PROCEEDINGS................................31
EXPERTS..........................................32
REGISTRATION STATEMENT...........................32
DISTRIBUTION OF THE POLICIES.....................32
ADDITIONAL INFORMATION ABOUT
NATIONWIDE..................................34
4
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APPENDIX A: OBJECTIVES FOR UNDERLYING
MUTUAL FUNDS................................43
APPENDIX B: ILLUSTRATIONS OF SURRENDER CHARGES...54
APPENDIX C: ILLUSTRATIONS OF CASH VALUES,
CASH SURRENDER VALUES, AND DEATH BENEFITS...56
5
<PAGE> 9
SUMMARY OF POLICY EXPENSES
Nationwide deducts certain charges from the policy. Charges are made for
administrative and sales expenses, providing life insurance protection, and
assuming the mortality and expense risks.
Nationwide deducts a sales load and a premium expense charge from premium
payments. The current sales load is 0.5% of each premium payment and is
guaranteed never to exceed 2.5% of each premium payment. The premium expense
charge is approximately 3.5% of premiums for all states (see "Sales Load" and
"Premium Expense Charge").
Nationwide deducts the following charges from the cash value of the policy:
- monthly cost of insurance;
- monthly cost of any additional benefits provided by riders to the
policy;
- administrative expense charge(1): and
- mortality and expense risk charge(2).
(1) Currently, the administrative expense charge is $10 per month in the first
year and $5 per month in renewal years. It is guaranteed not to exceed $10
per month in the first year and $7.50 in renewal years.
(2) The mortality and expense risk charge is a daily charge equal to an annual
rate of 0.60% of the first $25,000 of cash value attributable to the
variable account, 0.30% of the next $225,000 of cash value attributable to
the variable account, and 0.10% of cash value attributable to the variable
account in excess of $250,000.
For policies which are surrendered during the first nine policy years (first
fifteen years in Pennsylvania), Nationwide deducts a surrender charge (see
"Surrender Charges").
For more information about any policy charge, see "Policy Charges" in this
prospectus.
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UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(as a percentage of underlying mutual fund net assets, after expense
reimbursement)
<TABLE>
<CAPTION>
Management Other 12b-1 Total
Fees Expenses Fees Underlying
Mutual Fund
Expenses
<S> <C> <C> <C> <C>
Asset Strategy Portfolio 0.74% 0.14% 0.24% 1.12%
Balanced Portfolio 0.65% 0.06% 0.24% 0.95%
Bond Portfolio 0.52% 0.06% 0.24% 0.82%
Growth Portfolio 0.69% 0.02% 0.24% 0.95%
High Income Portfolio 0.63% 0.05% 0.24% 0.92%
Income Portfolio 0.69% 0.02% 0.24% 0.95%
International Portfolio 0.82% 0.15% 0.24% 1.21%
Limited-Term Bond Portfolio 0.52% 0.15% 0.24% 0.91%
Money Market Portfolio 0.44% 0.08% 0.24% 0.76%
Science and Technology Portfolio 0.80% 0.06% 0.24% 1.10%
Small Cap Portfolio 0.84% 0.04% 0.24% 1.12%
</TABLE>
The expenses shown above are deducted by the underlying mutual fund before it
provides Nationwide with the daily net asset value. Nationwide then deducts
applicable variable account charges from the net asset value in calculating the
unit value of the corresponding sub-account. The management fees and other
expenses are more fully described in the prospectus for each underlying mutual
fund. Information relating to the underlying mutual funds was provided by the
underlying mutual funds and not independently verified by Nationwide.
SYNOPSIS OF THE POLICIES
The policy offered by this prospectus provides for life insurance coverage on
the insured. The death benefit and cash value of the policy may increase or
decrease to reflect the performance of the investment options chosen by the
policy owner (see "Death Benefit Information").
CASH SURRENDER VALUE
If the policy is terminated during the insured's lifetime, a cash surrender
value may be payable under the policy. However, there is no guaranteed cash
surrender value (see "Variation in Cash Value "). The policy will lapse without
value if the cash surrender value falls below what is needed to cover policy
charges. Nationwide will keep the policy in force during the guaranteed policy
continuation period provided premium requirements are met (see "Grace Period and
Guaranteed Policy Continuation Period" and "Minimum Requirements for Policy
Issuance").
PREMIUMS
The minimum initial premium for which a policy may be issued is equal to three
times the initial minimum monthly premium. The initial premium is shown on the
policy data page. Each premium payment must be at least $50.
Additional premium payments may be made at any time while the policy is in
force, subject to certain restrictions (see "Premium Payments").
TAXATION
The policies described in this prospectus meet the definition of "life
insurance" under Section 7702 of the Internal Revenue Code. Nationwide will
monitor compliance with the tests provided by Section 7702 to insure the
policies continue to receive this favored tax treatment (see "Tax Matters").
NONPARTICIPATING POLICIES
The policies are nonparticipating policies on which no dividends are payable.
The policies do not share in the profits or surplus earnings of Nationwide.
RIDERS
A rider may be added to the policy (availability varies by state).
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Riders currently include:
- Maturity Extension Endorsement (not available in New York);
- Spouse Rider;
- Child Rider;
- Waiver of Monthly Deductions Rider;
- Accidental Death Benefit Rider;
- Additional Protection Rider (not available in New York); and
- Change of Insured Rider.
POLICY CANCELLATION
Policy owners may return the policy for any reason within certain time periods
and Nationwide will refund the policy value or the amount required by law. In
New York, Nationwide will refund any premiums paid (see "Right to Revoke").
NATIONWIDE LIFE INSURANCE COMPANY
Nationwide is a stock life insurance company organized under the laws of the
State of Ohio in March 1929. It is a member of the Nationwide group with its
Home Office at One Nationwide Plaza, Columbus, Ohio 43215. Nationwide is a
provider of life insurance, annuities and retirement products. It is admitted to
do business in all states, the District of Columbia and Puerto Rico.
CUSTODIAN OF ASSETS
Nationwide serves as the custodian of the assets of the variable account.
OTHER CONTRACTS ISSUED BY NATIONWIDE
Nationwide does presently and will, from time to time, offer variable contracts
and policies with benefits which vary in accordance with the investment
experience of a separate account of Nationwide.
WADDELL & REED, INC.
The policies are distributed by Waddell & Reed, ("Waddell & Reed") Inc., located
at 6300 Lamar Ave., Overland Park, KS 66202.
INVESTING IN THE POLICY
THE VARIABLE ACCOUNT AND UNDERLYING MUTUAL FUNDS
Nationwide VLI Separate Account-5 is a separate account that invests in the
underlying mutual fund options listed in Appendix A. Nationwide established the
separate account on December 3, 1987, pursuant to Ohio law. Although the
separate account is registered with the SEC as a unit investment trust pursuant
to the Investment Company Act of 1940 ("1940 Act"), the SEC does not supervise
the management of Nationwide or the variable account.
Income, gains, and losses credited to, or charged against the variable account
reflect the variable account's own investment experience and not the investment
experience of Nationwide's other assets. The variable account's assets are held
separately from Nationwide's assets and in general are not chargeable with
liabilities incurred in any other business of Nationwide. Nationwide is
obligated to pay all amounts promised to policy owners under the policies.
The variable account is divided into sub-accounts. Policy owners elect to have
net premiums allocated among the sub-accounts and the fixed account at the time
of application.
Nationwide uses the assets of each sub-account to buy shares of the underlying
mutual funds based on policy owner instructions. A policy's investment
performance depends upon the performance of the underlying mutual fund options
chosen by the policy owner.
Each underlying mutual fund's prospectus contains more detailed information
about that fund. Prospectuses for the underlying mutual funds should be read in
conjunction with this prospectus.
Underlying mutual funds in the variable account are NOT publicly traded mutual
funds. They are only available as investment options in variable life insurance
policies or variable annuity contracts issued by life insurance companies or, in
some cases, through participation in certain qualified pension or retirement
plans.
8
<PAGE> 12
The investment advisers of the underlying mutual funds may manage publicly
traded mutual funds with similar names and objectives. However the underlying
mutual funds are NOT directly related to any publicly traded mutual fund. Policy
owners should not compare the performance of a publicly traded fund with the
performance of underlying mutual funds participating in the variable account.
The performance of the underlying mutual funds could differ substantially from
that of any publicly traded funds.
Changes of Investment Policy
Nationwide may materially change the investment policy of the variable account.
Nationwide must inform policy owners and obtain all necessary regulatory
approvals. Any change must be submitted to the various state insurance
departments which may disapprove it if deemed detrimental to the interests of
the policy owners or if it renders Nationwide's operations hazardous to the
public. If a policy owner objects, the policy may be converted to a
substantially comparable general account life insurance policy offered by
Nationwide. The policy owner has the later of 60 days (6 months in Pennsylvania)
from the date of the investment policy change or 60 days (6 months in
Pennsylvania) from being informed of the change to make the conversion.
Nationwide will not require evidence of insurability for this conversion.
The new policy will not be affected by the investment experience of any separate
account. The new policy will be for an amount of insurance not exceeding the
death benefit of the policy converted on the date of the conversion.
Voting Rights
Policy owners who have allocated assets to the underlying mutual funds are
entitled to certain voting rights. Nationwide will vote policy owner shares at
special shareholder meetings based on policy owner instructions. However, if the
law changes allowing Nationwide to vote in its own right, it may elect to do so.
Policy owners with voting interests in an underlying mutual fund will be
notified of issues requiring the shareholder's vote as soon as possible prior to
the shareholder meeting. Notification will contain proxy materials, and a form
to return to Nationwide with voting instructions. Nationwide will vote shares
for which no instructions are received in the same proportion as those that are
received.
The number of shares which a policy owner may vote is determined by dividing the
cash value of the amount they have allocated to an underlying mutual fund by the
net asset value of that underlying mutual fund. Nationwide will designate a date
for this determination not more than 90 days before the shareholder meeting.
Material Conflicts
The underlying mutual funds may be offered through separate accounts of other
insurance companies, as well as through other separate accounts of Nationwide.
Nationwide does not anticipate any disadvantages to this. However, it is
possible that a conflict may arise between the interests of the variable account
and one or more of the other separate accounts in which these underlying mutual
funds participate.
Material conflicts may occur due to a change in law affecting the operations of
variable life insurance policies and variable annuity contracts, or differences
in the voting instructions of the contract owners and those of other companies.
If a material conflict occurs, Nationwide will take whatever steps are necessary
to protect contract owners and variable annuity payees, including withdrawal of
the variable account from participation in the underlying mutual fund(s)
involved in the conflict.
Substitution of Securities
Nationwide may substitute, eliminate and/or combine shares of another underlying
mutual fund for shares already purchased or to be purchased in the future if
either of the following occur:
(1) shares of a current underlying mutual fund option are no longer
available for investment; or
(2) further investment in an underlying mutual fund option is
inappropriate.
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<PAGE> 13
No substitution, elimination, and/or combination of shares may take place
without the prior approval of the SEC
THE FIXED ACCOUNT
The fixed account is an investment option that is funded by assets of
Nationwide's general account. The general account contains all of Nationwide's
assets other than those in other Nationwide separate accounts. It is used to
support Nationwide's annuity and insurance obligations and may contain
compensation for mortality and expense risks.
Under exemptive and exclusionary provisions, Nationwide's general account has
not been registered under the Securities Act of 1933 and has not been registered
as an investment company under the Investment Company Act of 1940. Accordingly,
neither the general account nor any interest therein is subject to the
provisions of these Acts. Nationwide has been advised that the staff of the SEC
has not reviewed the disclosures in this prospectus relating to the fixed
account. Disclosures regarding the general account may, however, be subject to
certain generally applicable provisions of the federal securities laws
concerning the accuracy and completeness of statements made in prospectuses.
Premium payments will be allocated to the fixed account by election of the
policy owner.
The investment income earned by the fixed account will be allocated to the
policies at varying rate(s) set by Nationwide. The guaranteed rate for any
premium payment will be effective for not less than twelve months. Nationwide
guarantees that the rate will not be less than 3.0% per year.
Any interest in excess of 3.0% will be credited to fixed account allocations at
Nationwide's sole discretion. The policy owner assumes the risk that interest
credited to fixed account allocations may not exceed the minimum guarantee of
3.0% for any given year.
New premium payments deposited to the contract which are allocated to the fixed
account may receive a different rate of interest than amounts transferred from
the sub-accounts to the fixed account and amounts maturing in the fixed account.
INFORMATION ABOUT THE POLICIES
MINIMUM REQUIREMENTS FOR POLICY ISSUANCE
This policy provides life insurance coverage with the flexibility to vary the
amount and frequency of premium payments. Minimum requirements for policy
issuance include:
- the insured must be 80 or younger;
- Nationwide may require satisfactory evidence of insurability
(including a medical exam); and
- a minimum specified amount of $50,000 for non-preferred policies
($100,000 for non-preferred policies in Pennsylvania, New Jersey,
Texas Alabama and New York) and $100,000 for preferred policies.
PREMIUM PAYMENTS
Each premium payment must be at least $50. The initial premium is payable in
full at Nationwide's home office or to an authorized agent of Nationwide.
Upon payment of the initial premium, temporary insurance may be provided.
Issuance of the continuing insurance coverage is dependent upon completion of
all underwriting requirements, payment of initial premium, and delivery of the
policy while the insured is still living.
Additional premium payments may be made at any time while the policy is in
force, subject to the following conditions:
- Nationwide may require satisfactory evidence of insurability before
accepting any additional premium payment which results in an increase
in the net amount at risk.
- During the guaranteed policy continuation period, the total premium
payments, less any policy indebtedness and less any partial
surrenders, must be greater than or equal to the sum of the minimum
monthly premiums in order to guarantee that the policy remain
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<PAGE> 14
in force. (The minimum monthly premiums are shown in the policy data
page.)
- Premium payments in excess of the premium limit established by the IRS
to qualify the policy as a contract for life insurance will be
refunded.
- Nationwide may require policy indebtedness be repaid prior to
accepting any additional premium payments.
Additional premium payments or other changes to the policy may jeopardize the
policy's non-modified endowment status. Nationwide will monitor premiums paid
and other policy transactions and will notify the policy owner when non-modified
endowment contract status is in jeopardy.
Nationwide will send scheduled premium payment reminder notices to policy owners
according to the premium mode shown on the policy data page.
PRICING
Premiums will not be priced when the New York Stock Exchange is closed or on the
following nationally recognized holidays:
- New Year's Day - Independence Day
- Martin Luther King, Jr. Day - Labor Day
- Presidents' Day - Thanksgiving
- Good Friday - Christmas
- Memorial Day
Nationwide also will not price premiums if:
(1) trading on the New York Stock Exchange is restricted;
(2) an emergency exists making disposal or valuation of securities held in
the variable account impracticable; or
(3) the SEC, by order, permits a suspension or postponement for the
protection of security holders.
Rules and regulations of the SEC will govern as to when the conditions described
in (2) and (3) exist. If Nationwide is closed on days when the New York Stock
Exchange is open, policy value may be affected since the policy owner would not
have access to their account.
POLICY CHARGES
SALES LOAD
Nationwide deducts a sales load from each premium payment received. It is
guaranteed never to exceed 2.5% of each premium payment. Currently, for all
policy years the sales load is 0.5% of each premium payment.
The total sales load actually deducted from any policy will be equal to the sum
of this front-end sales load plus any sales surrender charge.
TAX EXPENSE CHARGES
A charge equal to 3.5% is deducted from all premium payments when the premium
payments are received in order to compensate Nationwide for certain
administrative expenses which are incurred by Nationwide for taxes, which
include premium or other taxes imposed by various state and local jurisdictions,
as well as federal taxes imposed under Section 848 of the Internal Revenue Code.
These tax expenses consist of two components:
(1) a tax rate of 2.25% for state and local premium or other taxes; and
(2) a tax rate of 1.25% for federal taxes.
The amount charged may be more or less than the amount actually assessed by the
state in which a particular policy owner lives.
Nationwide does not expect to make a profit from these charges.
SURRENDER CHARGES
Nationwide deducts a surrender charge from the cash value of any policy
surrendered during the first nine years (first fifteen years in Pennsylvania).
The charge is deducted proportionally from the cash value in each sub-account
and the fixed account.
The maximum initial surrender charge varies by issue age, sex, specified amount
and underwriting classification. The surrender charge is calculated based on the
initial specified amount. The following tables illustrate the maximum initial
surrender charge per $1,000 of initial specified amount for policies which are
issued on a standard basis (see Appendix B for specific examples).
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<PAGE> 15
INITIAL SPECIFIED AMOUNT $50,000-$99,999*
MALE FEMALE
ISSUE NON- NON- MALE FEMALE
AGE TOBACCO TOBACCO STANDARD STANDARD
25 $7.773 $7.518 $8.369 $7.818
35 $8.817 $8.396 $9.811 $8.889
45 $12.185 $11.390 $13.884 $12.164
55 $15.628 $13.995 $18.410 $15.106
65 $22.274 $19.043 $26.559 $20.607
*Specified amounts of less than $100,000 are not available in New York or New
Jersey.
INITIAL SPECIFIED AMOUNT $100,000+
MALE FEMALE
ISSUE NON- NON- MALE FEMALE
AGE TOBACCO TOBACCO STANDARD STANDARD
25 $5.773 $5.518 $6.369 $5.818
35 $6.817 $6.396 $7.811 $6.889
45 $9.685 $8.890 $11.384 $9.664
55 $13.128 $11.495 $15.910 $12.606
65 $21.274 $18.043 $25.559 $19.607
The surrender charge is comprised of two components:
- an underwriting component; and
- sales component.
The underwriting component varies by issue age in the following manner:
$1,000 OF INITIAL SPECIFIED AMOUNT
ISSUE SPECIFIED AMOUNTS SPECIFIED AMOUNTS
AGE LESS THAN $100,000* $100,000 OR MORE
0-35 $6.00 $4.00
36-55 $7.50 $5.00
56-80 $7.50 $6.50
*Specified amounts of less than $100,000 are not available in New York or New
Jersey.
The underwriting component is designed to cover the administrative expenses
associated with underwriting and issuing policies, including the costs of:
- processing applications;
- conducting medical exams;
- determining insurability and the insured's underwriting class; and
- establishing policy records.
The remainder of the surrender charge that is not attributable to the
underwriting component represents the sales component. In no event will this
component exceed 26.5% of the lesser of the SEC guideline level premium required
in the first year or the premiums actually paid in the first year. The purpose
of the sales component is to reimburse Nationwide for some of the expenses
incurred in the distribution of the policies. Nationwide also deducts 0.5% of
each premium payment for sales load.
The surrender charge may be insufficient to recover certain expenses related to
the sale of the policies. Unrecovered expenses are borne by Nationwide's general
assets which may include profits, if any, from mortality and expense risk
charges. Additional premiums and/or income earned on assets in the variable
account have no effect on these charges.
Increases in Specified Amount
Policies surrendered during the first nine policy years (first fifteen policy
years in Pennsylvania) following an increase in the specified amount will incur
a surrender charge associated with the increase. This surrender charge is
comprised of an underwriting component and sales component. The maximum initial
surrender charge associated with the increase is based on the attained age at
the time of the increase, the underwriting classification of the increase, sex,
and the amount of the increase in specified amount. The actual initial surrender
charge associated with the increase is based upon the maximum initial surrender
charge and the premium received within one year of the increase in specified
amount.
Increases that are caused by a change in death benefit option that do not change
the net amount at risk are not subject to a surrender charge. The surrender
charge associated with the increase for policy years following the increase is a
percentage of the initial surrender charge.
The following table illustrates the maximum initial surrender charge per $1,000
of specified amount increase for policies increasing coverage on a standard
basis. This charge reflects both the underwriting and sales component.
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MALE FEMALE
ISSUE NON- NON- MALE FEMALE
AGE TOBACCO TOBACCO STANDARD STANDARD
25 $3.464 $3.311 $3.821 $3.491
35 4.090 3.837 4.686 4.133
45 5.811 5.334 6.830 5.798
55 7.877 6.897 9.546 7.563
65 12.764 10.826 15.335 11.764
75 20.787 17.389 24.236 18.682
80 27.309 23.309 30.707 24.647
Reduction in Specified Amount
Decreases in specified amount requested by a policy owner will incur a
proportional surrender charge. This proportion is equal to the decrease in
specified amount divided by the specified amount prior to the decrease. In the
case of a policy with prior increases, these fractional surrender charges will
be calculated separately for the initial specified amount and each increase in
specified amount. For a policy with prior increases in specified amounts, these
decreases will be made on a last in first out ("LIFO") basis and therefore
decrease each segment in reverse order of its effective date.
Decreases in the specified amount resulting from a partial surrender or a death
benefit option change that do not change the net amount risk will not incur a
proportional surrender charge.
Reductions to Surrender Charges
Surrender charges are reduced in subsequent policy years as follows:
COMPLETED SURRENDER CHARGE AS A % OF
POLICY YEARS INITIAL SURRENDER CHARGES
0 100%
1 100%
2 90%
3 80%
4 70%
5 60%
6 50%
7 40%
8 30%
9+ 0%
The surrender charge is reduced by any partial surrender charge actually paid on
previous decreases in specified amount.
For the initial specified amount, a completed policy year (in the chart above)
is measured from the issue date. For any increase in specified amount, a
completed policy year (in the chart above) is measured from the effective date
of the increase.
Special guaranteed maximum surrender charges apply in Pennsylvania (see Appendix
B).
MONTHLY COST OF INSURANCE
The monthly cost of insurance charge for each policy month is determined by
multiplying the monthly cost of insurance rate by the net amount at risk. This
deduction is charged proportionately to the cash value in each sub-account and
the fixed account.
If death benefit Option 1 or Option 3 (Option 3 is not available in New York) is
in effect and there have been increases in the specified amount, then the cash
value will first be considered a part of the initial specified amount. If the
cash value exceeds the initial specified amount, it will then be considered a
part of the additional increases in specified amount resulting from the
increases in the order of the increases.
Monthly cost of insurance rates will not exceed those guaranteed in the policy.
Guaranteed cost of insurance rates for policies issued on specified amounts less
than $100,000 are based on the 1980 Commissioners' Extended Term Mortality
Table, Age Last Birthday (1980 CET). Guaranteed cost of insurance rates for
policies issued on specified amounts $100,000 or more are based on the 1980
Commissioners' Standard Ordinary Mortality Table, Age Last Birthday (1980 CSO).
Guaranteed cost of insurance rates for policies issued on a substandard basis
are based on appropriate percentage multiples of the guaranteed cost of
insurance rate on a standard basis. These mortality tables are sex distinct. In
addition, separate mortality tables will be used for tobacco and non-tobacco.
Mortality tables are unisex for:
- policies issued in the State of Montana;
- group or sponsored arrangements (including employees of Nationwide and
their family members); and
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- special exchange programs which Nationwide may make available from
time to time.
The rate class of an insured may affect the cost of insurance rate. Nationwide
currently places insureds into both standard rate classes and substandard rate
classes that involve a higher mortality risk. In an otherwise identical policy,
an insured in the standard rate class will have a lower cost of insurance than
an insured in a rate class with higher mortality risks. Nationwide may also
issue certain policies on a "non-medical" basis to certain categories of
individuals. Due to the underwriting criteria established for policies issued on
a non-medical basis, actual rates will be higher than the current cost of
insurance rates being charged under policies that are medically underwritten.
MONTHLY ADMINISTRATIVE CHARGE
Nationwide deducts an administrative expense charge proportionately from the
cash value in each sub-account and the fixed account on a monthly basis. This
charge reimburses Nationwide for certain actual expenses related to the
maintenance of the policies including accounting and record keeping, and
periodic reporting to policy owners. Nationwide does not expect to recover any
amount in excess of aggregate maintenance expenses from this charge. Currently,
this charge is $10 per month in the first year, and $5 per month in renewal
years. Nationwide may, at its sole discretion, increase this charge. However,
Nationwide guarantees that this charge will never exceed $10 per month in the
first year and $7.50 per month in renewal years.
MORTALITY AND EXPENSE RISK CHARGE
Nationwide assumes certain risks for guaranteeing the mortality and expense
charges. The mortality risk assumed under the policies is that the insured may
not live as long as expected. The expense risk assumed is that the actual
expenses incurred in issuing and administering the policies may be greater than
expected. In addition, Nationwide assumes risks associated with the non-recovery
of policy issue, underwriting and other administrative expenses due to policies
that lapse or are surrendered in the early policy years.
Nationwide deducts the mortality and expense risk charge from the variable
account on a monthly basis. Mortality and expense risk deductions will be
charged proportionally to the cash value in each sub-account. The mortality and
expense risk charge compensates Nationwide for assuming risks associated with
mortality and administrative costs. The charge is charged on a daily basis and
is equivalent to an annual effective rate of 0.60% of the first $25,000 of cash
value attributable to the variable account, 0.30% of the next $225,000 of cash
value attributable to the variable account, and 0.10% of cash value attributable
to the variable account in excess of $250,000. Policy owners receive quarterly
and annual statements advising policy owners of the cancellation of accumulation
units for mortality and expense risk charges.
These charges are all guaranteed. Nationwide may realize a profit from this
charge.
INCOME TAX
No charge is assessed to policy owners for income taxes incurred by Nationwide
as a result of the operations of the sub-accounts. However, Nationwide reserves
the right to assess a charge for income taxes against the variable account if
income taxes are incurred.
REDUCTION OF CHARGES
The policy is available for purchase by individuals, corporations and other
groups. Nationwide may reduce or eliminate certain charges (sales load,
surrender charge, monthly administrative charge, monthly cost of insurance
charge, or other charges) where the size or nature of the group results in
savings in sales, underwriting, administrative or other costs, to Nationwide.
These charges may be reduced in certain group, sponsored arrangements or special
exchange programs made available by Nationwide (including employees of
Nationwide and their families).
Eligibility for reduction in charges and the amount of any reduction is
determined by a number of factors, including:
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<PAGE> 18
- the number of insureds;
- the total premium expected to be paid;
- total assets under management for the policy owner;
- the nature of the relationship among individual insureds;
- the purpose for which the policies are being purchased;
- the expected persistency of individual policies; and
- any other circumstances which are rationally related to the expected
reduction in expenses.
The extent and nature of reductions may change from time to time. The charge
structure may vary. Variations are determined in a manner not unfairly
discriminatory to policy owners which reflects differences in costs of services.
SURRENDERING THE POLICY FOR CASH
SURRENDER (REDEMPTION)
Policies may be surrendered for the cash surrender value any time while the
insured is living. The cancellation will be effective as of the date Nationwide
receives the policy accompanied by a signed, written request for cancellation.
In some cases, Nationwide may require additional documentation of a customary
nature.
CASH SURRENDER VALUE
The cash surrender value increases or decreases daily to reflect the investment
experience of the variable account and the daily crediting of interest in the
fixed account and the policy loan account.
The cash surrender value equals the policy's cash value, next computed after the
date Nationwide receives a proper written request for surrender and the policy,
minus any charges, indebtedness or other deductions due on that date, which may
also include a surrender charge.
PARTIAL SURRENDERS
After the policy has been in force for one year, the policy owner may request a
partial surrender.
Partial surrenders are permitted if they satisfy the following requirements:
(1) the minimum partial surrender is $200;
(2) partial surrenders may not reduce the specified amount below the
minimum specified amount;
(3) during the first ten policy years, the maximum amount of a partial
surrender cannot exceed 10% of cash surrender value as of the
beginning of the policy year;
(4) after the completion of ten policy years, the maximum amount of a
partial surrender is the cash surrender value less the greater of $500
or three monthly deductions; and
(5) after the partial surrender, the policy continues to qualify as life
insurance.
When a partial surrender is made, the cash value will be reduced by the amount
of the partial surrender. Further, the specified amount will be reduced by the
amount necessary to prevent any increase to the net amount at risk, unless the
partial surrender is treated as a preferred partial surrender.
Preferred Partial Surrenders
A partial surrender is considered a preferred partial surrender if the following
conditions are met:
(1) the surrender occurs before the 15th policy anniversary; and
(2) the surrender amount plus the amount of any previous preferred policy
surrenders in that same policy year does not exceed 10% of the cash
surrender value as of the beginning of the policy year.
Reduction of the Specified Amount
When a partial surrender is made, in addition to the cash value being reduced by
the amount of the partial surrender, the specified amount may also be reduced
(except in the case of a preferred
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partial surrender). The reduction to the specified amount will be made in the
following order:
(1) against the most recent increase in the specified amount;
(2) against the next most recent increases in the specified amount in
succession; and
(3) against the specified amount under the original application.
Nationwide reserves the right to deduct a fee from the partial surrender amount.
The maximum fee is $25 or 5% of the partial surrender amount, whichever is less.
Preferred partial surrenders are not subject to this fee. Certain partial
surrenders may result in currently taxable income and tax penalties.
INCOME TAX WITHHOLDING
Federal law requires Nationwide to withhold income tax from any portion of
surrender proceeds subject to tax. Nationwide will withhold income tax unless
the policy owner advises Nationwide, in writing, of his or her request not to
withhold. If a policy owner requests that taxes not be withheld, or if the taxes
withheld are insufficient, the policy owner may be liable for payment of an
estimated tax. Policy owners should consult a tax advisor.
In certain employer-sponsored life insurance arrangements, including equity
split dollar arrangements, participants may be required to report for income tax
purposes, one or more of the following:
(1) the value each year of the life insurance protection provided;
(2) an amount equal to any employer-paid premiums; or
(3) some or all of the amount by which the current value exceeds the
employer's interest in the policy.
Participants should consult with the sponsor or the administrator of the plan,
and/or with their personal tax or legal advisor, to determine the tax
consequences, if any, of their employer-sponsored life insurance arrangements.
VARIATION IN CASH VALUE
On any date during the policy year, the cash value equals the cash value on the
preceding valuation date, plus any net premium applied since the previous
valuation date, minus any partial surrenders, plus or minus any investment
results, minus any surrender charge for decreases in specified amount, and less
any policy charges.
There is no guaranteed cash value. The cash value will vary with the investment
experience of the variable account and/or the daily crediting of interest in the
fixed account and policy loan account depending on the allocation of cash value
by the policy owner.
POLICY PROVISIONS
POLICY OWNER
While the insured is living, all rights in this policy are vested in the policy
owner named in the application or as subsequently changed, subject to
assignment, if any.
The policy owner may name a contingent policy owner or a new policy owner while
the insured is living. Any change must be in a written form satisfactory to
Nationwide and received at Nationwide's home office. Once received, the change
will be effective when signed. The change will not affect any payment made or
action taken by Nationwide before it was received. Nationwide may require that
the policy be submitted for endorsement before making a change.
If the policy owner is other than the insured, names no contingent policy owner,
and dies before the insured, the policy owner's rights in this policy belong to
the policy owner's estate.
BENEFICIARY
The beneficiary(ies) will be as named in the application or as subsequently
changed, subject to assignment, if any.
The policy owner may name a new beneficiary while the insured is living. Any
change must be in a written form satisfactory to Nationwide and received at
Nationwide's home office. Once received, the change will be effective when
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<PAGE> 20
signed. The change will not affect any payment made or action taken by
Nationwide before it was received.
If any beneficiary predeceases the insured, that beneficiary's interest passes
to any surviving beneficiary(ies), unless otherwise provided. Multiple
beneficiaries will be paid in equal shares, unless otherwise provided. If no
named beneficiary survives the insured, the death proceeds will be paid to the
policy owner or the policy owner's estate.
CHANGES IN EXISTING INSURANCE COVERAGE
The policy owner may request certain changes in the insurance coverage under the
policy. Requests must be in writing and received by Nationwide. No change will
take effect unless the cash surrender value after the change is sufficient to
keep the policy in force for at least 3 months.
Specified Amount Increases
After the first policy year, the policy owner may request an increase to the
specified amount. Any increase will be subject to the following conditions:
(1) the request must be applied for in writing;
(2) satisfactory evidence of insurability must be provided;
(3) the increase must be for a minimum of $10,000;
(4) the cash surrender value is sufficient to continue the policy in force
for at least 3 months; and
(5) the age at the time of increase must satisfy the same age requirements
as new issues.
Any approved increase will have an effective date of the monthly anniversary day
on or next following the date Nationwide approves the supplemental application.
Nationwide reserves the right to limit the number of specified amount increases
to one each policy year.
Specified Amount Decreases
After the first policy year, the policy owner may also request a decrease to the
specified amount. Any approved decrease will be effective on the monthly
anniversary day on or next following the date Nationwide receives the request.
Any such decrease shall reduce the insurance in the following order:
(1) against insurance provided by the most recent increase;
(2) against the next most recent increases successively; and
(3) against insurance provided under the original application.
Nationwide reserves the right to limit the number of specified amount decreases
to one each policy year. Nationwide will refuse a request for a decrease which
would:
(1) reduce the specified amount to less than the minimum specified amount;
or
(2) disqualify the policy as a contract for life insurance.
OPERATION OF THE POLICY
ALLOCATION OF NET PREMIUM AND CASH VALUE
Nationwide allocates premium payments to sub-accounts or the fixed account, as
instructed by policy owners. All percentage allocations must be in whole
numbers, and must be at least 1%. The sum of allocations must equal 100%. Future
premium allocations may be changed by giving written notice to Nationwide.
Premiums allocated to a sub-account on the application are allocated to the NSAT
Money Market Fund during the period the policy owner may cancel the policy,
unless a specific state requires premiums to be allocated to the fixed account.
(In New York, premiums are allocated to either the NSAT Money Market Fund or the
fixed account based on the policy owner's election.) At the expiration of this
period, the premiums are used to purchase shares of the underlying mutual funds
specified by the policy owner at net asset value for the respective
sub-account(s).
The policy owner may change the allocation of net premiums or may transfer cash
value from one sub-account to another. Changes are subject to the terms and
conditions imposed by each underlying mutual fund and those found in this
prospectus. Net premiums allocated to the fixed
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<PAGE> 21
account at the time of application may not be transferred from the fixed account
prior to the first policy anniversary (see "Transfers").
HOW THE INVESTMENT EXPERIENCE IS DETERMINED
The accumulation unit value for a valuation period is determined by multiplying
the accumulation unit value for each sub-account for the immediately preceding
valuation period by the net investment factor for the sub-account for the
subsequent valuation period. Though the number of accumulation units will not
change as a result of investment experience, the value of an accumulation unit
may increase or decrease from valuation period to valuation period.
NET INVESTMENT FACTOR
The net investment factor for any valuation period is determined by dividing (a)
by (b) where:
(a) is:
(1) the net asset value per share of the underlying mutual fund held
in the sub-account as of the end of the current valuation period;
and
(2) the per share amount of any dividend or income distributions made
by the underlying mutual fund (if the ex-dividend date occurs
during the current valuation period).
(b) is the net asset value per share of the underlying mutual fund determined
as of the end of the immediately preceding valuation period.
The net investment factor may be greater or less than one; therefore, the value
of an accumulation unit may increase or decrease. Currently, Nationwide does not
maintain a tax reserve with respect to the policies since income with respect to
the underlying mutual funds is not taxable to Nationwide or the variable
account. Nationwide reserves the right to adjust the calculation of the net
investment factor to reflect a tax reserve should such income of other items
become taxable to Nationwide. It should be noted that changes in the net
investment factor may not be directly proportional to changes in the net asset
value of underlying mutual fund shares, because of the deduction for mortality
and expense risk charge, and any charge or credit for tax reserves.
DETERMINING THE CASH VALUE
The cash value is the sum of the value of all variable account accumulation
units attributable to the policy plus amounts credited to the fixed account and
the policy loan account. Nationwide will determine the value of the assets in a
variable account at the end of each valuation day. The cash value will be
determined at least monthly.
The number of accumulation units credited to each sub-account is determined by
dividing the net amount allocated to the sub-account by the accumulation unit
value for the sub-account for the valuation period during which the premium is
received by Nationwide. In the event part or all of the cash value is
surrendered or charges or deductions are made against the cash value, an
appropriate number of accumulation units from the variable account and an
appropriate amount from the fixed account will be deducted in the same
proportion that the policy owner's interest in the variable account and the
fixed account bears to the total cash value.
The cash value in the fixed account and the policy loan account is credited with
interest daily at an effective annual rate which Nationwide periodically
declares. The annual effective rate will never be less than 3%. (For a
description of the annual effective credited rates, see "The Fixed Account" and
"Policy Loans.") Upon request, Nationwide will inform the policy owner of the
then applicable rates for each account.
TRANSFERS
Policy owners can transfer allocations without penalty or adjustment subject to
the following conditions:
- Nationwide reserves the right to restrict transfers between the fixed
account and the sub-accounts to one per policy year.
- transfers made to the fixed account may not be made in the first
policy year.
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- Nationwide reserves the right to restrict the amount transferred from
the fixed account to 20% of that portion of the cash value
attributable to the fixed account as of the end of the previous policy
year (subject to state restrictions). Policy owners who have entered
into Dollar Cost Averaging agreements with Nationwide may transfer
under the terms of that agreement.
- Nationwide reserves the right to restrict the amount transferred to
the fixed account to 20% of that portion of cash value attributable to
the sub-accounts as of the close of business of the prior valuation
period.
- Nationwide reserves the right to refuse a transfer to the fixed
account if the fixed account value is greater than or equal to 30% of
the total policy value.
Transfer Requests
Nationwide will accept transfer requests in writing or in those states that
allow, over the telephone. Nationwide will use reasonable procedures to confirm
that telephone instructions are genuine and will not be liable for following
instructions it reasonably determined to be genuine. Nationwide may withdraw the
telephone exchange privilege upon 30 days written notice to policy owners.
Market-Timing Firms
Some policy owners may use market-timing firms or other third parties to make
transfers on their behalf. Generally, in order to take advantage of perceived
market trends, market-timing firms will submit transfer requests on behalf of
multiple policy owners at the same time. Sometimes this can result in unusually
large transfers of funds. These large transfers might interfere with the ability
of Nationwide or the underlying mutual fund to process transactions. This can
potentially disadvantage policy owners not using market-timing firms. To avoid
this, Nationwide may modify the transfer rights of policy owners who use
market-timing firms (or other third parties) to initiate transfers on their
behalf.
The transfer rights of individual policy owners will not be modified in any way
when instructions are submitted directly by the policy owner, or by the policy
owner's representative (as authorized by the execution of a valid Nationwide
Limited Power of Attorney Form).
To protect policy owners, Nationwide may refuse transfer requests:
- submitted by any agent acting under a power of attorney on behalf of
more than one policy owner; or
- submitted on behalf of individual policy owners who have executed
pre-authorized exchange forms which are submitted by market-timing
firms (or other third parties) on behalf of more than one policy owner
at the same time.
Nationwide will not restrict transfer rights unless Nationwide believes it to be
necessary for the protection of all policy owners.
RIGHT TO REVOKE
A policy owner may cancel the policy by returning it by the latest of:
- 10 days after receiving the policy;
- 45 days after signing the application; or
- 10 days after Nationwide delivers a Notice of Right of Withdrawal.
The policy can be mailed to the registered representative who sold it, or
directly to Nationwide.
Returned policies are deemed void from the beginning. Nationwide will refund the
amount prescribed by the state in which the policy was issued within seven days
after it receives the policy. (In New York, Nationwide will refund any premiums
paid.) The refunded policy value will reflect the deduction of any policy
charges, unless otherwise required by law. This right varies by state.
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POLICY LOANS
TAKING A POLICY LOAN
The policy owner may take a policy loan at any time using the policy as
security. In states other than New York, maximum policy indebtedness is limited
to cash value attributable to both fixed and policy loan accounts, and 90% of
the cash value of the variable account, less any surrender charges. In New York,
maximum policy indebtedness is limited to 90% of the cash value attributable to
the fixed account, policy loan account, and variable account, less any surrender
charges. Nationwide will not grant a loan for an amount less than $200. Policy
indebtedness will be deducted from the death benefit, cash surrender value upon
surrender, or the maturity proceeds.
Any request for a policy loan must be in written form. The request must be
signed. Certain policy loans may result in currently taxable income and tax
penalties.
A policy owner considering the use of policy loans in connection with his or her
retirement income plan should consult his or her personal tax adviser regarding
potential tax consequences that may arise if necessary payments are not made to
keep the policy from lapsing. The amount of the payments necessary to prevent
the policy from lapsing will increase with age.
EFFECT ON INVESTMENT PERFORMANCE
When a loan is made, an amount equal to the amount of the loan is transferred
from the variable account to the policy loan account. If the assets relating to
a policy are held in more than one sub-account, withdrawals from the
sub-accounts will be made in proportion to the assets in each sub-account at the
time of the loan. Policy loans will be transferred from the fixed account only
when sufficient amounts are not available in the sub-accounts.
The amount taken out of the variable account will not be affected by the
variable account's investment experience while the loan is outstanding.
INTEREST
The annual effective loan interest rate charged on policy loans is 3.9%.
On a current basis, the cash value in the policy loan account is credited with
an annual effective rate of 3% during policy years 1 through 10 and an annual
effective rate of 3.9% during the 11th and subsequent policy years. Nationwide
may change the current interest crediting rate on the policy loans at any time
at its sole discretion. However, the crediting rate is guaranteed never to be
lower than 3% during policy years 1 through 10 and 3.65% during the 11th and
subsequent policy years.
If it is determined that such loans will be treated, as a result of the
differential between the interest crediting rate and the loan interest rate, as
taxable distributions under any applicable ruling, regulation, or court
decision, Nationwide retains the right to increase the net cost (by decreasing
the interest crediting rate) on all subsequent policy loans to an amount that
would result in the transaction being treated as a loan under federal tax law.
If this amount is not prescribed by such ruling, regulation, or court decision,
the amount will be that which Nationwide considers to be more likely to result
in the transaction being treated as a loan under federal tax law.
Amounts transferred to the policy loan account will earn interest daily from the
date of transfer. The earned interest is transferred from the policy loan
account to the variable account or the fixed account on each policy anniversary,
at the time a new loan is requested, or at the time of loan repayment. It will
be allocated according to the fund allocation factors in effect at the time of
the transfer.
Interest is charged daily and is payable at the end of each policy year or at
the time of loan repayment. Unpaid interest will be added to the existing policy
indebtedness as of the due date and will be charged interest at the same rate as
the rest of the indebtedness.
Whenever the total policy indebtedness exceeds the cash value less any surrender
charges, and if the guaranteed policy continuation provision is not in effect,
Nationwide will send a notice to the policy owner and the assignee, if any. The
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<PAGE> 24
policy will terminate without value 61 days after the mailing of the notice
unless a sufficient repayment is made during that period. A repayment is
sufficient if it is large enough to reduce the total policy indebtedness to an
amount equal to the total cash value less any surrender charges plus an amount
sufficient to continue the policy in force for 3 months. Alternatively, if the
policy is in the guaranteed policy continuation period, a payment which will
bring the guaranteed policy continuation provision into effect will be
considered sufficient if such an amount is less than the premium required to
bring the cash surrender value to zero and cover 3 months of deductions.
EFFECT ON DEATH BENEFIT AND CASH VALUE
A policy loan, whether or not repaid, will have a permanent effect on the death
benefit and cash value because the investment results of the variable account or
the fixed account will apply only to the non-loaned portion of the cash value.
The longer the loan is outstanding, the greater the effect is likely to be.
Depending on the investment results of the variable account or the fixed account
while the loan is outstanding, the effect could be favorable or unfavorable.
REPAYMENT
All or part of the indebtedness may be repaid at any time while the policy is in
force during the insured's lifetime. Any payment intended as a premium payment,
rather than a loan repayment, must be identified as such. Loan repayments will
be credited to the sub-accounts and the fixed account in proportion to the
policy owner's underlying mutual fund allocation factors in effect at the time
of the repayment. Each repayment may not be less than $50. Nationwide reserves
the right to require that any loan repayments resulting from policy loans
transferred from the fixed account must be first allocated to the fixed account.
ASSIGNMENT
While the insured is living, the policy owner may assign his or her rights in
the policy. The assignment must be in writing, signed by the policy owner and
received at Nationwide's home office. Prior to being received, assignments will
not affect any payments made or actions taken by Nationwide. Nationwide is not
responsible for any assignment not submitted, nor is Nationwide responsible for
the sufficiency of any assignment. Assignments are subject to any indebtedness
owed to Nationwide before being received.
POLICY OWNER SERVICES
DOLLAR COST AVERAGING
Dollar Cost Averaging is a long-term transfer program that allows you to make
regular, level investments over time. It involves the automatic transfer of a
specified amount from the fixed account and/or certain sub-accounts into other
sub-accounts. This program is not available in the State of New York. Nationwide
does not guarantee that this program will result in profit or protect policy
owners from loss.
Policy owners direct Nationwide to automatically transfer specified amounts from
the fixed account, and the Money Market portfolio.
Transfers occur monthly or on another frequency if permitted by Nationwide.
Nationwide will process transfers until either the value in the originating
investment option is exhausted, or the policy owner instructs Nationwide in
writing to stop the transfers.
Transfers from the fixed account must be equal to or less than 1/30th of the
fixed account value at the time the program is requested.
Nationwide reserves the right to stop establishing new Dollar Cost Averaging
programs. Nationwide reserves the right to assess a processing fee for this
service.
DEATH BENEFIT INFORMATION
CALCULATION OF THE DEATH BENEFIT
At issue, the policy owner irrevocably elects either of the following tests
qualifying the policy as life insurance under Section 7702 of the Internal
Revenue Code: (1) the guideline premium/cash value corridor test; or (2) the
cash value accumulation test. The cash value
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accumulation test is not available on policies issued for delivery in the State
of New York.
While the policy is in force, the death benefit will never be less than the
specified amount. The death benefit may vary with the cash value of the policy,
which depends on investment performance.
In states other than New York, the policy owner may choose one of three death
benefit options. In New York, only death benefit Options 1 and 2 are available.
OPTION 1: the death benefit will be the greater of the specified amount or
minimum required death benefit. Under OPTION 1, the amount of the death benefit
will ordinarily not change for several years to reflect the investment
performance and may not change at all. If investment performance is favorable,
the amount of death benefit may increase. To see how and when investment
performance will begin to affect death benefits, see the illustrations in
Appendix C.
OPTION 2: the death benefit will be the greater of the specified amount plus the
cash value as of the date of death, or minimum required death benefit and will
vary directly with the investment performance.
OPTION 3: the death benefit is the greater of the minimum required death benefit
or the sum of the specified amount on the date of death and accumulated premium
account which consists of all premium payments accumulated to date of death less
partial surrenders accumulated to date of death. The accumulations will be
calculated based on the OPTION 3 interest rate shown on the policy data page. In
no event will the accumulated premium account be less than zero or greater than
the maximum accumulated premium account shown on the policy data page.
For any death benefit option, the calculation of the minimum required death
benefit is shown on the policy data page. The minimum required death benefit is
the lowest death benefit which will qualify the policy as life insurance under
Section 7702 of the Internal Revenue Code. A change in death benefit option will
not be permitted if it results in the total premiums paid exceeding the then
current maximum premium limitations under Section 7702 of the Internal Revenue
Code where the policy owner has selected guideline premium/cash value corridor
test.
CHANGES IN THE DEATH BENEFIT OPTION
After the first policy year, the policy owner may elect to change the death
benefit option under the policy from either Option 1 to Option 2, or from Option
2 to Option 1. Only one change of death benefit option is permitted per policy
year. The effective date of a change will be the monthly anniversary day
following the date the change is approved by Nationwide.
In order for any change in the death benefit option to become effective, the
cash surrender value, after a change, must be sufficient to keep the policy in
force for at least three months.
Nationwide will adjust the specified amount so that the net amount at risk
remains constant before and after the death benefit option change. A change in
death benefit option will not be permitted if it results in the total premiums
paid exceeding the then current maximum premium limitations under Section 7702
of the Internal Revenue Code where the policy owner has selected guideline
premium/cash value corridor test.
PROCEEDS PAYABLE ON DEATH
The actual death proceeds payable on the insured's death will be the death
benefit as described above, less any policy indebtedness, and less any unpaid
policy charges. Under certain circumstances, the death proceeds may be adjusted
(see "Incontestability," "Error in Age or Sex," and "Suicide").
INCONTESTABILITY
Nationwide will not contest payment of the death proceeds based on the initial
specified amount after the policy has been in force during the insured's
lifetime for 2 years from the policy date. For any increase in specified amount
requiring evidence of insurability, Nationwide will not contest payment of the
death proceeds based on such an increase after it has been in force during the
insured's lifetime for 2 years from its effective date.
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ERROR IN AGE OR SEX
If the age or sex of the insured has been misstated, the death benefit and cash
value will be adjusted. The cash value will be adjusted to reflect the cost of
insurance charges on the correct age and sex from the policy date.
SUICIDE
If the insured dies by suicide, while sane or insane, within two years from the
policy date, Nationwide will pay no more than the sum of the premiums paid, less
any indebtedness and less any partial surrenders. If the insured dies by
suicide, while sane or insane, within two years from the date an application is
accepted for an increase in the specified amount, Nationwide will pay no more
than the amount paid for the additional benefit.
MATURITY PROCEEDS
The maturity date is the policy anniversary on or next following the insured's
100th birthday. If the policy is still in force, maturity proceeds are payable
to the policy owner on the maturity date. Maturity proceeds are equal to the
amount of the policy's cash value, less any indebtedness.
EXCHANGE RIGHTS
The policy owner may exchange the policy for a flexible premium adjustable life
insurance policy offered by Nationwide on the policy date. The benefits for the
new policy will not vary with the investment experience of a separate account.
The exchange must be elected within 24 months from the policy date. No evidence
of insurability will be required.
The policy owner and beneficiary under the new policy will be the same as those
under the exchanged policy on the effective date of the exchange. The new policy
will have a death benefit on the exchange date not more than the death benefit
of the original policy immediately prior to the exchange date. The new policy
will have the same policy date and issue age as the original policy. The initial
specified amount and any increases in specified amount will have the same rate
class as those of the original policy. Any indebtedness may be transferred to
the new policy.
The exchange may be subject to an equitable adjustment in rates and values to
reflect variances, if any, in the rates and values between the two policies.
After adjustment, if any excess is owed the policy owner, Nationwide will pay
the excess to the policy owner in cash. The exchange may be subject to federal
income tax withholding (see "Income Tax Withholding").
GRACE PERIOD AND GUARANTEED POLICY CONTINUATION PERIOD
GRACE PERIOD
If the cash surrender value on a monthly anniversary day is not sufficient to
cover the current monthly deduction, and the guaranteed policy continuation
provision is not in effect, a grace period will be allowed for the payment of a
premium of the lesser of at least three times the current monthly deduction and
the premium required to bring the guaranteed policy continuation provision back
into effect. Nationwide will send the policy owner a notice at the start of the
grace period, at the address in the application or another address specified by
the policy owner, stating the amount of premium required. The grace period will
end 61 days after the day the notice is mailed. If sufficient premium is not
received by Nationwide by the end of the grace period, the policy will lapse
without value. If death proceeds become payable during the grace period,
Nationwide will pay the death proceeds.
GUARANTEED POLICY CONTINUATION PERIOD
This policy will not lapse during the guaranteed policy continuation period
provided that on each monthly anniversary day (1) is greater than or equal to
(2) where:
(1) is the sum of all premiums paid to date minus any indebtedness, and
minus any partial surrenders; and
(2) is the sum of minimum monthly premiums required since the policy date
including the minimum monthly premium for the current monthly
anniversary day.
The guaranteed policy continuation period is the lesser of 30 policy years or
the number of policy
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years until the insured reaches attained age 65. For policies issued to ages
greater than 55, the guaranteed policy continuation period is 10 policy years.
This provision is subject to state insurance restrictions. In New York, the
guaranteed policy continuation period is the lesser of 30 policy years or the
number of policy years until the insured reaches attained age 65. For policies
issued to ages greater than 62, the guaranteed policy continuation period is 3
policy years. In Texas, the guaranteed policy continuation period is 9 policy
years for all issue ages. In Massachusetts, the guaranteed policy continuation
period is 5 policy years for all issue ages.
REINSTATEMENT
If the grace period ends and the policy owner has neither paid the required
premium nor surrendered the policy for its cash surrender value, the policy
owner may reinstate the policy by:
(1) submitting a written request at any time within 3 years after the end
of the grace period and prior to the maturity date;
(2) providing evidence of insurability satisfactory to Nationwide;
(3) paying sufficient premium to cover all policy charges that were due
and unpaid during the grace period;
(4) paying sufficient premium to keep the policy in force for 3 months
from the date of reinstatement, or, if the policy is in the guaranteed
policy continuation period, paying the lesser of (a) and (b) where:
(a) is premium sufficient to keep the policy in force for 3 months
from the date of reinstatement; and
(b) is premium sufficient to bring the guaranteed policy continuation
provision into effect; and
(5) paying or reinstating any indebtedness against the policy which
existed at the end of the grace period.
The effective date of a reinstated policy will be the monthly anniversary day on
or next following the date the application for reinstatement is approved by
Nationwide. If the policy is reinstated, the cash value on the date of
reinstatement, but prior to applying any premiums or loan repayments received,
will be set equal to the lesser of:
(1) the cash value at the end of the grace period; or
(2) the surrender charge for the policy year in which the policy was
reinstated.
Amounts allocated to underlying mutual funds at the start of the grace period
will be reinstated, unless the policy owner provides otherwise.
TAX MATTERS
POLICY PROCEEDS
Section 7702 of the Internal Revenue Code provides that if certain tests are
met, a policy will be treated as a life insurance policy for federal tax
purposes. Nationwide will monitor compliance with these tests. The policy should
thus receive the same federal income tax treatment as fixed benefit life
insurance. As a result, the death proceeds payable under a policy are excludable
from gross income of the beneficiary under Section 101 of the Internal Revenue
Code.
Section 7702A of the Internal Revenue Code defines modified endowment contracts
as those policies issued or materially changed on or after June 21, 1988 on
which the total premiums paid during the first seven years exceed the amount
that would have been paid if the policy provided for paid up benefits after
seven level annual premiums (see "Information about the Policies"). The Internal
Revenue Code states that taxation of surrenders, partial surrenders, loans,
collateral assignments and other pre-death distributions from modified endowment
contracts (other than certain distributions to terminally ill individuals) are
subject to federal income taxes in a manner similar to the way annuities are
taxed. Modified endowment contract distributions are defined by the Internal
Revenue Code as amounts not received as an annuity and are taxable to the extent
the cash value of the policy exceeds, at the time of distribution, the premiums
paid into the policy.
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A 10% tax penalty generally applies to the taxable portion of such distributions
unless the policy owner is over age 59 1/2, disabled, or the distribution is
part of an annuity to the policy owner as defined in the Internal Revenue Code.
Under certain circumstances, certain distributions made under a policy on the
life of a "terminally ill individual", as that term is defined in the Internal
Revenue Code, are excludable from gross income.
The policies offered by this prospectus may or may not be issued as modified
endowment contracts. Nationwide will monitor premiums paid and will notify the
policy owner when the policy's non-modified endowment status is in jeopardy. If
a policy is not a modified endowment contract, a cash distribution during the
first 15 years after a policy is issued which causes a reduction in death
benefits may still become fully or partially taxable to the policy owner
pursuant to Section 7702(f)(7) of the Internal Revenue Code. The policy owner
should carefully consider this potential effect and seek further information
before initiating any changes in the terms of the policy. Under certain
conditions, a policy may become a modified endowment as a result of a material
change or a reduction in benefits as defined by Section 7702A(c) of the Internal
Revenue Code.
In addition to meeting the tests required under Section 7702, Section 817(h) of
the Internal Revenue Code requires that the investments of separate accounts
such as the variable account be adequately diversified. Regulations under 817(h)
provide that a variable life policy that fails to satisfy the diversification
standards will not be treated as life insurance unless such failure was
inadvertent, is corrected, and the policy owner or Nationwide pays an amount to
the IRS. The amount will be based on the tax that would have been paid by the
policy owner if the income, for the period the policy was not diversified, had
been received by the policy owner.
If the failure to diversify is not corrected in this manner, the policy owner
will be deemed the owner of the underlying securities and taxed on the earnings
of his or her account.
Representatives of the IRS have suggested, from time to time, that the number of
underlying mutual funds available or the number of transfer opportunities
available under a variable product may be relevant in determining whether the
product qualifies for the desired tax treatment. No formal guidance has been
issued in this area. Should the U.S. Secretary of the Treasury issue additional
rules or regulations limiting the number of underlying mutual funds, transfers
between underlying mutual funds, exchanges of underlying mutual funds or changes
in investment objectives of underlying mutual funds such that the policy would
no longer qualify as life insurance under Section 7702 of the Internal Revenue
Code, Nationwide will take whatever steps are available to remain in compliance.
Nationwide will monitor compliance with these regulations and, to the extent
necessary, will change the objectives or assets of the sub-account investments
to remain in compliance.
A total surrender or cancellation of the policy by lapse or the maturity of the
policy on its maturity date may have adverse tax consequences. If the amount
received by the policy owner plus total policy indebtedness exceeds the premiums
paid into the policy, the excess generally will be treated as taxable income,
regardless of whether or not the policy is a modified endowment contract.
WITHHOLDING
Distributions of income from a modified endowment contract are subject to
federal income tax withholding; however, the recipient may elect not to have the
withholding taken from the distribution. A distribution of income from a
modified endowment contract may be subject to mandatory back-up withholding
(which cannot be waived). The mandatory back-up withholding rate is 31% of the
income that is distributed and will arise of no taxpayer identification number
is provided to Nationwide, or if the IRS notifies Nationwide that back-up
withholding is required.
FEDERAL ESTATE AND GENERATION-SKIPPING TRANSFER TAXES
The federal estate tax is integrated with the
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federal gift tax under a unified tax rate schedule. In general, in 2000, an
estate of less than $625,000 (inclusive of certain pre-death gifts) will not
incur a federal estate tax liability. In addition, an unlimited marital
deduction may be available for federal estate tax purposes, for certain amounts
that pass to the surviving spouse.
When the insured dies, the death benefit will generally be included in the
insured's federal gross estate if: (1) the proceeds were payable to or for the
benefit of the insured's estate; or (2) the insured held any "incident of
ownership" in the policy at death or at any time within three years of death. An
incident of ownership is, in general, any right that may be exercised by the
policy owner, such as the right to borrow on the policy, or the right to name a
new beneficiary.
If the policy owner (whether or not he or she is the insured) transfers
ownership of the policy to another person, such transfer may be subject to a
federal gift tax. In addition, if such policy owner transfers the policy to
someone two or more generations younger than the policy owner, the transfer may
be subject to the federal generation-skipping transfer tax ("GSTT"), the taxable
amount being the value of the policy.
Similarly, if the beneficiary is two or more generations younger than the
insured, the payment of the death proceeds at the death of the insured may be
subject to the GSTT. Pursuant to regulations recently promulgated by the U.S.
Secretary of the Treasury, Nationwide may be required to withhold a portion of
the death proceeds and pay them directly to the IRS as the GSTT liability.
The GSTT provisions generally apply to the same transfers that are subject to
estate or gift taxes.
The tax rate is a flat rate equal to the maximum estate tax rate (currently
55%), and there is a provision for an aggregate $1 million exemption. Due to the
complexity of these rules, the policy owner should consult with counsel and
other competent advisors regarding these taxes.
NON-RESIDENT ALIENS
Pre-death distributions from modified endowment contracts to nonresident aliens
("NRAs") are generally subject to federal income tax and tax withholding, at a
statutory rate of 30% of the amount of income that is distributed. Nationwide is
required to withhold such amount from the distribution and remit it to the IRS.
Distributions to certain NRAs may be subject to lower, or in certain instances
zero, tax and withholding rates, if the United States has entered into an
applicable treaty. However, in order to obtain the benefits of such treaty
provisions, the NRA must give to Nationwide sufficient proof of his or her
residency and citizenship in the form and manner prescribed by the IRS. In
addition, the NRA must obtain an individual taxpayer identification number from
the IRS, and furnish that number to Nationwide prior to the distribution. If
Nationwide does not have the proper proof of citizenship or residency and a
proper individual taxpayer identification number prior to any distribution,
Nationwide will be required to withhold 30% of the income, regardless of any
treaty provision.
A pre-death distribution may not be subject to withholding where the recipient
sufficiently establishes to Nationwide that such payment is effectively
connected to the recipient's conduct of a trade or business in the United States
and that such payment is includible in the recipient's gross income for United
States federal income tax purposes. Any such distributions may be subject to
back-up withholding at the statutory rate (currently 31%) if no taxpayer
identification number, or an incorrect taxpayer identification number, is
provided.
State and local estate, inheritance, income and other tax consequences of
ownership or receipt of policy proceeds depend on the circumstances of each
policy owner or beneficiary.
TAXATION OF NATIONWIDE
Nationwide is taxed as a life insurance company under the Internal Revenue Code.
Since the variable account is not a separate entity from Nationwide and its
operations form a part of Nationwide, it will not be taxed separately as a
"regulated investment company" under Sub-chapter M of the Internal Revenue Code.
Investment income and realized capital gains on the assets of the variable
account are reinvested
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and taken into account in determining the value of accumulation units. As a
result, such investment income and realized capital gains are automatically
applied to increase reserves under the policies.
Nationwide does not initially expect to incur any federal income tax liability
that would be chargeable to the variable account. Based upon these expectations,
no charge is currently being made against the variable account for federal
income taxes. If, however, Nationwide determines that on a separate company
basis such taxes may be incurred, it reserves the right to assess a charge for
such taxes against the variable account.
Nationwide may also incur state and local taxes (in addition to premium taxes)
in several states. At present, these taxes are not significant. If they
increase, however, charges for such taxes may be made.
TAX CHANGES
The foregoing discussion, which is based on Nationwide's understanding of
federal tax laws as they are currently interpreted by the IRS, is general and is
not intended as tax advice.
The Internal Revenue Code has been subjected to numerous amendments and changes,
and it is reasonable to believe that it will continue to be revised. The United
States Congress has, in the past, considered numerous legislative proposals
that, if enacted, could change the tax treatment of the policies. It is
reasonable to believe that such proposals, and future proposals, may be enacted
into law. In addition, the U.S. Treasury Department may amend existing
regulations, issue new regulations, or adopt new interpretations of existing law
that may be at variance with its current positions on these matters. In
addition, current state law (which is not discussed herein), and future
amendments to state law, may affect the tax consequences of the policy.
If the policy owner, insured, or beneficiary or other person receiving any
benefit or interest in or from the policy is not both a resident and citizen of
the United States, there may be a tax imposed by a foreign country, in addition
to any tax imposed by the United States. The foreign law (including regulations,
rulings, and case law) may change and impose additional taxes on the policy, the
death proceeds, or other distributions and/or ownership of the policy, or a
treaty may be amended and all or part of the favorable treatment may be
eliminated.
Any or all of the foregoing may change from time to time without any notice, and
the tax consequences arising out of a policy may be changed retroactively. There
is no way of predicting if, when, or to what extent any such change may take
place. No representation is made as to the likelihood of the continuation of
these current laws, interpretations, and policies.
The foregoing is a general explanation as to certain tax matters pertaining to
insurance policies. It is not intended to be legal or tax advice, and should not
take the place of your independent legal, tax and/or financial advisor.
LEGAL CONSIDERATIONS
On July 6, 1983, the U.S. Supreme Court held in Arizona Governing Committee v.
Norris that certain annuity benefits provided by employers' retirement and
fringe benefit programs may not vary between men and women on the basis of sex.
This decision applies only to benefits derived from premiums made on or after
August 1, 1983. The policies offered by this prospectus are based upon actuarial
tables which distinguish between men and women. Thus the policies provide
different benefits to men and women of the same age. Accordingly, employers and
employee organizations should consider, in consultation with legal counsel, the
impact of Norris on any employment related insurance or benefit program before
purchasing this policy.
STATE REGULATION
Nationwide is subject to the laws of Ohio governing insurance companies and to
regulation by the Ohio Insurance Department. An annual statement in a prescribed
form is filed with the Insurance Department each year covering the operation of
Nationwide for the preceding year and its financial condition as of the end of
such year. Regulation by the Insurance Department includes periodic
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examination to determine Nationwide's contract liabilities and reserves so that
the Insurance Department may certify the items are correct. Nationwide's books
and accounts are subject to review by the Insurance Department at all times and
a full examination of its operations is conducted periodically by the National
Association of Insurance Commissioners. Such regulation does not, however,
involve any supervision of management or investment practices or policies. In
addition, Nationwide is subject to regulation under the insurance laws of other
jurisdictions in which it may operate.
REPORTS TO POLICY OWNERS
Nationwide will mail to the policy owner at the last known address of record:
- an annual statement containing: the amount of the current death
benefit, cash value, cash surrender value, premiums paid, monthly
charges deducted, amounts invested in the fixed account and the
sub-accounts, and policy indebtedness;
- annual and semi-annual reports containing all applicable information
and financial statements or their equivalent, which must be sent to
the underlying mutual fund beneficial shareholders as required by the
rules under the Investment Company Act of 1940 for the variable
account; and
- statements of significant transactions, such as changes in specified
amount, changes in death benefit options, changes in future premium
allocations, transfers among sub-accounts, premium payments, loans,
loan repayments, reinstatement and termination.
ADVERTISING
Nationwide is ranked and rated by independent financial rating services,
including Moody's, Standard & Poor's and A.M. Best Company. The purpose of these
ratings is to reflect the financial strength or claims-paying ability of
Nationwide. The ratings are not intended to reflect the investment experience or
financial strength of the variable account. Nationwide may advertise these
ratings from time to time. In addition, Nationwide may include in certain
advertisements, endorsements in the form of a list of organizations, individuals
or other parties which recommend Nationwide or the policies. Furthermore,
Nationwide may occasionally include in advertisements comparisons of currently
taxable and tax deferred investment programs, based on selected tax brackets, or
discussions of alternative investment vehicles and general economic conditions.
LEGAL PROCEEDINGS
Nationwide is a party to litigation and arbitration proceedings in the ordinary
course of its business, none of which is expected to have a material adverse
effect on Nationwide.
In recent years, life insurance companies have been named as defendants in
lawsuits, including class action lawsuits, relating to life insurance and
annuity pricing and sales practices. A number of these lawsuits have resulted in
substantial jury awards or settlements.
In November 1997, two plaintiffs, one who was the owner of a variable life
insurance contract and the other who was the owner of a variable annuity
contract, commenced a lawsuit in a federal court in Texas against Nationwide
Life Insurance Company and the American Century group of defendants (Robert
Young and David D. Distad v. Nationwide Life Insurance Company et al.). In this
lawsuit, plaintiffs sought to represent a class of variable life insurance
contract owners and variable annuity contract owners whom they claim were
allegedly misled when purchasing these variable contracts into believing that
the performance of their underlying mutual fund option managed by American
Century, whose shares may only be purchased by insurance companies, would track
the performance of a mutual fund, also managed by American Century, whose shares
are publicly traded. The amended complaint seeks unspecified compensatory and
punitive damages. On April 27, 1998, the District Court denied, in part, and
granted, in part, motions to dismiss the complaint filed by Nationwide and
American Century. The remaining claims against Nationwide allege securities
fraud, common law fraud, civil conspiracy, and breach
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of contract. The District Court, on December 2, 1998, issued an order denying
plaintiffs' motion for class certification and the appeals court declined to
review the order denying class certification upon interlocutory appeal. On June
11, 1999, the District Court denied the plaintiffs' motion to amend their
complaint and reconsider class certification. In January 2000, Nationwide and
American Century settled this lawsuit now limited to the claims of the two named
plaintiffs. On February 9, 2000, the court dismissed this lawsuit with
prejudice.
On October 29, 1998, Nationwide was named in a lawsuit filed in Ohio state court
related to the sale of deferred annuity products for use as investments in
tax-deferred contributory retirement plans (Mercedes Castillo v. Nationwide
Financial Services, Inc., Nationwide Life Insurance Company and Nationwide Life
and Annuity Insurance Company). On May 3, 1999, the complaint was amended to,
among other things, add Marcus Shore as a second plaintiff. The amended
complaint is brought as a class action on behalf of all persons who purchased
individual deferred annuity contracts or participated in group annuity contracts
sold by Nationwide and the other named Nationwide affiliates which were used to
fund certain tax-deferred retirement plans. The amended complaint seeks
unspecified compensatory and punitive damages. No class has been certified. On
June 11, 1999, Nationwide and the other named defendants filed a motion to
dismiss the amended complaint. On March 8, 2000, the court denied the motion to
dismiss the amended complaint filed by Nationwide and other named defendants.
Nationwide intends to defend this lawsuit vigorously.
There can be no assurance that any litigation relating to pricing or sales
practices will not have a material adverse effect on Nationwide in the future.
The general distributor, Waddell & Reed, Inc., is not engaged in any litigation
of any material nature.
REGISTRATION STATEMENT
A registration statement has been filed with the SEC under the Securities Act of
1933, as amended, with respect to the policies offered hereby. This prospectus
does not contain all the information set forth in the Registration Statement and
amendments thereto and exhibits filed as a part thereof, to all of which
reference is hereby made for further information concerning the variable
account, Nationwide, and the policies offered hereby. Statements contained in
this prospectus as to the content of policies and other legal instruments are
summaries. For a complete statement of the terms thereof, reference is made to
such instruments as filed.
DISTRIBUTION OF THE POLICIES
The policies will be sold by licensed insurance agents in those states where the
policies may lawfully be sold. Agents are registered representatives of broker
dealers registered under the Securities Exchange Act of 1934 who are member
firms of the National Association of Securities Dealers, Inc. ("NASD"). The
policies will be distributed by the general distributor, Waddell & Reed, Inc.
Waddell & Reed, Inc. was organized as a Delaware corporation in 1981.
Waddell & Reed, Inc. acts as general distributor for the following investment
companies:
WADDELL & REED ADVISORS FUNDS
WADDELL & REED ADVISORS FUNDS, INC.*
- Waddell & Reed Advisors Accumulative Fund
- Waddell & Reed Advisors Bond Fund
- Waddell & Reed Advisors Income Fund
- Waddell & Reed Advisors Science and Technology Fund
- Waddell & Reed Advisors Asset Strategy Fund, Inc.
- Waddell & Reed Advisors Cash Management, Inc.
- Waddell & Reed Advisors Continental Income Fund, Inc.
- Waddell & Reed Advisors Government Securities Fund, Inc.
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- Waddell & Reed Advisors High Income Fund, Inc.
- Waddell & Reed Advisors High Income Fund II, Inc.
- Waddell & Reed Advisors International Growth Fund, Inc.
- Waddell & Reed Advisors Municipal Bond Fund, Inc.
- Waddell & Reed Advisors Municipal High Income Fund, Inc.
- Waddell & Reed Advisors New Concepts Fund, Inc.
- Waddell & Reed Advisors Retirement Shares, Inc.
- Waddell & Reed Advisors Small Cap Fund, Inc.
- Waddell & Reed Advisors Tax-Managed Equity Fund, Inc.
- Waddell & Reed Advisors Vanguard Fund, Inc.
W&R FUNDS, INC.*
- Asset Strategy Fund
- International Growth Fund
- Large Cap Growth Fund
- Mid Cap Growth Fund
- Science and Technology Fund
- Small Cap Growth Fund
- Tax-Managed Equity Fund
- Total Return Fund
TARGET/UNITED FUNDS, INC.* (TO BE RENAMED W&R/TARGET FUNDS, INC.)
- Asset Strategy Portfolio
- Balanced Portfolio
- Bond Portfolio
- Growth Portfolio
- High Income Portfolio
- Income Portfolio
- International Growth Portfolio
- Large Cap Growth Portfolio
- Mid Cap Growth Portfolio
- Science and Technology Portfolio
- Small Cap Growth Portfolio
- Tax-Managed Equity Portfolio
- Total Return Portfolio
* Indicates series fund.
Gross first year commissions paid by Nationwide on the sale of these policies
plus fees for marketing services are not more than 6.75% of the premiums paid.
No underwriting commissions have been paid by Nationwide to NISC.
<TABLE>
<CAPTION>
WADDELL &REED, INC. DIRECTORS AND OFFICERS
------------------------------------------------------------------------------------------------------------------
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
------------------------------------------------------------------------------------------------------------------
<S> <C>
Keith A. Tucker Director, Chairman of the Board
6300 Lamar Ave.
Overland Park, KS 66202
------------------------------------------------------------------------------------------------------------------
Robert L. Hechler Director, President, Chief Executive Officer,
6300 Lamar Ave. Principal Financial Officer and Treasurer
Overland Park, KS 66202
------------------------------------------------------------------------------------------------------------------
Henry J. Hermann Director
6300 Lamar Ave.
Overland Park, KS 66202
------------------------------------------------------------------------------------------------------------------
Robert J. Williams Executive Vice President and
6300 Lamar Ave. National Sales Manager
Overland Park, KS 66202
------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 34
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
------------------------------------------------------------------------------------------------------------------
<S> <C>
Thomas W. Butch Executive Vice President and
6300 Lamar Ave. Chief Marketing Officer
Overland Park, KS 66202
------------------------------------------------------------------------------------------------------------------
Daniel C. Schulte Senior Vice President, Secretary and
6300 Lamar Ave. Chief Legal Officer
Overland Park, KS 66202
------------------------------------------------------------------------------------------------------------------
</TABLE>
KEITH A. TUCKER - Chairman of the Board of Directors of the registered
investment companies for which Waddell & Reed, Inc. serves as principal
underwriter; Chairman of the Board of Directors, Chief Executive Officer and
Director of Waddell & Reed Financial, Inc.; President, Chairman of the Board of
Directors and Chief Executive Officer of Waddell & Reed Financial Services,
Inc.; Chairman of the Board of Directors of Waddell & Reed Investment Management
Company, Waddell & Reed, Inc. and Waddell & Reed Services Company; formerly,
President of each of the registered investment companies for which Waddell &
Reed, Inc. serves as principal underwriter; formerly, Chairman of the Board of
Directors of Waddell & Reed Asset Management Company, a former affiliate of
Waddell & Reed Financial, Inc. Date of birth: February 11, 1945.
ROBERT L HECHLER - President and Principal Financial Officer of the registered
investment companies for which Waddell & Reed, Inc. serves as principal
underwriter; Executive Vice President, Chief Operating Officer and Director of
Waddell & Reed Financial, Inc.; Vice President, Chief Operating Officer,
Director and Treasurer of Waddell & Reed Financial Services, Inc.; Executive
Vice President, Principal Financial Officer, Director and Treasurer of WRIMCO;
President, Chief Executive Officer, Principal Financial Officer, Director and
Treasurer of Waddell & Reed, Inc.; Director and Treasurer of Waddell & Reed
Services Company; Chairman, Chief Executive Officer, President and Director of
Fiduciary Trust Company of New Hampshire, an affiliate of Waddell & Reed, Inc.;
Director of Legend Group Holdings, LLC, Legend Advisory Corporation, Legend
Equities Corporation, Advisory Services Corporation, The Legend Group, Inc. and
LEC Insurance Agency, Inc., affiliates of Waddell & Reed Financial, Inc.;
formerly, Vice President of each of the funds in the Fund Complex; formerly,
Director and Treasurer of Waddell & Reed Asset Management Company; formerly,
President of Waddell & Reed Services Company. Date of birth: November 12, 1936.
HENRY J. HERRMANN - Vice President of the registered investment companies for
which Waddell & Reed, Inc. serves as principal underwriter; President, Chief
Investment Officer, and Director of Waddell & Reed Financial, Inc.; Vice
President, Chief Investment Officer and Director of Waddell & Reed Financial
Services, Inc.; Director of Waddell & Reed, Inc.; President, Chief Executive
Officer, Chief Investment Officer and Director of Waddell & Reed Investment
Management Company (WRIMCO); Chairman of the Board of Directors of Austin,
Calvert & Flavin, Inc., an affiliate of WRIMCO; formerly, President, Chief
Executive Officer, Chief Investment Officer and Director of Waddell & Reed Asset
Management Company. Date of birth: December 8, 1942.
ROBERT J. WILLIAMS - Senior Vice President of Waddell & Reed Financial, Inc.;
Vice President and National Sales Manager of Waddell & Reed Financial Services,
Inc.; Executive Vice President and National Sales Manager of Waddell & Reed,
Inc.; President and Director of W & R Insurance Agency, Inc. (and eight other
state-specific insurance agencies). Date of birth: March 21, 1944.
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<PAGE> 35
THOMAS W. BUTCH - Senior Vice President and Chief Marketing Officer of Waddell &
Reed Financial, Inc.; Executive Vice President and Chief Marketing Officer of
Waddell & Reed, Inc. Date of birth: December 16, 1956.
DANIEL C. SCHULTE - Vice President, Assistant Secretary and General Counsel of
the registered investment companies for which Waddell & Reed, Inc. serves as
principal underwriter; Vice President, Secretary and General Counsel of Waddell
& Reed Financial, Inc.; Senior Vice President, Secretary and Director of Waddell
& Reed Financial Services, Inc. and Waddell & Reed Services Company; Senior Vice
President, Secretary and General Counsel of Waddell & Reed, Inc. and Waddell &
Reed Investment Management Company; Vice President, Secretary and Director of W
& R Insurance Agency, Inc. (and eight other state-specific insurance agencies);
Assistant Secretary and General Counsel of Austin, Calvert & Flavin, Inc. Date
of birth: December 8, 1965.
ADDITIONAL INFORMATION ABOUT NATIONWIDE
The life insurance business, including annuities, is the only business in which
Nationwide is engaged.
Nationwide markets its policies through independent insurance brokers, general
agents, and registered representatives of registered NASD broker/dealer firms.
Nationwide serves as depositor for the following separate investment accounts,
each of which is a registered investment company:
- Nationwide Variable Account;
- Nationwide Variable Account-II;
- Nationwide Variable Account-3;
- Nationwide Variable Account-4;
- Nationwide Variable Account-5;
- Nationwide Variable Account-6;
- Nationwide Fidelity Advisor Variable Account;
- Nationwide Variable Account-8;
- Nationwide Variable Account-9;
- Nationwide Variable Account-10;
- Nationwide Variable Account-11;
- MFS Variable Account;
- Nationwide Multi-Flex Variable Account;
- Nationwide VLI Separate Account;
- Nationwide VLI Separate Account-2;
- Nationwide VLI Separate Account-3;
- Nationwide VLI Separate Account-4;
- Nationwide VLI Separate Account-5;
- NACo Variable Account;
- Nationwide DC Variable Account; and the
- Nationwide DCVA-II.
Nationwide, in common with other insurance companies, is subject to regulation
and supervision by the regulatory authorities of the states in which it is
licensed to do business. A license from the state insurance department is a
prerequisite to the transaction of insurance business in that state. In general,
all states have statutory administrative powers. Such regulation relates, among
other things, to licensing of insurers and their agents, the approval of policy
forms, the methods of computing reserves, the form and content of statutory
financial statements, the amount of policyholders' and stockholders' dividends,
and the type of distribution of investments permitted.
Nationwide operates in the highly competitive field of life insurance. There are
approximately 2,300 stock, mutual and other types of insurers in the life
insurance business in the United States, and a large number of them compete with
the registrant in the sale of insurance policies.
As is customary in insurance company groups, employees are shared with the other
insurance companies in the group. In addition to its direct salaried employees,
Nationwide shares employees with Nationwide Mutual Insurance Company and
Nationwide Mutual Fire Insurance Company.
Nationwide does not presently own or lease any materially important physical
properties when its property holdings are viewed in relation to its total
assets. Nationwide shares its home office, other facilities and equipment with
Nationwide Mutual Insurance Company.
Company Management
Nationwide and Nationwide Life and Annuity Insurance Company, together with
Nationwide
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<PAGE> 36
Mutual Insurance Company, Nationwide Mutual Fire Insurance Company, Nationwide
Property and Casualty Insurance Company and Nationwide General Insurance Company
and their affiliated companies comprise the Nationwide group of companies. The
companies listed above have substantially common boards of directors and
officers.
Nationwide Financial Services, Inc. ("NFS") is the sole shareholder of
Nationwide. NFS serves as a holding company for other financial institutions.
Nationwide is the sole owner of Nationwide Life and Annuity Insurance Company.
Each of the directors and officers listed below is a director or officer
respectively of at least one or more of the other major insurance affiliates of
the Nationwide group of companies. Messrs. McFerson, Gasper, Woodward and Ms.
Thomas are also trustees of one or more of the registered investment companies
distributed by Nationwide Investment Services Corporation, a registered
broker-dealer affiliated with the Nationwide group of companies.
<TABLE>
<CAPTION>
DIRECTORS OF NATIONWIDE
------------------------------------- --------------------------- ----------------------------------------------------
DIRECTORS OF THE DEPOSITOR NAME AND
PRINCIPAL BUSINESS POSITIONS AND OFFICES
ADDRESS WITH DEPOSITOR PRINCIPAL OCCUPATION
------------------------------------- --------------------------- ----------------------------------------------------
<S> <C> <C>
Lewis J. Alphin Director
519 Bethel Church Road Farm Owner and Operator, Bell Farms (1)
Mount Olive, NC 28365-6107
------------------------------------- --------------------------- ----------------------------------------------------
A. I. Bell Director Farm Owner and Operator (1)
4121 North River Road West
Zanesville, OH 43701
------------------------------------- --------------------------- ----------------------------------------------------
Kenneth D. Davis Director Farm Owner and Operator (1)
7229 Woodmansee Road
Leesburg, OH 45135
------------------------------------- --------------------------- ----------------------------------------------------
Keith W. Eckel Director
1647 Falls Road Partner, Fred W. Eckel Sons; President, Eckel
Clarks Summit, PA 18411 Farms, Inc. (1)
------------------------------------- --------------------------- ----------------------------------------------------
Willard J. Engel Director Retired General Manager, Lyon County Co-operative
301 East Marshall Street Oil Company (1)
Marshall, MN 56258
------------------------------------- --------------------------- ----------------------------------------------------
Fred C. Finney Director Owner and Operator, Moreland Fruit Farm; Operator,
1558 West Moreland Road Melrose Orchard (1)
Wooster, OH 44691
------------------------------------- --------------------------- ----------------------------------------------------
Joseph J. Gasper President and Chief President and Chief Operating Officer, Nationwide
One Nationwide Plaza Operating Officer and Life Insurance Company and Nationwide Life and
Columbus, OH 43215 Director Annuity Insurance Company (2)
------------------------------------- --------------------------- ----------------------------------------------------
Dimon R. McFerson Chairman and Chief Chairman and Chief Executive Officer- (2)
One Nationwide Plaza Executive Officer and
Columbus, OH 43215 Director
------------------------------------- --------------------------- ----------------------------------------------------
David O. Miller Chairman of the Board and President, Owen Potato Farm, Inc.; Partner, M&M
115 Sprague Drive Director Enterprises (1)
Hebron, OH 43025
------------------------------------- --------------------------- ----------------------------------------------------
Yvonne L. Montgomery Director
Xerox Corporation Senior Vice President and General Manager, Public
Suite 200 Sector Worldwide/Document Solutions Group
1401 H Street NW Xerox Corporation (2)
Washington, DC 20007
------------------------------------- --------------------------- ----------------------------------------------------
</TABLE>
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<PAGE> 37
<TABLE>
<CAPTION>
------------------------------------- --------------------------- ----------------------------------------------------
DIRECTORS OF THE DEPOSITOR NAME AND
PRINCIPAL BUSINESS POSITIONS AND OFFICES
ADDRESS WITH DEPOSITOR PRINCIPAL OCCUPATION
------------------------------------- --------------------------- ----------------------------------------------------
<S> <C> <C>
Ralph M. Paige Director Executive Director Federation of Southern
Federation of Southern Cooperatives/Land Assistance Fund
Cooperatives/Land Assistance Fund
2769 Church Street
East Point, GA 30344
------------------------------------- --------------------------- ----------------------------------------------------
James F. Patterson Director
8765 Mulberry Road Vice President, Pattersons, Inc.; President,
Chesterland, OH 44026 Patterson Farms, Inc. (1)
------------------------------------- --------------------------- ----------------------------------------------------
Arden L. Shisler Director President and Chief Executive Officer, K&B
1356 North Wenger Road Transport, Inc. (1)
Dalton, OH 44618
------------------------------------- --------------------------- ----------------------------------------------------
Robert L. Stewart Director Owner and Operator Sunnydale Farms and Mining (1)
88740 Fairview Road
Jewett, OH 43986
------------------------------------- --------------------------- ----------------------------------------------------
Nancy C. Thomas Director Co-owner, Thomas Farms (2)
1767D Westwood Avenue
Alliance, OH 44601
------------------------------------- --------------------------- ----------------------------------------------------
</TABLE>
(1) Principal occupation for last 5 years.
(2) Prior to assuming this current position, held other executive
management positions with the same or affiliated companies.
Each of the directors is a director of the other major insurance affiliates of
the Nationwide group of companies except Mr. Gasper who is a director only of
Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance
Company. Messrs. McFerson and Gasper are directors of NISC, a registered
broker-dealer.
Messrs. McFerson, Miller, Patterson, and Shisler are directors of Nationwide
Financial Services, Inc. Mr. McFerson and Ms. Thomas are trustees of Nationwide
Mutual Funds, a registered investment company. Messrs. McFerson, Gasper and
Woodward are trustees of Nationwide Separate Account Trust and Nationwide Asset
Allocation Trust, registered investment companies. Mr. McFerson is trustee of
Financial Horizons Investment Trust and Nationwide Mutual Funds, registered
investment companies.
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<PAGE> 38
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF NATIONWIDE
-------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE DEPOSITOR OFFICES OF THE DEPOSITOR
NAME AND PRINCIPAL BUSINESS ADDRESS
-------------------------------------------------------------------------------------------------------------------
<S> <C>
Richard D. Headley Executive Vice President - Chief Information Technology Officer
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
Robert A. Oakley Executive Vice President - Chief Financial Officer
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
Robert J. Woodward, Jr. Executive Vice President - Chief Investment Officer
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
James E. Brock Senior Vice President - Corporate Development
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
Charles A. Bryan Senior Vice President - Chief Actuary - Property and Casualty
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
John R. Cook, Jr. Senior Vice President - Chief Communications Officer
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
David A. Diamond Senior Vice President - Corporate Controller
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
Philip C. Gath Senior Vice President - Chief Actuary - Nationwide Financial
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
Patricia R. Hatler Senior Vice President, General Counsel and Secretary
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
David K. Hollingsworth Senior Vice President
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
David R. Jahn Senior Vice President - Commercial Insurance
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
Donna A. James Senior Vice President - Chief Human Resources Officer
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
Richard A. Karas Senior Vice President - Sales - Financial Services
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
Gregory S. Lashutka Senior Vice President - Corporate Relations
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
Edwin P. McCausland, Jr. Senior Vice President - Fixed Income Securities
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 39
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF NATIONWIDE
-------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE DEPOSITOR OFFICES OF THE DEPOSITOR
NAME AND PRINCIPAL BUSINESS ADDRESS
-------------------------------------------------------------------------------------------------------------------
<S> <C>
Mark D. Phelan Senior Vice President - Technology Services
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
Douglas C. Robinette Senior Vice President - Claims and Financial Services
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
Mark R. Thresher Senior Vice President - Finance - Nationwide Financial
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
Richard M. Waggoner Senior Vice President - Operations
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
Susan A. Wolken Senior Vice President - Product Management and Nationwide
One Nationwide Plaza Financial Marketing
Columbus, OH 43215
-------------------------------------------------------------------------------------------------------------------
</TABLE>
DIMON R. MCFERSON has been a Director since April 1988 and Chairman and Chief
Executive Officer since April 1996. He was elected Chief Executive Officer in
December 1992, and President and Chief Executive Officer in December 1993. He
was President and General Manager of Nationwide Mutual Insurance Company from
April 1988 to April 1991; President and Chief Operating Officer of Nationwide
Mutual Insurance Company from April 1991 to December 1992; and President and
Chief Executive Officer of Nationwide Mutual Insurance Company from December
1992 to April 1996. Mr. McFerson has been with Nationwide for 20 years.
JOSEPH J. GASPER has been President and Chief Operating Officer and Director of
Nationwide since April 1996. Previously, he was Executive Vice President -
Property/Casualty Operations of Nationwide Mutual Insurance Company from April
1995 to April 1996. He was Senior Vice President - Property/Casualty Operations
of Nationwide Mutual Insurance Company from September 1993 to April 1995. Prior
to that time, Mr. Gasper held numerous positions within Nationwide. Mr. Gasper
has been with Nationwide for 33 years.
LEWIS J. ALPHIN has been a Director of Nationwide since 1993. Mr. Alphin owns
and operates an 800-acre farm in Mt. Olive, NC. He taught agriculture business
at James Sprunt Community Collegy in Kenansville, NC for more than 22 years
before retiring in 1994. He is the former board chairman of the Cape Fear Farm
Credit Association, a member and former vice president, secretary/treasurer, and
director of the Duplin County Agribusiness Council, and a former board member of
the Southern States Cooperative (1986 to 1993). Mr. Alphin is a member of the
Duplin County Farm Bureau, the North Carolina Farm Bureau, ad the Farm Credit
Council. He is a member and former director of the Oak Wolfe Fire Department.
A. I. BELL has been a Director of Nationwide since April, 1998. Mr. Bell has
served as a state trustee of the Ohio Farm Bureau Federation from 1991 to 1998
and as president that last four years. He oversees the Bell family farm in
Zanesville, Ohio. The farm is the hub of a multi-family swine network, in
addition to grain and beef operations. Mr. Bell has represented the Ohio Farm
Bureau at state and national level activities, and has traveled internationally
representing Ohio agriculture. In 1995, he was introduced into The Ohio State
University Department of Animal Sciences Hall of Fame.
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<PAGE> 40
JAMES E. BROCK has been Senior Vice President - Corporate Development since July
1997. Previously, he was Senior Vice President - Company Operations from
December 1996 to July 1997 and was also Senior Vice President - Life Company
Operations from April 1996 to July 1997. Mr. Brock was Senior Vice President -
Investment Products Operations from November 1990 to April 1996. Prior to that
time, Mr. Brock held several positions within Nationwide. Mr. Brock has been
with Nationwide for 30 years.
CHARLES A. BRYAN has been a Senior Vice President - Chief Actuary - Property and
Casualty since 1998. Prior to joining Nationwide, Mr. Bryan was president, Chief
Operating Officer of Direct Response Corporation from 1996 to 1998. Prior to
that time, Mr. Bryan was a partner with Ernst & Young.
JOHN R. COOK, JR. has been Senior Vice President - Chief Communications Officer
since May 1997. Previously, Mr. Cook was Senior Vice President - Chief
Communications Officer of USAA from July 1989 to May 1997. Mr. Cook has been
with Nationwide for 2 years.
KENNETH D. DAVIS has been a Director of Nationwide since April 1999. Mr. Davis
is the immediate past president of the Ohio Farm Bureau Federation. He served as
a member of the Ohio Farm Bureau Federation's board of trustees from 1989 until
1999. He served as first vice president of the board from 1994 until 1998. Mr.
Davis serves on the board of directors of his local rural electric cooperatives
and is a member of many agriculture organizations including the Ohio Corn
Growers, Ohio Cattlemen's and Ohio Soybean associations.
DAVID A. DIAMOND has been Senior Vice President - Corporate Controller since
August 1999. He was Vice President-Controller from August 1996 to August 1999.
Previously, he was Vice President - Controller from October 1993 to August 1996.
Prior to that time, Mr. Diamond held several positions within Nationwide. Mr.
Diamond has been with Nationwide for 11 years.
KEITH W. ECKEL has been a Director of Nationwide since April 1996. Mr. Eckel is
a partner of Fred W. Eckel Sons and president of Eckel Farms, Inc. in northeast
Pennsylvania. He received the Master Farmer award from Penn State University in
1982. Mr. Eckel is a member of the Pennsylvania Agricultural Land Preservation
Board. He is a former president of the Pennsylvania Farm Bureau, a position he
held for 15 years, and the Lackawanna County Cooperative Extension Association.
He has served as a board member and executive committee member of the American
Farm Bureau Federation. He is a former vice president of the Pennsylvania
Council of Cooperative Extension Associations and former board member of the
Pennsylvania Vegetable Growers Association.
WILLARD J. ENGEL has been a Director of Nationwide since 1994. Mr. Engel served
as general manager of Lyon County Co-Operative Oil Co. in Marshall, MN from 1975
to 1997, and occasionally serves on a consulting basis. He previously was a
division manager of the Truman Farmers Elevator. He is a former director of the
Western Co-op Transport in Montevideo, MN, a former director and legislative
committee chairman of the Northwest Petroleum Association in St. Paul, and a
former director of Farmland Industries in Kansas City.
FRED C. FINNEY has been a Director of Nationwide since 1992. Mr. Finney is the
owner and operator of the Moreland Fruit Farm and operator of Melrose Orchard in
Wooster, OH. He is past president of the Ohio Farm Bureau Federation, the Ohio
Fruit Growers Society, Wayne County Farm Bureau, and the Westwood Ruritan Club.
He is a member of the American Berry Cooperative.
PHILIP C. GATH has been Senior Vice President - Chief Actuary - Nationwide
Financial since May 1998. Previously, Mr. Gath was Vice President - Product
Manager - Individual Variable Annuity from July 1997 to May 1998. Mr. Gath was
Vice President - Individual Life Actuary from August 1989 to July 1997. Prior to
that time, Mr. Gath held several positions within Nationwide. Mr. Gath has been
with Nationwide for 31 years.
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<PAGE> 41
PATRICIA R. HATLER has been Senior Vice President, General Counsel and Secretary
since April 2000. Previously, she was Senior Vice President and General Counsel
from July 1999 to April 2000. Prior to that time, she was General Counsel and
Corporate Secretary of Independence Blue Cross from 1983 to July 1999.
DAVID K. HOLLINGSWORTH has been Senior Vice President - Multi Channel and
Sponsor Relations since August 1999. Previously, he was Senior Vice President -
Marketing from June 1999 to August 1999. Prior to that time, has held numerous
positions within the Nationwide group of companies. Mr. Hollingsworth has been
with Nationwide for 25 years.
DAVID R. JAHN has been Senior Vice President - Commercial Insurance since March
1998. Previously, he was Vice President - Property/Casualty Operations and Vice
President - Resource Management from March 1996 to January 1998. Prior to that
time, Mr. Jahn has held numerous positions within the Nationwide group of
companies. Mr. Jahn has been with Nationwide for 28 years.
DONNA A. JAMES has been Senior Vice President - Chief Human Resources Officer
since May 1999. She was Senior Vice President - Human Resources from December
1997 to May 1999. Previously she was Vice President - Human Resources from July
1996 to December 1997. Prior to that time, Ms. James was Vice President -
Assistant to the CEO of Nationwide from March 1996 to July 1996. From May 1994
to March 1996 she was Associate Vice President - Assistant to the CEO for
Nationwide. Previously Ms. James held several positions within Nationwide. Ms.
James has been with Nationwide for 18 years.
RICHARD D. HEADLEY has been Executive Vice President - Chief Information
Technology Officer since May 1999. He was Senior Vice President - Chief
Information Technology Officer from October 1997 to May 1999. Previously, Mr.
Headley was Chairman and Chief Executive Officer of Banc One Services
Corporation from 1992 to October 1997. From January 1975 until 1992 Mr. Headley
held several positions with Banc One Corporation. Mr. Headly has been with
Nationwide for 2 years.
RICHARD A. KARAS has been Senior Vice President - Sales - Financial Services
since March 1993. Previously, he was Vice President - Sales - Financial Services
from February 1989 to March 1993. Prior to that time, Mr. Karas held several
positions within Nationwide. Mr. Karas has been with Nationwide for 35 years.
GREGORY S. LASHUTKA has been Senior Vice President - Corporate Relations since
January 2000. Previously, he was the Mayor of the City of Columbus (Ohio) from
January 1992 to December 1999. From January 1986 to December 1991, Mr. Lashutka
was a Partner with Squire, Sanders & Dempsey. From January 1978 to December
1985, he was City Attorney for the City of Columbus (Ohio).
EDWIN P. MCCAUSLAND, JR. has been Senior Vice President - Fixed Income
Securities since 1999. Mr. McCausland has 29 years of experience in insurance
investments beginning his career in 1970 with Connecticut Mutual Life Insurance
Company. He joined Phoenix Mutual Life Insurance Company in 1981 as second Vice
President of Bond Investments and rising to Vice President of Pension
Operations. He was Vice President and Managing Director of Mass Mutual Life
Insurance Company prior to joining Nationwide.
DAVID O. MILLER has been a Director of Nationwide since November 1996. Mr.
Miller has been Chairman of the Board since 1998. Mr. Miller is president of
Owen Potato Farm, Inc. and a partner of M&M Enterprises in Licking County, OH.
He is a director and board chairman of the National Cooperative Business
Association, director of Cooperative Business International and the
International Cooperative Alliance, and serves on the educational executive
committee of the National Council of Farmer Cooperatives. He was president of
the Ohio Farm Bureau Federation from 1981 to 1985 and was vice president for six
years. Mr. Miller served a two year term on the board of the American Farm
Bureau Association. He is past president of the Ohio Vegetable and Potato
Growers Association, and was a director of
38
<PAGE> 42
Landmark, Inc., a farm supply cooperative which is now part of
Indianapolis-based Countrymark.
YVONNE L. MONTGOMERY has been a Director of Nationwide since April, 1998. Ms.
Montgomery is senior vice president/general manager - Public Sector
Worldwide/Document Solutions Group for Xerox Corporation. A resident of
Washington, DC, Ms. Montgomery is in charge of providing an integrated,
industry-focused portfolio of document solutions and services to the public
sector worldwide. Ms. Montgomery joined Xerox in 1976 as a sales representative
and progressed through management positions, including vice president-field
operations and executive assistant to the chairman and CEO.
ROBERT A. OAKLEY has been Executive Vice President - Chief Financial Officer
since April 1995. Previously, he was Senior Vice President - Chief Financial
Officer from October 1993 to April 1995. Prior to that time, Mr. Oakley held
several positions within Nationwide. Mr. Oakley has been with Nationwide for 24
years.
RALPH M. PAIGE has been a Director of Nationwide since April 1999. Mr. Paige has
been the Executive Director of the Federation of Southern Cooperatives/Land
Assistance Fund since 1969. Mr. Paige also served as the National Field
Director/Georgia State Director from 1981 to 1984.
JAMES F. PATTERSON has been a Director of Nationwide since April 1989. Mr.
Patterson is president of Patterson Farms, Inc. and has operated Patterson Fruit
Farm in Chesterland, OH since 1964. Mr. Patterson is on the boards of The Ohio
State University Hospitals Health System in Cleveland, Geauga Hospital, Inc. and
the National Cooperative Business Association. He is past president of the Ohio
Farm Bureau Federation and former member of Cleveland Foundation's Lake and
Geauga Advisory Committees.
MARK D. PHELAN has been Senior Vice President - Technology Services since 1998.
His previous management experience includes five years (1977-1982) with the data
processing division's sales group at IBM Corporation. From 1982 through 1990,
Mr. Phelan served as director of AT&T's Consumer Communications Services Group
and he was subsequently promoted to sales vice president for the Eastern Region
of the Business Communications Services Division. In 1992, he became executive
vice president-sales and marketing for the Electronic Commerce Division of
Checkfree Corporation, a position he held for five years. From 1997 until 1998,
he was in private consulting.
DOUGLAS C. ROBINETTE has been Senior Vice President - Claims and Financial
Services since 1999. Previously, he was Senior Vice President - Marketing and
Product Management from May 1998 to 1999. Previously, Mr. Robinette was
Executive Vice President, Customer Services of Employers Insurance of Wausau
(Wausau), a member of the Nationwide group until December 1998, from September
1996 to May 1998. Prior to that time he was Executive Vice President, Finance
and Insurance Services of Wausau from May 1995 to September 1996. From November
1994 to May 1995 Mr. Robinette was Senior Vice President, Finance and Insurance
Services of Wausau. From May 1993 to November 1994 he was Senior Vice President,
Finance of Wausau. Prior to that time, Mr. Robinette held several positions
within the Nationwide group. Mr. Robinette has been with the Nationwide group
for 13 years.
ARDEN L. SHISLER has been a Director of Nationwide since 1984. Mr. Shisler is
president and chief executive officer of K&B Transport, Inc., a trucking firm in
Dalton, OH. He is a director of the National Cooperative Business Association in
Washington, DC. He is a former board member and vice president of the Ohio Farm
Bureau Federation and past president of the Ohio Agricultural Marketing
Association, an Ohio Farm Bureau Federation subsidiary. He is a member of the
Ohio Trucking Association, the Ohio Trucking Safety Council, the Wayne County
Farm Bureau, Cornerstone Community Church, the Advisory Committee of The Ohio
State University Agriculture Technical Institute and a board member of the
Wilderness Center.
ROBERT L. STEWART has been a Director of Nationwide since 1989. Mr. Stewart is
the owner and operator of Sunnydale Farms and Mining in Jewett, OH. He served on
the board
39
<PAGE> 43
of the Ohio Farm Bureau Federation and as president of the Ohio Holstein
Association board. Mr. Stewart was a director of the Ohio Agricultural
Stabilization and Conservation Service board and Landmark, Inc. a farm supply
cooperative which is now part of Indianapolis-based Countrymark.
NANCY C. THOMAS has been a Director of Nationwide since 1986. Mrs. Thomas is a
board member of Farm Credit Services' 4th District and serves on the advisory
board of Walsh University in North Canton, OH. She is a past president and
former director of the Ohio Agricultural Marketing Association and served on the
boards of the Ohio Farm Bureau Federation and Landmark, Inc., a farm supply
cooperative which is now part of Indianapolis-based Countrymark, and as the
Midwest regional representative on the American Farm Bureau women's committee.
MARK R. THRESHER has been Senior Vice President - Finance - Nationwide Financial
since May 1999. He was Vice President - Controller from August 1996 to May 1999.
He was Vice President and Treasurer from November 1996 to February 1997.
Previously, he was Vice President and Treasurer from June 1996 to November 1996.
Prior to joining Nationwide, Mr. Thresher served as a partner with KPMG LLP from
July 1988 to June 1996.
RICHARD M. WAGGONER has been Senior Vice President - Operations since May 1999.
Previously, he was President of Nationwide Services from May 1997 to May 1999.
Prior to that time, Mr. Waggoner has held numerous positions within the
Nationwide group of companies. Mr. Waggoner has been with Nationwide for 23
years.
SUSAN A. WOLKEN has been Senior Vice President - Product Management and
Nationwide Financial Marketing since May 1999. Previously, Ms. Wolken was Senior
Vice President - Life Company Operations from June 1997 to May 1999. She was
Senior Vice President - Enterprise Administration from July 1996 to June 1997.
Prior to that time, she was Senior Vice President - Human Resources from April
1995 to July 1996. From September 1993 to April 1995, Ms. Wolken was Vice
President - Human Resources. From October 1989 to September 1993 she was Vice
President - Individual Life and Health Operations. Ms. Wolken has been with
Nationwide for 25 years.
ROBERT J. WOODWARD, JR. has been Executive Vice President - Chief Investment
Officer since August 1995. Previously, he was Senior Vice President - Fixed
Income Investments from March 1991 to August 1995. Prior to that time, Mr.
Woodward held several positions within Nationwide. Mr. Woodward has been with
Nationwide for 35 years.
40
<PAGE> 44
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS
The underlying mutual funds listed below are designed primarily as investment
vehicles for variable annuity contracts and variable life insurance policies
issued by insurance companies.
There is no guarantee that the investment objectives will be met.
TARGET/UNITED FUNDS, INC.
The Fund is an open-end, diversified management company organized as a Maryland
corporation on December 2, 1986. The Fund sells its shares only to the separate
accounts of participating insurance companies to fund certain variable life
insurance policies and variable annuity contracts. Waddell & Reed Investment
Management Company is the Fund's investment advisor.
ASSET STRATEGY PORTFOLIO
Investment Objective: The Asset Strategy Portfolio seeks high total return
over the long-term. It seeks to achieve its goal by allocating its assets
among stocks, bonds and short-term instruments, both in the United States
and abroad.
BALANCED PORTFOLIO
Investment Objective: The Balanced Portfolio seeks as a primary goal,
current income, with a secondary goal of long-term appreciation of capital.
It invests primarily in a mix of stocks, fixed-income securities and cash,
depending on market conditions.
BOND PORTFOLIO
Investment Objective: The Bond Portfolio seeks a reasonable return with
more emphasis on preservation of capital. It seeks to achieve its goal by
investing primarily in domestic debt securities, usually of investment
grade.
GROWTH PORTFOLIO
Investment Objective: The Growth Portfolio seeks capital growth, with a
secondary goal of current income. It seeks to achieve its goal by investing
primarily in common stocks, or securities convertible into common stocks,
of U.S. and foreign companies.
HIGH INCOME PORTFOLIO
Investment Objective: The High Income Portfolio seeks as a primary goal,
high current income with a secondary goal of capital growth. It seeks to
achieve its goals by investing primarily in high-yield, high-risk,
fixed-income securities of U.S. and foreign issuers, the risks of which are
consistent with the Portfolio's goals.
INCOME PORTFOLIO
Investment Objective: The Income Portfolio seeks maintenance of current
income, subject to market conditions, with a secondary goal of capital
growth. It seeks to achieve its goals by investing primarily in common
stocks of large U.S. and foreign companies that have a record of paying
regular dividends on common stock or have the potential for capital
appreciation, or are expected to resist market decline.
INTERNATIONAL PORTFOLIO
Investment Objective: The International Portfolio seeks as a primary goal,
long-term appreciation of capital, with a secondary goal of current income.
It seeks to achieve its goals by investing primarily in common stocks, or
securities convertible into or exchangeable for common stocks of foreign
companies that may have the potential for long-term growth.
LIMITED-TERM BOND PORTFOLIO
Investment Objective: The Limited-Term Bond Portfolio seeks a high level of
current income consistent with preservation of capital. It seeks to achieve
its goal by investing primarily in investment-grade debt securities of U.S.
issuers, including U.S. Government securities.
MONEY MARKET PORTFOLIO
Investment Objective: The Money Market Portfolio seeks current income
consistent with stability of principal. It seeks to achieve it goal by
investing in U.S. dollar-
41
<PAGE> 45
denominated high quality money market obligations and instruments.
SCIENCE AND TECHNOLOGY PORTFOLIO
Investment Objective: The Science and Technology Portfolio seeks long-term
capital growth. It seeks to achieve its goals by concentrating its
investments primarily in the common stock of science and technology
securities of U.S. and foreign companies.
SMALL CAP PORTFOLIO
Investment Objective: The Small Cap Portfolio seeks capital growth. It
seeks to achieve its goal by investing primarily in common stocks, or
securities convertible into the common stocks, of companies that are
relatively new or unseasoned, companies in their early stages of
development, or smaller companies positioned in new or in emerging
industries where the opportunity for rapid growth is above average.
42
<PAGE> 46
APPENDIX B: ILLUSTRATION OF SURRENDER CHARGES
EXAMPLE 1: A female non-tobacco, age 45, purchases a policy with a specified
amount of $50,000 and a scheduled premium of $750. She now wishes to surrender
the policy during the first policy year. By using the initial surrender charge
table reproduced below, (also see "Surrender Charges") the total surrender
charge per thousand multiplied by the specified amount expressed in thousands
equals the total surrender charge of $569.50 ($11.390 x 50=569.50).
EXAMPLE 2: A male non-tobacco, age 35, purchases a policy with a specified
amount of $100,000 and a scheduled premium of $1100. He now wants to surrender
the policy in the sixth policy year. The total initial surrender charge is
calculated using the method illustrated above (surrender charge per 1000 is
6.817 x 100=681.70 maximum initial surrender charge). Because the fifth policy
year has been completed, the maximum initial surrender charge is reduced by
multiplying it by the applicable percentage factor from the "Reductions to
Surrender Charges" table below. (Also see "Reductions to Surrender Charges.") In
this case, $681.70 x 60%=$409.02 which is the amount Nationwide deducts as a
total surrender charge.
Maximum surrender charge per $1,000 of initial specified amount for policies
issued on a standard basis:
INITIAL SPECIFIED AMOUNT $50,000-$99,999*
<TABLE>
<CAPTION>
ISSUE MALE FEMALE MALE FEMALE
AGE NON-TOBACCO NON-TOBACCO STANDARD STANDARD
<S> <C> <C> <C> <C>
25 $7.773 $7.518 $8.369 $7.818
35 8.817 8.396 9.811 8.889
45 12.185 11.390 13.884 12.164
55 15.628 13.995 18.410 15.106
65 22.274 19.043 26.559 20.607
</TABLE>
*Specified amounts of less than $100,000 are not available in New York or New
Jersey.
INITIAL SPECIFIED AMOUNT $100,000+
<TABLE>
<CAPTION>
ISSUE MALE FEMALE MALE FEMALE
AGE NON-TOBACCO NON-TOBACCO STANDARD STANDARD
<S> <C> <C> <C> <C>
25 $5.773 $5.518 $6.369 $5.818
35 6.817 6.396 7.811 6.889
45 9.685 8.890 11.384 9.664
55 13.128 11.495 15.910 12.606
65 21.274 18.043 25.559 19.607
</TABLE>
43
<PAGE> 47
REDUCTIONS TO SURRENDER CHARGES
<TABLE>
<CAPTION>
SURRENDER CHARGE SURRENDER CHARGE
COMPLETED AS A % OF INITIAL COMPLETED AS A % OF INITIAL
POLICY YEARS SURRENDER CHARGES POLICY YEARS SURRENDER CHARGES
<S> <C> <C> <C>
0 100% 5 60%
1 100% 6 50%
2 90% 7 40%
3 80% 8 30%
4 70% 9+ 0%
</TABLE>
The current surrender charges are the same for all states. However, in
Pennsylvania the guaranteed maximum surrender charges are spread out over 14
years. The guaranteed maximum surrender charge in subsequent years in
Pennsylvania is reduced in the following manner:
<TABLE>
<CAPTION>
COMPLETED SURRENDER CHARGE AS A COMPLETED SURRENDER CHARGE AS A COMPLETED SURRENDER CHARGE AS A
POLICY YEARS % OF INITIAL POLICY YEARS % OF INITIAL POLICY YEARS % OF INITIAL
SURRENDER CHARGES SURRENDER CHARGES SURRENDER CHARGES
<S> <C> <C> <C> <C> <C>
0 100% 5 60% 10 20%
1 100% 6 50% 11 15%
2 90% 7 40% 12 10%
3 80% 8 30% 13 5%
4 70% 9 25% 14+ 0%
</TABLE>
The illustrations of current values in this prospectus are the same for
Pennsylvania. However, the illustrations of guaranteed values in this prospectus
do not reflect guaranteed maximum surrender charges which are spread out over 14
years. If this policy is issued in Pennsylvania, please contact Nationwide's
home office for an illustration.
Nationwide has no plans to change the current surrender charges.
44
<PAGE> 48
APPENDIX C: ILLUSTRATIONS OF CASH VALUES, CASH SURRENDER VALUES,
AND DEATH BENEFITS
The illustrations in this prospectus have been prepared to help show how values
under the policies change with investment performance. The illustrations
illustrate how cash values, cash surrender values and death benefits under a
policy would vary over time if the hypothetical gross investment rates of return
were a uniform annual effective rate of either 0%, 6% or 12%. If the
hypothetical gross investment rate of return averages 0%, 6% or 12% over a
period of years, but fluctuates above or below those averages for individual
years, the cash values, cash surrender values and death benefits may be
different. For hypothetical returns of 0% and 6%, the illustrations also
illustrate when the policies would go into default, at which time additional
premium payments would be required to continue the policy in force. The
illustrations also assume there is no policy indebtedness, no additional premium
payments are made, no cash values are allocated to the fixed account, and there
are no changes in the specified amount or death benefit option.
The amounts shown for the cash value, cash surrender value and death benefit as
of each policy anniversary reflect the fact that the net investment return on
the assets held in the sub-accounts is lower than the gross return. This is due
to the deduction of underlying mutual fund investment advisory fees and other
expenses, which are equivalent to an annual effective rate of 0.98%. This
effective rate is based on the average of the fund expenses, after expense
reimbursement, for the preceding year for all underlying mutual fund options
available under the policy as of December 31, 1999.
Taking into account the underlying mutual fund expenses, gross annual rates of
return of 0%, 6% and 12% correspond to net investment experience at constant
annual rates of -0.98%, 5.02% and 11.02%.
The illustrations also reflect the fact that Nationwide makes monthly charges
for providing insurance protection, recovering taxes, providing for
administrative expenses, and assuming mortality and expense risks. Current
values reflect current cost of insurance charges and guaranteed values reflect
the maximum cost of insurance charges guaranteed in the policy. The values shown
are for policies which are issued as standard. Policies issued on a substandard
basis would result in lower cash values and death benefits than those
illustrated.
The cash surrender values shown in the illustrations reflect the fact that
Nationwide will deduct a surrender charge from the policy's cash value for any
policy surrendered in full during the first nine policy years.
The illustrations also reflect the fact that no charges for federal or state
income taxes are currently made against the variable account. If such a charge
is made in the future, it will require a higher gross investment return than
illustrated in order to produce the net after-tax returns shown in the
illustrations.
Upon request, Nationwide will furnish a comparable illustration based on the
proposed insured's age, sex, smoking classification, rating classification and
premium payment requested.
45
<PAGE> 49
DEATH BENEFIT OPTION 1
$1,500 ANNUAL PREMIUM: $100,000 SPECIFIED AMOUNT
MALE: NON-TOBACCO: AGE 45
CURRENT VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
----------------------- ----------------------- -----------------------
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,575 960 63 100,000 1,031 133 100,000 1,101 204 100,000
2 3,229 1,952 1,055 100,000 2,155 1,257 100,000 2,366 1,469 100,000
3 4,965 2,915 2,107 100,000 3,314 2,507 100,000 3,748 2,940 100,000
4 6,788 3,849 3,131 100,000 4,511 3,793 100,000 5,258 4,540 100,000
5 8,703 4,754 4,126 100,000 5,746 5,118 100,000 6,912 6,283 100,000
6 10,713 5,630 5,092 100,000 7,021 6,483 100,000 8,722 8,184 100,000
7 12,824 6,476 6,028 100,000 8,338 7,889 100,000 10,708 10,259 100,000
8 15,040 7,293 6,934 100,000 9,697 9,338 100,000 12,886 12,527 100,000
9 17,367 8,080 7,810 100,000 11,101 10,832 100,000 15,278 15,009 100,000
10 19,810 8,836 8,836 100,000 12,552 12,552 100,000 17,907 17,907 100,000
11 22,376 9,561 9,561 100,000 14,051 14,051 100,000 20,800 20,800 100,000
12 25,069 10,255 10,255 100,000 15,601 15,601 100,000 23,985 23,985 100,000
13 27,898 10,918 10,918 100,000 17,203 17,203 100,000 27,499 27,499 100,000
14 30,868 11,549 11,549 100,000 18,861 18,861 100,000 31,387 31,387 100,000
15 33,986 12,106 12,106 100,000 20,539 20,539 100,000 35,661 35,661 100,000
16 37,261 12,613 12,613 100,000 22,260 22,260 100,000 40,385 40,385 100,000
17 40,699 13,066 13,066 100,000 24,024 24,024 100,000 45,615 45,615 100,000
18 44,309 13,460 13,460 100,000 25,832 25,832 100,000 51,411 51,411 100,000
19 48,099 13,798 13,798 100,000 27,695 27,695 100,000 57,848 57,848 100,000
20 52,079 14,092 14,092 100,000 29,627 29,627 100,000 65,014 65,014 100,000
21 56,258 14,298 14,298 100,000 31,598 31,598 100,000 72,986 72,986 100,000
22 60,646 14,409 14,409 100,000 33,607 33,607 100,000 81,872 81,872 100,000
23 65,253 14,415 14,415 100,000 35,653 35,653 100,000 91,760 91,760 108,277
24 70,091 14,307 14,307 100,000 37,735 37,735 100,000 102,662 102,662 120,115
25 75,170 14,073 14,073 100,000 39,854 39,854 100,000 114,677 114,677 133,026
26 80,504 13,700 13,700 100,000 42,011 42,011 100,000 127,919 127,919 147,107
27 86,104 13,179 13,179 100,000 44,208 44,208 100,000 142,541 142,541 161,072
28 91,984 12,494 12,494 100,000 46,448 46,448 100,000 158,700 158,700 176,156
29 98,158 11,628 11,628 100,000 48,735 48,735 100,000 176,569 176,569 192,460
30 104,641 10,557 10,557 100,000 51,069 51,069 100,000 196,349 196,349 210,093
</TABLE>
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY
$10.00 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5
THEREAFTER. CURRENT VALUES REFLECT A 6% OF PREMIUM CHARGE ON ALL PREMIUMS
UP TO THE BREAK POINT PREMIUM AND 4% ON PREMIUMS IN EXCESS OF BREAK POINT
FOR ANY SINGLE POLICY YEAR.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
46
<PAGE> 50
DEATH BENEFIT OPTION 1
$1,500 ANNUAL PREMIUM: $100,000 SPECIFIED AMOUNT
MALE: NON-TOBACCO: AGE 45
GUARANTEED VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
----------------------- ----------------------- -----------------------
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,575 930 33 100,000 999 101 100,000 1,068 170 100,000
2 3,229 1,851 954 100,000 2,047 1,150 100,000 2,252 1,354 100,000
3 4,965 2,733 1,925 100,000 3,116 2,308 100,000 3,532 2,724 100,000
4 6,788 3,572 2,854 100,000 4,202 3,484 100,000 4,915 4,197 100,000
5 8,703 4,368 3,740 100,000 5,306 4,678 100,000 6,411 5,783 100,000
6 10,713 5,116 4,578 100,000 6,424 5,885 100,000 8,028 7,489 100,000
7 12,824 5,812 5,364 100,000 7,551 7,103 100,000 9,775 9,326 100,000
8 15,040 6,451 6,092 100,000 8,684 8,325 100,000 11,660 11,301 100,000
9 17,367 7,027 6,757 100,000 9,815 9,546 100,000 13,695 13,426 100,000
10 19,810 7,534 7,534 100,000 10,940 10,940 100,000 15,892 15,892 100,000
11 22,376 7,965 7,965 100,000 12,053 12,053 100,000 18,264 18,264 100,000
12 25,069 8,317 8,317 100,000 13,148 13,148 100,000 20,829 20,829 100,000
13 27,898 8,586 8,586 100,000 14,222 14,222 100,000 23,610 23,610 100,000
14 30,868 8,762 8,762 100,000 15,267 15,267 100,000 26,630 26,630 100,000
15 33,986 8,837 8,837 100,000 16,274 16,274 100,000 29,922 29,922 100,000
16 37,261 8,798 8,798 100,000 17,230 17,230 100,000 33,517 33,517 100,000
17 40,699 8,633 8,633 100,000 18,123 18,123 100,000 37,450 37,450 100,000
18 44,309 8,322 8,322 100,000 18,935 18,935 100,000 41,761 41,761 100,000
19 48,099 7,844 7,844 100,000 19,646 19,646 100,000 46,499 46,499 100,000
20 52,079 7,178 7,178 100,000 20,234 20,234 100,000 51,726 51,726 100,000
21 56,258 6,302 6,302 100,000 20,678 20,678 100,000 57,516 57,516 100,000
22 60,646 5,194 5,194 100,000 20,956 20,956 100,000 63,964 63,964 100,000
23 65,253 3,828 3,828 100,000 21,042 21,042 100,000 71,184 71,184 100,000
24 70,091 2,173 2,173 100,000 20,904 20,904 100,000 79,317 79,317 100,000
25 75,170 182 182 100,000 20,499 20,499 100,000 88,524 88,524 102,688
26 80,504 (*) (*) (*) 19,769 19,769 100,000 98,726 98,726 113,534
27 86,104 (*) (*) (*) 18,636 18,636 100,000 109,967 109,967 124,263
28 91,984 (*) (*) (*) 17,002 17,002 100,000 122,368 122,368 135,829
29 98,158 (*) (*) (*) 14,748 14,748 100,000 136,072 136,072 148,318
30 104,641 (*) (*) (*) 11,736 11,736 100,000 151,248 151,248 161,835
</TABLE>
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND A
MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND
$7.50 THEREAFTER. GUARANTEED VALUES REFLECT A 6% OF PREMIUM CHARGE ON ALL
PREMIUMS.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
47
<PAGE> 51
DEATH BENEFIT OPTION 1
$2,500 ANNUAL PREMIUM: $100,000 SPECIFIED AMOUNT
MALE: NON-TOBACCO: AGE 55
CURRENT VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
----------------------- ----------------------- -----------------------
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,625 1,452 290 100,000 1,565 403 100,000 1,679 516 100,000
2 5,381 2,935 1,772 100,000 3,254 2,092 100,000 3,589 2,426 100,000
3 8,275 4,387 3,341 100,000 5,012 3,966 100,000 5,692 4,646 100,000
4 11,314 5,811 4,881 100,000 6,843 5,913 100,000 8,012 7,082 100,000
5 14,505 7,205 6,392 100,000 8,751 7,937 100,000 10,571 9,758 100,000
6 17,855 8,571 7,874 100,000 10,740 10,043 100,000 13,400 12,702 100,000
7 21,373 9,909 9,327 100,000 12,815 12,234 100,000 16,527 15,946 100,000
8 25,066 11,218 10,753 100,000 14,981 14,516 100,000 19,988 19,523 100,000
9 28,945 12,500 12,151 100,000 17,244 16,896 100,000 23,823 23,474 100,000
10 33,017 13,754 13,754 100,000 19,609 19,609 100,000 28,080 28,080 100,000
11 37,293 14,981 14,981 100,000 22,083 22,083 100,000 32,819 32,819 100,000
12 41,782 16,028 16,028 100,000 24,529 24,529 100,000 37,972 37,972 100,000
13 46,497 16,917 16,917 100,000 26,977 26,977 100,000 43,624 43,624 100,000
14 51,446 17,667 17,667 100,000 29,452 29,452 100,000 49,870 49,870 100,000
15 56,644 18,266 18,266 100,000 31,952 31,952 100,000 56,797 56,797 100,000
16 62,101 18,746 18,746 100,000 34,515 34,515 100,000 64,533 64,533 100,000
17 67,831 19,109 19,109 100,000 37,152 37,152 100,000 73,206 73,206 100,000
18 73,848 19,341 19,341 100,000 39,866 39,866 100,000 82,961 82,961 100,000
19 80,165 19,443 19,443 100,000 42,672 42,672 100,000 93,969 93,969 102,426
20 86,798 19,420 19,420 100,000 45,590 45,590 100,000 106,232 106,232 113,668
21 93,763 19,179 19,179 100,000 48,577 48,577 100,000 119,814 119,814 125,805
22 101,076 18,692 18,692 100,000 51,640 51,640 100,000 134,792 134,792 141,531
23 108,755 17,925 17,925 100,000 54,788 54,788 100,000 151,302 151,302 158,867
24 116,818 16,838 16,838 100,000 58,034 58,034 100,000 169,497 169,497 177,971
25 125,284 15,388 15,388 100,000 61,399 61,399 100,000 189,539 189,539 199,016
26 134,173 13,520 13,520 100,000 64,908 64,908 100,000 211,608 211,608 222,188
27 143,506 11,174 11,174 100,000 68,595 68,595 100,000 235,898 235,898 247,693
28 153,307 8,279 8,279 100,000 72,506 72,506 100,000 262,627 262,627 275,758
29 163,597 4,736 4,736 100,000 76,695 76,695 100,000 292,070 292,070 306,673
30 174,402 412 412 100,000 81,230 81,230 100,000 324,489 324,489 340,714
</TABLE>
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY
$10.00 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5
THEREAFTER. CURRENT VALUES REFLECT A 6% OF PREMIUM CHARGE ON ALL PREMIUMS
UP TO THE BREAK POINT PREMIUM AND 4% ON PREMIUMS IN EXCESS OF BREAK POINT
FOR ANY SINGLE POLICY YEAR.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
48
<PAGE> 52
DEATH BENEFIT OPTION 1
$2,500 ANNUAL PREMIUM: $100,000 SPECIFIED AMOUNT
MALE: NON-TOBACCO: AGE 55
GUARANTEED VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
----------------------- ----------------------- -----------------------
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,625 1,391 229 100,000 1,501 338 100,000 1,611 449 100,000
2 5,381 2,720 1,558 100,000 3,027 1,864 100,000 3,348 2,185 100,000
3 8,275 3,955 2,909 100,000 4,546 3,500 100,000 5,189 4,143 100,000
4 11,314 5,090 4,160 100,000 6,051 5,121 100,000 7,142 6,212 100,000
5 14,505 6,114 5,300 100,000 7,532 6,719 100,000 9,212 8,398 100,000
6 17,855 7,019 6,322 100,000 8,980 8,283 100,000 11,403 10,705 100,000
7 21,373 7,795 7,214 100,000 10,383 9,801 100,000 13,723 13,142 100,000
8 25,066 8,424 7,959 100,000 11,722 11,257 100,000 16,175 15,710 100,000
9 28,945 8,889 8,540 100,000 12,980 12,631 100,000 18,766 18,417 100,000
10 33,017 9,172 9,172 100,000 14,137 14,137 100,000 21,503 21,503 100,000
11 37,293 9,256 9,256 100,000 15,175 15,175 100,000 24,402 24,402 100,000
12 41,782 9,123 9,123 100,000 16,074 16,074 100,000 27,490 27,490 100,000
13 46,497 8,755 8,755 100,000 16,814 16,814 100,000 30,796 30,796 100,000
14 51,446 8,126 8,126 100,000 17,368 17,368 100,000 34,352 34,352 100,000
15 56,644 7,198 7,198 100,000 17,698 17,698 100,000 38,194 38,194 100,000
16 62,101 5,923 5,923 100,000 17,754 17,754 100,000 42,362 42,362 100,000
17 67,831 4,233 4,233 100,000 17,468 17,468 100,000 46,905 46,905 100,000
18 73,848 2,042 2,042 100,000 16,753 16,753 100,000 51,886 51,886 100,000
19 80,165 (*) (*) (*) 15,506 15,506 100,000 57,393 57,393 100,000
20 86,798 (*) (*) (*) 13,612 13,612 100,000 63,554 63,554 100,000
21 93,763 (*) (*) (*) 10,938 10,938 100,000 70,545 70,545 100,000
22 101,076 (*) (*) (*) 7,324 7,324 100,000 78,598 78,598 100,000
23 108,755 (*) (*) (*) 2,570 2,570 100,000 88,027 88,027 100,000
24 116,818 (*) (*) (*) (*) (*) (*) 99,182 99,182 104,141
25 125,284 (*) (*) (*) (*) (*) (*) 111,579 111,579 117,158
26 134,173 (*) (*) (*) (*) (*) (*) 125,166 125,166 131,425
27 143,506 (*) (*) (*) (*) (*) (*) 140,042 140,042 147,044
28 153,307 (*) (*) (*) (*) (*) (*) 156,307 156,307 164,122
29 163,597 (*) (*) (*) (*) (*) (*) 174,066 174,066 182,769
30 174,402 (*) (*) (*) (*) (*) (*) 193,429 193,429 203,100
</TABLE>
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND A
MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND
$7.50 THEREAFTER. GUARANTEED VALUES REFLECT A 6% OF PREMIUM CHARGE ON ALL
PREMIUMS.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
49
<PAGE> 53
DEATH BENEFIT OPTION 2
$1,500 ANNUAL PREMIUM: $100,000 SPECIFIED AMOUNT
MALE: NON-TOBACCO: AGE 45
CURRENT VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
----------------------- ----------------------- -----------------------
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,575 956 59 100,956 1,026 129 101,026 1,097 199 101,097
2 3,229 1,940 1,043 101,940 2,141 1,244 102,141 2,352 1,454 102,352
3 4,965 2,891 2,084 102,891 3,287 2,479 103,287 3,717 2,909 103,717
4 6,788 3,810 3,092 103,810 4,464 3,746 104,464 5,202 4,484 105,202
5 8,703 4,695 4,066 104,695 5,672 5,044 105,672 6,820 6,192 106,820
6 10,713 5,546 5,007 105,546 6,912 6,374 106,912 8,582 8,043 108,582
7 12,824 6,362 5,914 106,362 8,184 7,736 108,184 10,502 10,054 110,502
8 15,040 7,144 6,785 107,144 9,489 9,130 109,489 12,596 12,237 112,596
9 17,367 7,891 7,622 107,891 10,827 10,558 110,827 14,881 14,611 114,881
10 19,810 8,602 8,602 108,602 12,198 12,198 112,198 17,373 17,373 117,373
11 22,376 9,277 9,277 109,277 13,602 13,602 113,602 20,094 20,094 120,094
12 25,069 9,914 9,914 109,914 15,040 15,040 115,040 23,066 23,066 123,066
13 27,898 10,514 10,514 110,514 16,512 16,512 116,512 26,315 26,315 126,315
14 30,868 11,075 11,075 111,075 18,017 18,017 118,017 29,875 29,875 129,875
15 33,986 11,551 11,551 111,551 19,509 19,509 119,509 33,731 33,731 133,731
16 37,261 11,966 11,966 111,966 21,012 21,012 121,012 37,939 37,939 137,939
17 40,699 12,318 12,318 112,318 22,519 22,519 122,519 42,530 42,530 142,530
18 44,309 12,600 12,600 112,600 24,027 24,027 124,027 47,539 47,539 147,539
19 48,099 12,816 12,816 112,816 25,538 25,538 125,538 53,012 53,012 153,012
20 52,079 12,978 12,978 112,978 27,068 27,068 127,068 59,012 59,012 159,012
21 56,258 13,038 13,038 113,038 28,565 28,565 128,565 65,539 65,539 165,539
22 60,646 12,986 12,986 112,986 30,018 30,018 130,018 72,639 72,639 172,639
23 65,253 12,813 12,813 112,813 31,412 31,412 131,412 80,361 80,361 180,361
24 70,091 12,509 12,509 112,509 32,732 32,732 132,732 88,757 88,757 188,757
25 75,170 12,061 12,061 112,061 33,962 33,962 133,962 97,883 97,883 197,883
26 80,504 11,461 11,461 111,461 35,083 35,083 135,083 107,805 107,805 207,805
27 86,104 10,698 10,698 110,698 36,079 36,079 136,079 118,594 118,594 218,594
28 91,984 9,762 9,762 109,762 36,929 36,929 136,929 130,328 130,328 230,328
29 98,158 8,639 8,639 108,639 37,611 37,611 137,611 143,088 143,088 243,088
30 104,641 7,311 7,311 107,311 38,095 38,095 138,095 156,962 156,962 256,962
</TABLE>
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY
$10.00 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5
THEREAFTER. CURRENT VALUES REFLECT A 6% OF PREMIUM CHARGE ON ALL PREMIUMS
UP TO THE BREAK POINT PREMIUM AND 4% ON PREMIUMS IN EXCESS OF BREAK POINT
FOR ANY SINGLE POLICY YEAR.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
50
<PAGE> 54
DEATH BENEFIT OPTION 2
$1,500 ANNUAL PREMIUM: $100,000 SPECIFIED AMOUNT
MALE: NON-TOBACCO: AGE 45
GUARANTEED VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
----------------------- ----------------------- -----------------------
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,575 926 29 100,926 995 97 100,995 1,063 166 101,063
2 3,229 1,840 942 101,840 2,034 1,137 102,034 2,238 1,340 102,238
3 4,965 2,709 1,901 102,709 3,088 2,281 103,088 3,500 2,693 103,500
4 6,788 3,532 2,814 103,532 4,154 3,436 104,154 4,858 4,140 104,858
5 8,703 4,306 3,678 104,306 5,230 4,601 105,230 6,316 5,688 106,316
6 10,713 5,028 4,489 105,028 6,309 5,771 106,309 7,881 7,342 107,881
7 12,824 5,691 5,242 105,691 7,388 6,939 107,388 9,556 9,107 109,556
8 15,040 6,290 5,931 106,290 8,457 8,098 108,457 11,345 10,986 111,345
9 17,367 6,818 6,548 106,818 9,510 9,240 109,510 13,252 12,983 113,252
10 19,810 7,268 7,268 107,268 10,537 10,537 110,537 15,281 15,281 115,281
11 22,376 7,635 7,635 107,635 11,529 11,529 111,529 17,437 17,437 117,437
12 25,069 7,912 7,912 107,912 12,477 12,477 112,477 19,724 19,724 119,724
13 27,898 8,095 8,095 108,095 13,375 13,375 113,375 22,150 22,150 122,150
14 30,868 8,177 8,177 108,177 14,209 14,209 114,209 24,721 24,721 124,721
15 33,986 8,146 8,146 108,146 14,965 14,965 114,965 27,441 27,441 127,441
16 37,261 7,991 7,991 107,991 15,625 15,625 115,625 30,317 30,317 130,317
17 40,699 7,700 7,700 107,700 16,171 16,171 116,171 33,349 33,349 133,349
18 44,309 7,253 7,253 107,253 16,575 16,575 116,575 36,532 36,532 136,532
19 48,099 6,632 6,632 106,632 16,810 16,810 116,810 39,859 39,859 139,859
20 52,079 5,818 5,818 105,818 16,846 16,846 116,846 43,322 43,322 143,322
21 56,258 4,796 4,796 104,796 16,656 16,656 116,656 46,916 46,916 146,916
22 60,646 3,550 3,550 103,550 16,209 16,209 116,209 50,634 50,634 150,634
23 65,253 2,064 2,064 102,064 15,476 15,476 115,476 54,470 54,470 154,470
24 70,091 321 321 100,321 14,421 14,421 114,421 58,414 58,414 158,414
25 75,170 (*) (*) (*) 12,998 12,998 112,998 62,441 62,441 162,441
26 80,504 (*) (*) (*) 11,147 11,147 111,147 66,517 66,517 166,517
27 86,104 (*) (*) (*) 8,797 8,797 108,797 70,591 70,591 170,591
28 91,984 (*) (*) (*) 5,858 5,858 105,858 74,596 74,596 174,596
29 98,158 (*) (*) (*) 2,239 2,239 102,239 78,453 78,453 178,453
30 104,641 (*) (*) (*) (*) (*) (*) 82,089 82,089 182,089
</TABLE>
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND A
MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND
$7.50 THEREAFTER. GUARANTEED VALUES REFLECT A 6% OF PREMIUM CHARGE ON ALL
PREMIUMS.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
51
<PAGE> 55
DEATH BENEFIT OPTION 2
$2,500 ANNUAL PREMIUM: $100,000 SPECIFIED AMOUNT
MALE: NON-TOBACCO: AGE 55
CURRENT VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
----------------------- ----------------------- -----------------------
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,625 1,436 274 101,436 1,548 386 101,548 1,661 498 101,661
2 5,381 2,891 1,728 102,891 3,206 2,043 103,206 3,535 2,373 103,535
3 8,275 4,303 3,257 104,303 4,915 3,869 104,915 5,581 4,534 105,581
4 11,314 5,673 4,743 105,673 6,678 5,748 106,678 7,814 6,884 107,814
5 14,505 7,001 6,187 107,001 8,496 7,682 108,496 10,255 9,442 110,255
6 17,855 8,287 7,590 108,287 10,371 9,674 110,371 12,924 12,227 112,924
7 21,373 9,532 8,951 109,532 12,306 11,725 112,306 15,844 15,262 115,844
8 25,066 10,735 10,270 110,735 14,302 13,837 114,302 19,039 18,574 119,039
9 28,945 11,897 11,548 111,897 16,361 16,012 116,361 22,538 22,189 122,538
10 33,017 13,017 13,017 113,017 18,486 18,486 118,486 26,372 26,372 126,372
11 37,293 14,096 14,096 114,096 20,679 20,679 120,679 30,588 30,588 130,588
12 41,782 14,952 14,952 114,952 22,754 22,754 122,754 35,029 35,029 135,029
13 46,497 15,607 15,607 115,607 24,725 24,725 124,725 39,740 39,740 139,740
14 51,446 16,084 16,084 116,084 26,615 26,615 126,615 44,771 44,771 144,771
15 56,644 16,368 16,368 116,368 28,401 28,401 128,401 50,137 50,137 150,137
16 62,101 16,499 16,499 116,499 30,116 30,116 130,116 55,912 55,912 155,912
17 67,831 16,480 16,480 116,480 31,759 31,759 131,759 62,141 62,141 162,141
18 73,848 16,296 16,296 116,296 33,308 33,308 133,308 68,854 68,854 168,854
19 80,165 15,950 15,950 115,950 34,758 34,758 134,758 76,101 76,101 176,101
20 86,798 15,453 15,453 115,453 36,114 36,114 136,114 83,948 83,948 183,948
21 93,763 14,693 14,693 114,693 37,253 37,253 137,253 92,337 92,337 192,337
22 101,076 13,644 13,644 113,644 38,135 38,135 138,135 101,293 101,293 201,293
23 108,755 12,278 12,278 112,278 38,712 38,712 138,712 110,841 110,841 210,841
24 116,818 10,563 10,563 110,563 38,934 38,934 138,934 121,006 121,006 221,006
25 125,284 8,472 8,472 108,472 38,750 38,750 138,750 131,817 131,817 231,817
26 134,173 5,973 5,973 105,973 38,102 38,102 138,102 143,303 143,303 243,303
27 143,506 3,039 3,039 103,039 36,934 36,934 136,934 155,498 155,498 255,498
28 153,307 (*) (*) (*) 35,184 35,184 135,184 168,441 168,441 268,441
29 163,597 (*) (*) (*) 32,776 32,776 132,776 182,160 182,160 282,160
30 174,402 (*) (*) (*) 29,616 29,616 129,616 196,671 196,671 296,671
</TABLE>
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY
$10.00 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5
THEREAFTER. CURRENT VALUES REFLECT A 6% OF PREMIUM CHARGE ON ALL PREMIUMS
UP TO THE BREAK POINT PREMIUM AND 4% ON PREMIUMS IN EXCESS OF BREAK POINT
FOR ANY SINGLE POLICY YEAR.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
52
<PAGE> 56
DEATH BENEFIT OPTION 1
$1,200 ANNUAL PREMIUM: $50,000 SPECIFIED AMOUNT
MALE: NON-TOBACCO: AGE 55
CURRENT VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
----------------------- ----------------------- -----------------------
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,260 613 - 50,000 665 - 50,000 716 23 50,000
2 2,583 1,240 547 50,000 1,383 690 50,000 1,533 840 50,000
3 3,972 1,841 1,218 50,000 2,117 1,494 50,000 2,418 1,794 50,000
4 5,431 2,430 1,876 50,000 2,882 2,328 50,000 3,395 2,840 50,000
5 6,962 3,008 2,523 50,000 3,680 3,195 50,000 4,474 3,989 50,000
6 8,570 3,574 3,158 50,000 4,512 4,097 50,000 5,667 5,251 50,000
7 10,259 4,129 3,782 50,000 5,382 5,035 50,000 6,988 6,641 50,000
8 12,032 4,672 4,395 50,000 6,290 6,012 50,000 8,451 8,174 50,000
9 13,893 5,204 4,996 50,000 7,239 7,031 50,000 10,073 9,865 50,000
10 15,848 5,726 5,726 50,000 8,232 8,232 50,000 11,872 11,872 50,000
11 17,901 6,236 6,236 50,000 9,271 9,271 50,000 13,870 13,870 50,000
12 20,056 6,650 6,650 50,000 10,278 10,278 50,000 16,017 16,017 50,000
13 22,318 6,979 6,979 50,000 11,265 11,265 50,000 18,348 18,348 50,000
14 24,694 7,235 7,235 50,000 12,242 12,242 50,000 20,902 20,902 50,000
15 27,189 7,409 7,409 50,000 13,205 13,205 50,000 23,709 23,709 50,000
16 29,808 7,453 7,453 50,000 14,115 14,115 50,000 26,785 26,785 50,000
17 32,559 7,367 7,367 50,000 14,973 14,973 50,000 30,192 30,192 50,000
18 35,447 7,135 7,135 50,000 15,771 15,771 50,000 33,991 33,991 50,000
19 38,479 6,754 6,754 50,000 16,508 16,508 50,000 38,263 38,263 50,000
20 41,663 6,228 6,228 50,000 17,194 17,194 50,000 43,110 43,110 50,000
21 45,006 5,525 5,525 50,000 17,809 17,809 50,000 48,642 48,642 51,074
22 48,517 4,617 4,617 50,000 18,339 18,339 50,000 54,802 54,802 57,542
23 52,202 3,468 3,468 50,000 18,764 18,764 50,000 61,585 61,585 64,664
24 56,073 2,036 2,036 50,000 19,063 19,063 50,000 69,050 69,050 72,502
25 60,136 270 270 50,000 19,211 19,211 50,000 77,260 77,260 81,123
26 64,403 (*) (*) (*) 19,185 19,185 50,000 86,287 86,287 90,601
27 68,883 (*) (*) (*) 18,952 18,952 50,000 96,206 96,206 101,016
28 73,587 (*) (*) (*) 18,469 18,469 50,000 107,098 107,098 112,453
29 78,527 (*) (*) (*) 17,675 17,675 50,000 119,052 119,052 125,005
30 83,713 (*) (*) (*) 16,488 16,488 50,000 132,159 132,159 138,767
</TABLE>
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY
$10.00 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5
THEREAFTER. CURRENT VALUES REFLECT A 6% OF PREMIUM CHARGE ON ALL PREMIUMS
UP TO THE BREAK POINT PREMIUM AND 4% ON PREMIUMS IN EXCESS OF BREAK POINT
FOR ANY SINGLE POLICY YEAR.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
53
<PAGE> 57
DEATH BENEFIT OPTION 1
$1,200 ANNUAL PREMIUM: $50,000 SPECIFIED AMOUNT
MALE: NON-TOBACCO: AGE 55
GUARANTEED VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
----------------------- ----------------------- -----------------------
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,260 467 - 50,000 513 - 50,000 560 - 50,000
2 2,583 908 215 50,000 1,031 338 50,000 1,159 466 50,000
3 3,972 1,291 668 50,000 1,519 895 50,000 1,768 1,144 50,000
4 5,431 1,611 1,057 50,000 1,971 1,417 50,000 2,383 1,829 50,000
5 6,962 1,861 1,376 50,000 2,378 1,893 50,000 2,998 2,513 50,000
6 8,570 2,033 1,617 50,000 2,731 2,315 50,000 3,606 3,190 50,000
7 10,259 2,119 1,772 50,000 3,018 2,671 50,000 4,200 3,854 50,000
8 12,032 2,105 1,828 50,000 3,222 2,945 50,000 4,768 4,490 50,000
9 13,893 1,979 1,771 50,000 3,326 3,118 50,000 5,293 5,086 50,000
10 15,848 1,724 1,724 50,000 3,310 3,310 50,000 5,763 5,763 50,000
11 17,901 1,326 1,326 50,000 3,154 3,154 50,000 6,158 6,158 50,000
12 20,056 769 769 50,000 2,833 2,833 50,000 6,461 6,461 50,000
13 22,318 35 35 50,000 2,321 2,321 50,000 6,649 6,649 50,000
14 24,694 (*) (*) (*) 1,585 1,585 50,000 6,694 6,694 50,000
15 27,189 (*) (*) (*) 578 578 50,000 6,556 6,556 50,000
16 29,808 (*) (*) (*) (*) (*) (*) 6,180 6,180 50,000
17 32,559 (*) (*) (*) (*) (*) (*) 5,492 5,492 50,000
18 35,447 (*) (*) (*) (*) (*) (*) 4,392 4,392 50,000
19 38,479 (*) (*) (*) (*) (*) (*) 2,752 2,752 50,000
20 41,663 (*) (*) (*) (*) (*) (*) 410 410 50,000
21 45,006 (*) (*) (*) (*) (*) (*) (*) (*) (*)
22 48,517 (*) (*) (*) (*) (*) (*) (*) (*) (*)
23 52,202 (*) (*) (*) (*) (*) (*) (*) (*) (*)
24 56,073 (*) (*) (*) (*) (*) (*) (*) (*) (*)
25 60,136 (*) (*) (*) (*) (*) (*) (*) (*) (*)
26 64,403 (*) (*) (*) (*) (*) (*) (*) (*) (*)
27 68,883 (*) (*) (*) (*) (*) (*) (*) (*) (*)
28 73,587 (*) (*) (*) (*) (*) (*) (*) (*) (*)
29 78,527 (*) (*) (*) (*) (*) (*) (*) (*) (*)
30 83,713 (*) (*) (*) (*) (*) (*) (*) (*) (*)
</TABLE>
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND A
MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND
$7.50 THEREAFTER. GUARANTEED VALUES REFLECT A 6% OF PREMIUM CHARGE ON ALL
PREMIUMS.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
54
<PAGE> 58
DEATH BENEFIT OPTION 2
$750 ANNUAL PREMIUM: $50,000 SPECIFIED AMOUNT
MALE: NON-TOBACCO: AGE 45
CURRENT VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
----------------------- ----------------------- -----------------------
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 788 418 - 50,418 452 - 50,452 485 - 50,485
2 1,614 876 302 50,876 970 396 50,970 1,068 494 51,068
3 2,483 1,311 795 51,311 1,495 979 51,495 1,695 1,179 51,695
4 3,394 1,726 1,267 51,726 2,029 1,570 52,029 2,371 1,912 52,371
5 4,351 2,122 1,720 52,122 2,574 2,172 52,574 3,105 2,703 53,105
6 5,357 2,500 2,156 52,500 3,130 2,785 53,130 3,900 3,556 53,900
7 6,412 2,859 2,573 52,859 3,697 3,410 53,697 4,764 4,477 54,764
8 7,520 3,200 2,970 53,200 4,274 4,045 54,274 5,701 5,472 55,701
9 8,683 3,520 3,348 53,520 4,862 4,690 54,862 6,720 6,548 56,720
10 9,905 3,821 3,821 53,821 5,460 5,460 55,460 7,827 7,827 57,827
11 11,188 4,100 4,100 54,100 6,067 6,067 56,067 9,030 9,030 59,030
12 12,535 4,359 4,359 54,359 6,684 6,684 56,684 10,339 10,339 60,339
13 13,949 4,596 4,596 54,596 7,309 7,309 57,309 11,763 11,763 61,763
14 15,434 4,811 4,811 54,811 7,942 7,942 57,942 13,314 13,314 63,314
15 16,993 5,003 5,003 55,003 8,582 8,582 58,582 15,003 15,003 65,003
16 18,630 5,171 5,171 55,171 9,229 9,229 59,229 16,843 16,843 66,843
17 20,349 5,284 5,284 55,284 9,850 9,850 59,850 18,815 18,815 68,815
18 22,154 5,336 5,336 55,336 10,437 10,437 60,437 20,927 20,927 70,927
19 24,049 5,331 5,331 55,331 10,991 10,991 60,991 23,196 23,196 73,196
20 26,039 5,275 5,275 55,275 11,516 11,516 61,516 25,642 25,642 75,642
21 28,129 5,150 5,150 55,150 11,992 11,992 61,992 28,273 28,273 78,273
22 30,323 4,951 4,951 54,951 12,410 12,410 62,410 31,100 31,100 81,100
23 32,626 4,669 4,669 54,669 12,758 12,758 62,758 34,136 34,136 84,136
24 35,045 4,297 4,297 54,297 13,024 13,024 63,024 37,392 37,392 87,392
25 37,585 3,826 3,826 53,826 13,193 13,193 63,193 40,880 40,880 90,880
26 40,252 3,248 3,248 53,248 13,250 13,250 63,250 44,616 44,616 94,616
27 43,052 2,553 2,553 52,553 13,181 13,181 63,181 48,613 48,613 98,613
28 45,992 1,734 1,734 51,734 12,969 12,969 62,969 52,890 52,890 102,890
29 49,079 778 778 50,778 12,594 12,594 62,594 57,459 57,459 107,459
30 52,321 (*) (*) (*) 12,031 12,031 62,031 62,336 62,336 112,336
</TABLE>
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY
$10.00 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5
THEREAFTER. CURRENT VALUES REFLECT A 6% OF PREMIUM CHARGE ON ALL PREMIUMS
UP TO THE BREAK POINT PREMIUM AND 4% ON PREMIUMS IN EXCESS OF BREAK POINT
FOR ANY SINGLE POLICY YEAR.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
55
<PAGE> 59
DEATH BENEFIT OPTION 2
$750 ANNUAL PREMIUM: $50,000 SPECIFIED AMOUNT
MALE: NON-TOBACCO: AGE 45
GUARANTEED VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
----------------------- ----------------------- -----------------------
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 788 352 - 50,352 382 - 50,382 413 - 50,413
2 1,614 710 136 50,710 794 220 50,794 881 308 50,881
3 2,483 1,043 527 51,043 1,203 686 51,203 1,377 861 51,377
4 3,394 1,349 890 51,349 1,607 1,148 51,607 1,900 1,441 51,900
5 4,351 1,628 1,226 51,628 2,005 1,604 52,005 2,453 2,051 52,453
6 5,357 1,875 1,531 51,875 2,394 2,049 52,394 3,033 2,689 53,033
7 6,412 2,088 1,801 52,088 2,767 2,480 52,767 3,641 3,354 53,641
8 7,520 2,263 2,034 52,263 3,121 2,891 53,121 4,274 4,045 54,274
9 8,683 2,395 2,222 52,395 3,448 3,276 53,448 4,929 4,757 54,929
10 9,905 2,479 2,479 52,479 3,743 3,743 53,743 5,603 5,603 55,603
11 11,188 2,512 2,512 52,512 3,999 3,999 53,999 6,293 6,293 56,293
12 12,535 2,490 2,490 52,490 4,210 4,210 54,210 6,996 6,996 56,996
13 13,949 2,410 2,410 52,410 4,370 4,370 54,370 7,708 7,708 57,708
14 15,434 2,268 2,268 52,268 4,471 4,471 54,471 8,426 8,426 58,426
15 16,993 2,054 2,054 52,054 4,500 4,500 54,500 9,139 9,139 59,139
16 18,630 1,763 1,763 51,763 4,448 4,448 54,448 9,839 9,839 59,839
17 20,349 1,385 1,385 51,385 4,299 4,299 54,299 10,515 10,515 60,515
18 22,154 910 910 50,910 4,037 4,037 54,037 11,149 11,149 61,149
19 24,049 323 323 50,323 3,640 3,640 53,640 11,722 11,722 61,722
20 26,039 (*) (*) (*) 3,091 3,091 53,091 12,213 12,213 62,213
21 28,129 (*) (*) (*) 2,367 2,367 52,367 12,600 12,600 62,600
22 30,323 (*) (*) (*) 1,450 1,450 51,450 12,860 12,860 62,860
23 32,626 (*) (*) (*) 319 319 50,319 12,967 12,967 62,967
24 35,045 (*) (*) (*) (*) (*) (*) 12,888 12,888 62,888
25 37,585 (*) (*) (*) (*) (*) (*) 12,584 12,584 62,584
26 40,252 (*) (*) (*) (*) (*) (*) 12,002 12,002 62,002
27 43,052 (*) (*) (*) (*) (*) (*) 11,075 11,075 61,075
28 45,992 (*) (*) (*) (*) (*) (*) 9,723 9,723 59,723
29 49,079 (*) (*) (*) (*) (*) (*) 7,858 7,858 57,858
30 52,321 (*) (*) (*) (*) (*) (*) 5,387 5,387 55,387
</TABLE>
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND A
MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND
$7.50 THEREAFTER. GUARANTEED VALUES REFLECT A 6% OF PREMIUM CHARGE ON ALL
PREMIUMS.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
56
<PAGE> 60
DEATH BENEFIT OPTION 2
$1,200 ANNUAL PREMIUM: $50,000 SPECIFIED AMOUNT
MALE: NON-TOBACCO: AGE 55
CURRENT VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
----------------------- ----------------------- -----------------------
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,260 606 - 50,606 657 - 50,657 708 15 50,708
2 2,583 1,219 526 51,219 1,360 667 51,360 1,507 814 51,507
3 3,972 1,800 1,177 51,800 2,070 1,446 52,070 2,364 1,740 52,364
4 5,431 2,364 1,809 52,364 2,802 2,248 52,802 3,299 2,745 53,299
5 6,962 2,910 2,425 52,910 3,557 3,072 53,557 4,322 3,837 54,322
6 8,570 3,439 3,023 53,439 4,336 3,920 54,336 5,439 5,023 55,439
7 10,259 3,950 3,604 53,950 5,139 4,793 55,139 6,662 6,315 56,662
8 12,032 4,445 4,167 54,445 5,968 5,691 55,968 8,000 7,723 58,000
9 13,893 4,922 4,714 54,922 6,824 6,616 56,824 9,466 9,258 59,466
10 15,848 5,383 5,383 55,383 7,707 7,707 57,707 11,072 11,072 61,072
11 17,901 5,827 5,827 55,827 8,618 8,618 58,618 12,832 12,832 62,832
12 20,056 6,155 6,155 56,155 9,457 9,457 59,457 14,658 14,658 64,658
13 22,318 6,380 6,380 56,380 10,231 10,231 60,231 16,566 16,566 66,566
14 24,694 6,515 6,515 56,515 10,949 10,949 60,949 18,578 18,578 68,578
15 27,189 6,552 6,552 56,552 11,600 11,600 61,600 20,694 20,694 70,694
16 29,808 6,434 6,434 56,434 12,119 12,119 62,119 22,862 22,862 72,862
17 32,559 6,165 6,165 56,165 12,503 12,503 62,503 25,090 25,090 75,090
18 35,447 5,728 5,728 55,728 12,727 12,727 62,727 27,370 27,370 77,370
19 38,479 5,130 5,130 55,130 12,786 12,786 62,786 29,710 29,710 79,710
20 41,663 4,380 4,380 54,380 12,682 12,682 62,682 32,128 32,128 82,128
21 45,006 3,454 3,454 53,454 12,380 12,380 62,380 34,601 34,601 84,601
22 48,517 2,333 2,333 52,333 11,848 11,848 61,848 37,113 37,113 87,113
23 52,202 996 996 50,996 11,052 11,052 61,052 39,642 39,642 89,642
24 56,073 (*) (*) (*) 9,955 9,955 59,955 42,163 42,163 92,163
25 60,136 (*) (*) (*) 8,518 8,518 58,518 44,650 44,650 94,650
26 64,403 (*) (*) (*) 6,714 6,714 56,714 47,084 47,084 97,084
27 68,883 (*) (*) (*) 4,503 4,503 54,503 49,439 49,439 99,439
28 73,587 (*) (*) (*) 1,845 1,845 51,845 51,679 51,679 101,679
29 78,527 (*) (*) (*) (*) (*) (*) 53,761 53,761 103,761
30 83,713 (*) (*) (*) (*) (*) (*) 55,624 55,624 105,624
</TABLE>
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND A MONTHLY
$10.00 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND $5
THEREAFTER. CURRENT VALUES REFLECT A 6% OF PREMIUM CHARGE ON ALL PREMIUMS
UP TO THE BREAK POINT PREMIUM AND 4% ON PREMIUMS IN EXCESS OF BREAK POINT
FOR ANY SINGLE POLICY YEAR.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
57
<PAGE> 61
DEATH BENEFIT OPTION 2
$1,200 ANNUAL PREMIUM: $50,000 SPECIFIED AMOUNT
MALE: NON-TOBACCO: AGE 55
GUARANTEED VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
----------------------- ----------------------- -----------------------
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURR DEATH CASH SURR DEATH CASH SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,260 458 - 50,458 504 - 50,504 550 - 50,550
2 2,583 885 192 50,885 1,005 312 51,005 1,130 437 51,130
3 3,972 1,247 623 51,247 1,467 843 51,467 1,708 1,084 51,708
4 5,431 1,538 984 51,538 1,882 1,328 51,882 2,277 1,722 52,277
5 6,962 1,752 1,267 51,752 2,241 1,756 52,241 2,826 2,341 52,826
6 8,570 1,882 1,466 51,882 2,531 2,116 52,531 3,345 2,929 53,345
7 10,259 1,920 1,573 51,920 2,741 2,395 52,741 3,822 3,475 53,822
8 12,032 1,852 1,575 51,852 2,852 2,575 52,852 4,236 3,959 54,236
9 13,893 1,667 1,459 51,667 2,846 2,638 52,846 4,566 4,358 54,566
10 15,848 1,352 1,352 51,352 2,703 2,703 52,703 4,790 4,790 54,790
11 17,901 898 898 50,898 2,404 2,404 52,404 4,883 4,883 54,883
12 20,056 294 294 50,294 1,931 1,931 51,931 4,818 4,818 54,818
13 22,318 (*) (*) (*) 1,262 1,262 51,262 4,567 4,567 54,567
14 24,694 (*) (*) (*) 373 373 50,373 4,094 4,094 54,094
15 27,189 (*) (*) (*) (*) (*) (*) 3,355 3,355 53,355
16 29,808 (*) (*) (*) (*) (*) (*) 2,292 2,292 52,292
17 32,559 (*) (*) (*) (*) (*) (*) 836 836 50,836
18 35,447 (*) (*) (*) (*) (*) (*) (*) (*) (*)
19 38,479 (*) (*) (*) (*) (*) (*) (*) (*) (*)
20 41,663 (*) (*) (*) (*) (*) (*) (*) (*) (*)
21 45,006 (*) (*) (*) (*) (*) (*) (*) (*) (*)
22 48,517 (*) (*) (*) (*) (*) (*) (*) (*) (*)
23 52,202 (*) (*) (*) (*) (*) (*) (*) (*) (*)
24 56,073 (*) (*) (*) (*) (*) (*) (*) (*) (*)
25 60,136 (*) (*) (*) (*) (*) (*) (*) (*) (*)
26 64,403 (*) (*) (*) (*) (*) (*) (*) (*) (*)
27 68,883 (*) (*) (*) (*) (*) (*) (*) (*) (*)
28 73,587 (*) (*) (*) (*) (*) (*) (*) (*) (*)
29 78,527 (*) (*) (*) (*) (*) (*) (*) (*) (*)
30 83,713 (*) (*) (*) (*) (*) (*) (*) (*) (*)
</TABLE>
(1) NO POLICY LOANS AND NO PARTIAL WITHDRAWALS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND A
MONTHLY $10 ADMINISTRATIVE EXPENSE CHARGE FOR THE FIRST POLICY YEAR AND
$7.50 THEREAFTER. GUARANTEED VALUES REFLECT A 6% OF PREMIUM CHARGE ON ALL
PREMIUMS.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL LAPSE WITHOUT VALUE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATION CAN BE MADE BY NATIONWIDE LIFE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
58
<PAGE> 62
Financial Statements to be provided by Pre-Effective Amendment
59
<PAGE> 63
PART II - OTHER INFORMATION
CONTENTS OF REGISTRATION STATEMENT
This Form S-6 Registration Statement comprises the following papers and
documents:
- The facing sheet.
- Cross-reference to items required by Form N-8B-2.
- The prospectus consisting of ____ pages.
- Representations and Undertakings.
- Signatures.
- Independent Auditors' Consent to be provided by pre-effective
amendment.
The following exhibits required by Forms N-8B-2 and S-6:
<TABLE>
<CAPTION>
<S> <C>
1. Power of Attorney dated July 26, 2000. Attached hereto.
2. Resolution of the Depositor's Board of Attached hereto.
Directors authorizing the establishment of
the Registrant, adopted
3. Distribution Contracts To be filed by Pre-Effective Amendment.
4. Form of Security Attached hereto.
5. Articles of Incorporation of Depositor Filed previously in connection with securities and Exchange
Commission File No. 333-27133 and is hereby incorporated by
reference.
6. Application form of Security Attached hereto.
7. Opinion of Counsel Attached hereto.
</TABLE>
<PAGE> 64
REPRESENTATIONS AND UNDERTAKINGS
The Registrant and Nationwide hereby make the following representations and
undertakings:
(a) This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940 (the "Act"). The Registrant and Nationwide elect to be
governed by Rule 6e-3(T)(b)(13)(i)(A) under the Act with respect to the
policies described in the prospectus. The policies have been designed in a
way as to qualify for the exemptive relief from various provisions of the
Act afforded by Rule 6e-3(T).
(b) Paragraph (b)(13)(iii)(F) of Rule 6e-3(T) is being relied on for the
deduction of the mortality and expense risk charges ("risk charges")
assumed by Nationwide under the policies. Naitionwide represents that the
risk charges are within the range of industry practice for comparable
policies and reasonable in relation to all of the risks assumed by the
issuer under the policies. Actuarial memoranda demonstrating the
reasonableness of these charges are maintained by Nationwide, and will be
made available to the Securities and Exchange Commission (the "SEC") on
request.
(c) Nationwide has concluded that there is a reasonable likelihood that the
distribution financing arrangement of the separate account will benefit the
separate account and the contractholders and will keep and make available
to the SEC on request a memorandum setting forth the basis for this
representation.
(d) Nationwide represents that the separate account will invest only in
management investment companies which have undertaken to have a board of
directors, a majority of whom are not interested persons of Nationwide,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
(e) Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the Registrant hereby undertakes to file with the SEC
such supplementary and periodic information, documents, and reports as may
be prescribed by any rule or regulation of the SEC heretofore or hereafter
duly adopted pursuant to authority conferred in that section.
(f) The fees and charges deducted under the policy in the aggregate are
reasonable in relation to the services rendered, the expenses expected to
be incurred, and the risks assumed by Nationwide.
<PAGE> 65
SIGNATURES
As required by the Securities Act of 1933, the Registrant, Nationwide VLI
Separate Account-5 and has caused this Registration Statement to be signed on
its behalf in the City of Columbus, and the State of Ohio, on this 20th day of
September, 2000.
<TABLE>
<CAPTION>
<S> <C>
NATIONWIDE VLI SEPARATE ACCOUNT-4
----------------------------------------------------------------
(Registrant)
(Seal) NATIONWIDE LIFE INSURANCE COMPANY
----------------------------------------------------------------
Attest: (Depositor)
By: /s/ GLENN W. SODEN By: /s/ STEVEN SAVINI
---------------------------------------------- ----------------------------------------------------------------
Glenn W. Soden Steven Savini, Esq.
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the
following persons in the capacities indicated on the 20th day of September, 2000.
SIGNATURE TITLE
LEWIS J. ALPHIN Director
----------------------------------------
Lewis J. Alphin
A. I. BELL Director
----------------------------------------
A. I. Bell
NANCY C. BREIT Director
----------------------------------------
Nancy C. Breit
KENNETH D. DAVIS Director
----------------------------------------
Kenneth D. Davis
KEITH W. ECKEL Director
----------------------------------------
Keith W. Eckel
WILLARD J. ENGEL Director
----------------------------------------
Willard J. Engel
FRED C. FINNEY Director
----------------------------------------
Fred C. Finney
JOSEPH J. GASPER President and Chief Operating
---------------------------------------- Officer and Director
Joseph J. Gasper
W.G. JURGENSEN Chief Executive Officer Elect
---------------------------------------- and Director
W.G. Jurgensen
DIMON R. MCFERSON Chairman and Chief Executive
---------------------------------------- Officer and Director
Dimon R. McFerson
DAVID O. MILLER Chairman of the Board and
---------------------------------------- Director
David O. Miller
YVONNE L. MONTGOMERY Director
----------------------------------------
Yvonne L. Montgomery
ROBERT A. OAKLEY Executive Vice President and Chief
---------------------------------------- Financial Officer
Robert A. Oakley
RALPH M. PAIGE Director
----------------------------------------
Ralph M. Paige
JAMES F. PATTERSON Director
----------------------------------------
James F. Patterson
ARDEN L. SHISLER Director By /s/ STEVEN SAVINI
---------------------------------------- --------------------------------------
Arden L. Shisler Steven Savini
ROBERT L. STEWART Director Attorney-in-Fact
----------------------------------------
Robert L. Stewart
</TABLE>
