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SUPPLEMENT DATED NOVEMBER 3, 1997 TO
PROSPECTUS DATED MAY 1, 1997 FOR
INDIVIDUAL MODIFIED SINGLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY
NATIONWIDE LIFE INSURANCE COMPANY
THROUGH ITS
NATIONWIDE FIDELITY ADVISOR VARIABLE ACCOUNT
This Supplement updates certain information contained in your Prospectus. Please
read it and keep it with your Prospectus for future reference.
1. The section entitled "Summary of Contract Expenses" located on page 7 of
the Prospectus is hereby replaced with the following:
SUMMARY OF CONTRACT EXPENSES
CONTRACT OWNER TRANSACTION EXPENSES
Maximum Contingent Deferred Sales Charge(1)............ 7 %
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RANGE OF CONTINGENT DEFERRED SALES CHARGE OVER TIME
Number of Completed Years from Contingent Deferred Sales Charge
Date of Purchase Payment Percentage
0 7%
1 6%
2 5%
3 4%
4 3%
5 2%
6 1%
7 0%
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VARIABLE ACCOUNT ANNUAL EXPENSES(2)
Mortality and Expense Risk Charge................... 1.25 %
Administration Charge............................... 0.15 %
Total Separate Account Annual Expenses.............. 1.40 %(3)
OPTIONAL LONG TERM CARE FACILITY AND
DEATH BENEFIT RIDERS(4)
Optional Long Term Care Facility and One-Year Stepped
Up Death Benefit (Rider Option 1)...................... 0.05 %
Total Variable Account Annual Expenses (Including
Rider Option 1)..................................... 1.45 %
Optional Long Term Care Facility and 5% Enhanced Death
Benefit (Rider Options 2).............................. 0.10 %
Total Variable Account Annual Expenses (Including
Rider Option 2)..................................... 1.50 %
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(1) Each contract year, the Contract Owner may withdraw without a
Contingent Deferred Sales Charge (CDSC) an amount equal to 10% of
the total sum of all Purchase Payments made at the time of
withdrawal. In addition, any amount withdrawn in order for the
Contract to meet minimum distribution requirements under the Code
shall be free of CDSC. Withdrawals may be restricted for Contracts
issued pursuant to the terms of a Tax Sheltered Annuity Plan. This
CDSC-free withdrawal privilege is non-cumulative; that is, free
amounts not taken during any given Contract Year cannot be taken
as free amounts in a subsequent Contract Year (see "Contingent
Deferred Sales Charge" for additional waiver provisions).
(2) The Variable Account charges set forth apply exclusively to
allocations made to the Sub-Account(s) of the Variable Account.
Such charges do not apply to, and will not be assessed against,
allocations made to the Fixed Account.
(3) The Total Variable Account Annual Expenses shown include the
Five-Year Reset Death Benefit ("Standard Contractual Death
Benefit") (see "Death Benefit Payment Provisions").
(4) For Contracts issued on or after the later of November 3, 1997, or
the date upon which the proper insurance authorities approve
applicable Contract modifications, the applicant may, at the time
of application, choose one of two Long Term Care Facility and
Death Benefit Riders in lieu of receiving the Standard Contractual
Death Benefit option which does not include any Long Term Care
Facility benefits (see "Long Term Care Facility and Death Benefit
Charges" for additional information). Should the applicant choose
a Rider Option, the Company will deduct an additional charge equal
to an annual rate of 0.05% for Rider Option 1, or 0.10% for Rider
Option 2, of the daily net asset value of the Variable Account
(see "Death Benefit Payment Provisions").
2. The "EXAMPLE" table located on page 9 of the Prospectus is hereby amended
to state "EXAMPLE (For Contracts Issued Without a Long Term Care Facility
and Death Benefit Rider)".
3. The "EXAMPLE" table located on page 9 of the Prospectus is further amended
to include the following additional table information:
<TABLE>
<CAPTION>
EXAMPLE (FOR CONTRACTS ISSUED WITH RIDER OPTION 2)
- -------------------------------------------------------------------------------------------------------
If you surrender your If you do not If you annuitize your
Contract at the end of surrender your Contract at the end of
the applicable time Contract at the end of the applicable time
period the applicable time period
period
- -------------------------------------------------------------------------------------------------------
1 3 5 10 1 3 5 10 1 3 5 10
Yr. Yrs. Yrs. Yrs. Yr. Yrs. Yrs. Yrs. Yr. Yrs. Yrs. Yrs.
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Variable Insurance Products 85 112 143 248 22 67 116 248 * 67 116 248
Fund: Equity-Income
Portfolio
- -------------------------------------------------------------------------------------------------------
Variable Insurance Products 86 116 148 260 23 71 121 260 * 71 121 260
Fund: Growth Portfolio
- -------------------------------------------------------------------------------------------------------
Variable Insurance Products 86 116 149 262 23 71 122 262 * 71 122 262
Fund: High Income Portfolio
- -------------------------------------------------------------------------------------------------------
Variable Insurance Products 89 123 161 285 26 78 134 285 * 78 134 285
Fund: Overseas Portfolio
- -------------------------------------------------------------------------------------------------------
Variable Insurance Products 82 103 128 218 19 58 101 218 * 58 101 218
Fund: Money Market
Portfolio
- -------------------------------------------------------------------------------------------------------
Variable Insurance Products 87 117 151 265 24 72 124 265 * 72 124 265
Fund II: Asset Manager
Portfolio
- -------------------------------------------------------------------------------------------------------
Variable Insurance Products 88 122 158 279 25 77 131 279 * 77 131 279
Fund II: Asset Manager:
Growth Portfolio
- -------------------------------------------------------------------------------------------------------
Variable Insurance Products 87 117 151 265 24 72 124 265 * 72 124 265
Fund II: Contrafund
Portfolio
- -------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
If you surrender your If you do not If you annuitize your
Contract at the end of surrender your Contract at the end of
the applicable time Contract at the end of the applicable time
period the applicable time period
period
- -------------------------------------------------------------------------------------------------------
1 3 5 10 1 3 5 10 1 3 5 10
Yr. Yrs. Yrs. Yrs. Yr. Yrs. Yrs. Yrs. Yr. Yrs. Yrs. Yrs.
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Variable Insurance Products 82 103 126 216 19 58 99 216 * 58 99 216
Fund II: Index 500
Portfolio
- -------------------------------------------------------------------------------------------------------
Variable Insurance Products 85 112 143 248 22 67 116 248 * 67 116 248
Fund II: Investment Grade
Bond Portfolio
- -------------------------------------------------------------------------------------------------------
Variable Insurance Products 86 117 150 263 23 72 123 263 * 72 123 263
Fund III: Balanced
Portfolio
- -------------------------------------------------------------------------------------------------------
Variable Insurance Products 87 118 153 268 24 73 126 268 * 73 126 268
Fund III: Growth
Opportunities Portfolio
- -------------------------------------------------------------------------------------------------------
Variable Insurance Products 86 116 149 261 23 71 122 261 * 71 122 261
Fund III: Growth & Income
- -------------------------------------------------------------------------------------------------------
</TABLE>
* The Contracts sold under this prospectus do not permit annuitizations
during the first two Contract Years.
The Example above takes into consideration the maximum amount which
could be assessed to a contract (1.50%), for the election of the Long
Term Care Facility and 5% Enhanced Death Benefit Rider (Rider Option
2) (see "Long Term Care Facility and Death Benefit Rider Charge" and
"Death Benefit Payment Provisions" for additional details on the rider
charges assessed). For these Contract which have not elected the Long
Term Care Facility and 5% Enhanced Death Benefit (Rider Option 2), the
expenses in the Example will be reduced accordingly.
The purpose of the Summary of Contract Expenses and Example is to
assist the Contract Owner in understanding the various costs and
expenses that will be borne directly or indirectly when investing in
the Contract. The expenses of the Variable Account as well as those of
the Mutual Funds are reflected in the Example. For more complete
descriptions of the expenses of the Variable Account, see "Variable
Account Charges, and Other Deductions." For more complete information
regarding expenses paid out of the assets of the underlying Mutual
Funds, see the underlying Mutual Fund prospectuses. Deductions for
premium taxes may also apply but are not reflected in the Example show
above (see "Premium Taxes").
4. The "SYNOPSIS" located on page 10 of the Prospectus is hereby amended to
include the following paragraph:
For Contracts issued on or after the later of November 3, 1997, or the
date upon which the proper insurance authorities approve applicable
Contract modifications, in cases where a Contract Owner has elected a Rider
Option at the time of application, the Company deducts: (1) a Long Term
Care Facility and One-Year Step Up Death Benefit (Rider Option 1) charge
equal to an annual rate of 0.05% of the daily net asset value of the
Variable Account; or (2) a Long Term Care Facility and 5% Enhanced Death
Benefit (Rider Option 2) charge equal to an annual rate of 0.10% of the
daily net asset value, depending on which Rider Option was chosen (see
"Long Term Care Facility and Death Benefit Charge", "Long Term Care
Facility Provisions" and "Death Benefit Payment Provision" for additional
information).
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5. The "EXPENSES OF VARIABLE ACCOUNT" sub-section located in the "VARIABLE
ACCOUNT CHARGES AND OTHER DEDUCTIONS" section on page 15 of the Prospectus
is hereby amended to read as follows:
The Variable Account is responsible for the following types of
expenses: (1) administrative expenses relating to the issuance and
maintenance of the Contracts; (2) a mortality risk charge associated with
guaranteeing the annuity purchase rates at issue for the life of the
Contracts; and (3) an expense risk charge associated with guaranteeing that
the Mortality Risk and Expense Risk and Administration Charges described in
this prospectus will not change regardless of actual expenses. In addition,
a charge will be deducted for those Contracts issued on or after November
3, 1997, in cases where Contract Owners have elected a Long Term Care
Facility and Death Benefit Rider. If these charges are insufficient to
cover these expenses, the loss will be borne by the Company.
For 1996, the Variable Account incurred total expenses equal to 1.54%
of its average net assets, relating to the administrative, sales, mortality
and expense risk charges described above for all Contracts outstanding
during that year. Deductions from and expenses paid out of the assets of
the underlying Mutual Funds are described in underlying Mutual Fund
prospectus.
All of the charges described in this section apply to Variable Account
allocations. Allocations to the Fixed Account are subject to Contingent
Deferred Sales Charges and Premium Tax deductions, if applicable, but are
not subject to charges exclusive to the Variable Account (i.e., the
Mortality Risk Charge, the Expense Risk Charge, the Administration Charge
and, if applicable, the Death Benefit Rider Charge).
6. In addition, the "VARIABLE ACCOUNT CHARGES AND OTHER DEDUCTIONS" section of
the Prospectus is hereby amended to include the following information:
LONG TERM CARE FACILITY AND DEATH BENEFIT RIDER CHARGE
For those Contracts where Contract Owners have elected a Long Term
Care Facility and Death Benefit Rider as chosen at the time of application,
the Company will deduct a charge equal to an annual rate of either 0.05% or
0.10% of the daily net asset value of the Variable Account depending on
which Long Term Care Facility and Death Benefit Rider was chosen (see
"Death Benefit Payment Provisions"). The Long Term Care Facility and Death
Benefit Rider charge is designed to reimburse the Company for increases in
the mortality and expense risks. The Company may generate a profit through
assessing this charge.
7. The "DEATH BENEFIT PAYMENT PROVISIONS" sub-section located in the "DEATH
BENEFIT AND OTHER DISTRIBUTIONS, ANNUITY PAYMENT PERIOD" section on page 28
of the Prospectus is amended to include the following information:
DEATH BENEFIT PAYMENT PROVISIONS (FOR CONTRACTS ISSUED ON OR AFTER NOVEMBER
3, 1997)
For Contracts issued on or after the later of November 3, 1997, or the
date upon which the proper insurance authorities approve applicable
Contract modifications, the Contract Owner may, at the time of application,
select one of three death benefits available under the Contract as listed
below. If no selection is made at the time of application, the Death
Benefit will be the Five Year Reset Death Benefit (Standard Contractual
Death Benefit).
FIVE-YEAR RESET DEATH BENEFIT (STANDARD CONTRACTUAL DEATH BENEFIT)
If the Annuitant dies at any time prior to the Annuitization Date, the
dollar amount of the death benefit will be the greatest of:
(1) the Contract Value;
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(2) the total of all Purchase Payments made to the Contract, less an
adjustment for amounts surrendered; or
(3) the Contract Value as of the most recent five year Contract
Anniversary before the Annuitant's 86th birthday, less adjustments for
amounts surrendered, plus Purchase Payments received after that
Contract Anniversary.
The adjustment for amounts surrendered will reduce items (2) and (3) above
in the same proportion that the Contract Value was reduced on the date of
the partial surrender.
No additional charge will be assessed to the Contract Owner for election of
the Five-Year Reset (Standard Contractual Death Benefit).
ONE-YEAR STEP UP DEATH BENEFIT (RIDER OPTION 1)
If the Annuitant dies at any time prior to the Annuitization Date, the
dollar amount of the death benefit will be the greatest of:
(1) the Contract Value;
(2) the total of all Purchase Payments, less an adjustment for amounts
surrendered; or
(3) the highest Contract Value on any Anniversary Date before the
Annuitant's 86th birthday, less an adjustment for amounts surrendered,
plus Purchase Payments received after that Contract Anniversary.
The adjustment for amounts surrendered will reduce items (2) and (3) above
in the same proportion that the Contract Value was reduced on the date of
the partial surrender.
For this Death Benefit Option, the Company deducts a charge at an annual
rate of 0.05% of the daily net asset value of the Variable Account. This
charge is designed only to reimburse the Company for increases in the
mortality and expense risks, and consequently the Company may lower this
charge at any time without prior notice to the Contract Owner. However, the
Company may generate a profit through assessing this charge.
5% ENHANCED DEATH BENEFIT (RIDER OPTION 2)
If the Annuitant dies at any time prior to Annuitization Date, the dollar
amount of the death benefit will be the greater of:
(1) the Contract Value; or
(2) the total of all Purchase Payments, less any amounts surrendered,
accumulated at 5% simple interest from the date of each Purchase
Payment or surrender to the most recent Contract Anniversary Date
prior to the Annuitant's 86 birthday, less an adjustment for amounts
surrendered, plus Purchase Payments received since that anniversary.
Such total accumulated amount shall not exceed 200% of the net of Purchase
Payments and amounts surrendered. The adjustment for amounts subsequently
surrendered after the most recent Contract Anniversary Date will reduce the
5% interest anniversary value in the same proportion that the Contract
Value was reduced on the date of the partial surrender.
For this Death Benefit Rider Option, the Company deducts a charge at an
annual rate of 0.10% of the daily net asset value of the Variable Account.
This charge is designed only to reimburse the Company for increases in the
mortality and expense risks, and consequently, the Company may lower this
charge at any time without prior notice to the Contract Owner. However, the
Company may generate a profit through assessing this charge.
FOR ANY DEATH BENEFIT OPTION SELECTED, IF THE ANNUITANT DIES AFTER THE
ANNUITIZATION DATE, ANY PAYMENT THAT MAY BE PAYABLE WILL BE DETERMINED
ACCORDING TO THE SELECTED ANNUITY PAYMENT OPTION.
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8. The "ANNUITY PAYMENT PERIOD, DEATH BENEFIT AND OTHER DISTRIBUTIONS" section
of the prospectus is amended to include the following information:
LONG TERM CARE FACILITY RIDERS PROVISION
For those Contracts which have elected a Long Term Care Facility and
Death Benefit Rider at the time of application, the following Long Term
Care Facility provisions also apply. Beginning at the third Contract
Anniversary Date, surrender charges on withdrawals will not apply if a
Contract Owner is confined to a Long Term Care Facility or hospital, as
defined by the applicable endorsement to the Contract, and has been
confined in such facility for a continuous 90 day period. In addition, upon
receipt of a physician's letter at the Company's Home Office, no surrender
charges will be deducted upon withdrawals if the Contract Owner has been
diagnosed by that physician to have a terminal illness, as defined by the
applicable endorsement to the Contract.
The Contract Owner may be subject to income tax on all or a portion of
any such withdrawals and to a tax penalty if the Contract Owner takes
withdrawals prior to age 59-1/2 (see "FEDERAL TAX CONSIDERATIONS -
Non-Qualified Contracts - Natural Persons as Owners").
