<PAGE> 1
As filed with the Securities and Exchange Commission.
'33 Act File No.__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 [X]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
NATIONWIDE VARIABLE ACCOUNT-6
(Exact Name of Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
(Name of Depositor)
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (614) 249-7111
GORDON E. MCCUTCHAN, SECRETARY, ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
(Name and Address of Agent for Service)
================================================================================
The Registrant elects to register an indefinite number of securities in
accordance with Rule 24f-2 under the Investment Company Act of 1940.
Approximate date of proposed public offering: (Upon the effective date
of this Registration Statement - May 1, 1997 Requested.)
The Registrant hereby amends the 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 become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
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NATIONWIDE VARIABLE ACCOUNT-6
REFERENCE TO ITEMS REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
N-4 ITEM PAGE
Part A INFORMATION REQUIRED IN A PROSPECTUS
<S> <C> <C>
Item 1. Cover page................................................................................. 3
Item 2. Definitions................................................................................ 4
Item 3. Synopsis or Highlights..................................................................... 11
Item 4. Condensed Financial Information............................................................ 9
Item 5. General Description of Registrant, Depositor, and Portfolio Companies...................... 12
Item 6. Deductions and Expenses.................................................................... 14
Item 7. General Description of Variable Annuity Contracts.......................................... 12
Item 8. Annuity Period............................................................................. 24
Item 9. Death Benefit.............................................................................. 26
Item 10. Purchases and Contract Value............................................................... 16
Item 11. Redemptions................................................................................ 20
Item 12. Taxes...................................................................................... 31
Item 13. Legal Proceedings.......................................................................... 36
Item 14. Table of Contents of the Statement of Additional Information............................... 36
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover Page................................................................................. 39
Item 16. Table of Contents.......................................................................... 39
Item 17. General Information and History............................................................ 39
Item 18. Services................................................................................... 39
Item 19. Purchase of Securities Being Offered....................................................... 39
Item 20. Underwriters............................................................................... 40
Item 21. Calculation of Yield Quotations of Money Market Sub-Accounts............................... 40
Item 22. Annuity Payments........................................................................... 41
Item 23. Financial Statements ...................................................................... 42
Part C OTHER INFORMATION
Item 24. Financial Statements and Exhibits.......................................................... 42
Item 25. Directors and Officers of the Depositor.................................................... 43
Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant............. 45
Item 27. Number of Contract Owners.................................................................. 54
Item 28. Indemnification............................................................................ 54
Item 29. Principal Underwriter...................................................................... 54
Item 30. Location of Accounts and Records........................................................... 56
Item 31. Management Services........................................................................ 56
Item 32. Undertakings............................................................................... 56
</TABLE>
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NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE
P.O. BOX 182008
COLUMBUS, OHIO , 43216, 1-800-240-5054, TDD 1-800-238-3035
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY THE NATIONWIDE VARIABLE ACCOUNT-6
OF NATIONWIDE LIFE INSURANCE COMPANY
The Individual Deferred Variable Annuity Contracts described in this
prospectus are flexible Purchase Payment contracts (collectively referred to as
the "Contracts"). Reference throughout the prospectus to such Contracts shall
also mean "Certificates" issued under Group Flexible Fund Retirement Contracts.
For such group contracts, references to "Owner" shall mean the "Participant"
unless the Plan otherwise permits or requires the Owner to exercise contractual
rights under the authority of the Plan terms. The Contracts are sold as
Non-Qualified Contracts, as Individual Retirement Annuities, to Simplified
Employee Pension Plans, as Qualified Contracts and as Tax Sheltered Annuities.
Annuity payments under the Contracts are deferred until a selected later date.
Purchase Payments are allocated to the Nationwide Variable Account-6
("Variable Account"), a separate account of Nationwide Life Insurance Company
(the "Company"). The Variable Account is divided into Sub-Accounts, each of
which invests in shares of one of the underlying Mutual Fund options described
below:
EVERGREEN VARIABLE TRUST
Evergreen VA Foundation Fund Evergreen VA Fund
Evergreen VA Growth and Income Fund
NATIONWIDE SEPARATE ACCOUNT TRUST
Government Bond Fund
Money Market Fund
This prospectus provides you with the basic information you should know
about the Individual Deferred Variable Annuity Contracts issued by the
Nationwide Variable Account-6 before investing. You should read it and keep it
for future reference. A Statement of Additional Information dated May 1, 1997
containing further information about the Contracts and the Nationwide Variable
Account-6 has been filed with the Securities and Exchange Commission. You can
obtain a copy without charge from Nationwide Life Insurance Company by calling
the number listed above, or writing P.O. Box 182008, Columbus, Ohio 43216.
INVESTMENTS IN THESE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, AND ARE NOT
GUARANTEED OR ENDORSED BY, THE ADVISER OF ANY OF THE UNDERLYING MUTUAL FUNDS
IDENTIFIED ABOVE, THE U.S. GOVERNMENT, OR ANY BANK OR BANK AFFILIATE.
INVESTMENTS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. ANY
INVESTMENT IN THE CONTRACT INVOLVES CERTAIN INVESTMENT RISK WHICH MAY INCLUDE
THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 1997, IS INCORPORATED
HEREIN BY REFERENCE. THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL
INFORMATION APPEARS ON PAGE 34 OF THE PROSPECTUS.
--
THE DATE OF THIS PROSPECTUS IS MAY 1, 1997.
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GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT- An accounting unit of measure used to calculate the Variable
Account Contract Value prior to the Annuitization Date.
ANNIVERSARY VALUE - The Contract Value on a Contract Anniversary.
ANNUITANT- The person designated to receive annuity payments and upon whose
continuation of life any annuity payments involving life contingencies depends.
This person must be age 85 or younger at the time of Contract issuance unless
the Company has approved a request for an Annuitant of greater age. The
Annuitant may be changed prior to the Annuitization Date with the consent of the
Company.
ANNUITIZATION DATE- The date the annuity payments actually commence at
Annuitization.
ANNUITY COMMENCEMENT DATE- The date on which annuity payments are scheduled to
commence. The Annuity Commencement Date is shown on the Data Page of the
Contract, and is subject to change by the Contract Owner.
ANNUITY PAYMENT OPTION- The chosen form of annuity payments. Several options are
available under the Contract.
ANNUITY UNIT- An accounting unit of measure used to calculate the value of
Variable Annuity payments.
BENEFICIARY- The Beneficiary is the person designated to receive certain
benefits under the Contract upon the death of the Annuitant prior to the
Annuitization Date. The Beneficiary can be changed by the Contract Owner as set
forth in the Contract.
CODE- The Internal Revenue Code of 1986, as amended.
COMPANY- Nationwide Life Insurance Company.
CONTINGENT ANNUITANT- The Contingent Annuitant may be the recipient of certain
rights or benefits under this Contract when the Annuitant dies before the
Annuitization Date. If a Contingent Annuitant is designated and the Annuitant
dies before the Annuitization Date, the Contingent Annuitant becomes the
Annuitant. A Contingent Annuitant may not be named for Contracts issued as
Qualified Contracts, Individual Retirement Annuities, SEP IRAs, or Tax Sheltered
Annuities.
CONTINGENT BENEFICIARY- The Contingent Beneficiary is the person designated to
be the Beneficiary if the named Beneficiary is not living at the time of the
death of the Annuitant.
CONTINGENT OWNER- A Contingent Owner succeeds to the rights of the Contract
Owner upon the Contract Owner's death before Annuitization. For Contracts issued
in the State of New York, references throughout this prospectus to "Contingent
Owner" shall mean "Owner's Beneficiary." A Contingent Owner may not be named for
Contracts issued as Qualified Contracts, Individual Retirement Annuities, SEP
IRAs, or Tax Sheltered Annuities.
CONTRACT- The Individual Deferred Variable Annuity Contract described in this
prospectus.
CONTRACT ANNIVERSARY- An anniversary of the Date of Issue of the Contract.
CONTRACT OWNER (OWNER)- The Contract Owner is the person who possesses all
rights under the Contract, including the right to designate and change any
designations of the Owner, Contingent Owner, Annuitant, Contingent Annuitant,
Beneficiary, Contingent Beneficiary, Annuity Payment Option, and the Annuity
Commencement Date. The Contract Owner is the person named as owner in the
application unless changed.
CONTRACT VALUE- The sum of the value of all Variable Account Accumulation Units
attributable to the Contract plus any amount held under the Contract in the
Fixed Account.
CONTRACT YEAR- Each year the Contract remains in force commencing with the Date
of Issue.
DATE OF ISSUE- The date shown as the Date of Issue on the Data Page of the
Contract.
DEATH BENEFIT- The benefit is payable upon the death of the Annuitant or the
Contingent Annuitant, if applicable. This benefit does not apply upon the death
of the Contract Owner when the Owner and
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Annuitant are not the same person. If the Annuitant dies after the Annuitization
Date, any benefit that may be payable shall be as specified in the Annuity
Payment Option elected.
DISTRIBUTION- Any payment of part or all of the Contract Value.
ERISA- The Employee Retirement Income Security Act of 1974, as amended.
FIXED ACCOUNT- The Fixed Account is made up of all assets of the Company other
than those in the Variable Account or any other segregated asset account of the
Company.
FIXED ANNUITY- An annuity providing for payments which are guaranteed by the
Company as to dollar amount during Annuitization.
HOME OFFICE- The main office of the Company located in Columbus, Ohio.
INDIVIDUAL RETIREMENT ANNUITY- An annuity contract which qualifies for favorable
tax treatment under Section 408(b) of the Code.
INTEREST RATE GUARANTEE PERIOD- An Interest Rate Guarantee Period is the
interval of time during which an interest rate credited to the Fixed Account is
guaranteed to remain the same. For new Purchase Payments allocated to the Fixed
Account or transfers from the Variable Account, this period begins upon the date
of deposit or transfer and ends at the end of the calendar quarter at least one
year (but not more than 15 months) from deposit or transfer. At the end of an
Interest Rate Guarantee Period, a new interest rate is declared with an Interest
Rate Guarantee Period starting at the end of the prior period and ending at the
end of the calendar quarter one year later.
JOINT OWNER- The Joint Owner, if any, possesses an undivided interest in the
entire Contract in conjunction with the Owner. If a Joint Owner is named,
references to "Contract Owner", "Owner", or "Joint Owner" in this prospectus
will apply to both the Owner and Joint Owner or either of them. Joint Owners
must be spouses at the time Joint Ownership is requested. Joint Ownership may be
selected only for a Non-Qualified Contract.
MUTUAL FUND (FUND)- A registered management investment company in which the
assets of the Sub-Accounts of the Variable Account will be invested.
NON-QUALIFIED CONTRACT- A Contract which does not qualify for favorable tax
treatment under the provisions of Sections 401 or 403(a) (Qualified Plans), 408
(IRAs) or 403(b) (Tax-Sheltered Annuities) of the Code.
PLAN PARTICIPANT- The Plan Participant is the person for whom contributions are
being made to a Qualified Contract or a Tax Sheltered Annuity either through
employer contributions and/or employee salary reduction contributions.
PURCHASE PAYMENT- A deposit of new value into the Contract. The term "Purchase
Payment" does not include transfers between the Variable Account and Fixed
Account, or among the Sub-Accounts.
QUALIFIED CONTRACT- A Contract issued to fund a Qualified Plan.
QUALIFIED PLANS- Retirement plans which receive favorable tax treatment under
the provisions of Sections 401 or 403(a) of the Code.
SEP IRA- A retirement plan which receives favorable tax treatment under the
provisions of Section 408(k) of the Code.
SUB-ACCOUNTS- Separate and distinct divisions of the Variable Account, to which
specific underlying Mutual Fund shares are allocated and for which Accumulation
Units and Annuity Units are separately maintained.
TAX SHELTERED ANNUITY- An annuity which qualifies for favorable tax treatment
under Section 403(b) of the Code.
VALUATION DATE- Each day the New York Stock Exchange and the Company's Home
Office are open for business or any other day during which there is a sufficient
degree of trading of the Variable Account's underlying Mutual Fund shares that
the current net asset value of its Accumulation Units might be materially
affected.
VALUATION PERIOD- The period of time commencing at the close of a Valuation Date
and ending at the close of business for the next succeeding Valuation Date.
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VARIABLE ACCOUNT- The Nationwide Variable Account-6, a separate investment
account of the Company into which Variable Account Purchase Payments are
allocated. The Variable Account is divided into Sub-Accounts, each of which
invests in the shares of a separate underlying Mutual Fund.
VARIABLE ANNUITY- An annuity providing for payments which are not predetermined
or guaranteed as to dollar amount and which vary in amount with the investment
experience of the Variable Account.
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<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
GLOSSARY OF SPECIAL TERMS.................................................................................... 2
SUMMARY OF CONTRACT EXPENSES................................................................................. 2
UNDERLYING MUTUAL FUND ANNUAL EXPENSES....................................................................... 7
SYNOPSIS..................................................................................................... 9
CONDENSED FINANCIAL INFORMATION.............................................................................. N/A
NATIONWIDE LIFE INSURANCE COMPANY............................................................................ 10
THE VARIABLE ACCOUNT......................................................................................... 10
Underlying Mutual Fund Options................................................................... 10
Evergreen Variable Trust......................................................................... 10
Nationwide Separate Account Trust................................................................ 11
Voting Rights.................................................................................... 11
Substitution of Securities....................................................................... 12
VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS, AND OTHER DEDUCTIONS............................................ 12
Expenses of the Variable Account................................................................. 12
Mortality Risk Charge............................................................................ 12
Expense Risk Charge.............................................................................. 12
Administration Charge............................................................................ 12
Contingent Deferred Sales Charge ................................................................ 13
Waiver of the Contingent Deferred Sales Charge................................................... 13
Premium Taxes.................................................................................... 14
OPERATION OF THE CONTRACT.................................................................................... 14
Investments of the Variable Account.............................................................. 14
Allocation of Purchase Payments and Contract Value............................................... 14
Value of an Annuity Unit......................................................................... 15
Value of a Variable Account Accumulation Unit.................................................... 15
Net Investment Factor............................................................................ 15
Valuation of Assets.............................................................................. 16
Determining the Contract Value................................................................... 16
Right to Revoke.................................................................................. 16
Transfers........................................................................................ 16
Contract Ownership Provisions.................................................................... 17
Joint Ownership Provisions....................................................................... 17
Contingent Ownership Provisions.................................................................. 17
Beneficiary Provisions........................................................................... 18
Surrender (Redemption)........................................................................... 18
Surrenders Under a Tax-Sheltered Annuity Contract................................................ 19
Loan Privilege................................................................................... 19
Assignment....................................................................................... 20
Contract Owner Services.......................................................................... 21
Asset Rebalancing...................................................................... 21
Dollar Cost Averaging.................................................................. 21
Systematic Withdrawals................................................................. 21
ANNUITY PAYMENT PERIOD, DEATH BENEFIT, AND OTHER DISTRIBUTIONS............................................... 22
Annuity Commencement Date........................................................................ 22
Change in Annuity Commencement Date.............................................................. 22
Annuity Payment Period-Variable Account.......................................................... 22
Assumed Investment Rate.......................................................................... 23
Frequency and Amount of Annuity Payments......................................................... 23
Change in Form of Annuity........................................................................ 23
Annuity Payment Options.......................................................................... 23
Death of Contract Owner Provisions-Non-Qualified Contracts....................................... 24
Death of Annuitant Provisions-Non-Qualified Contracts............................................ 24
Death of the Owner/Annuitant Provisions.......................................................... 24
Death Benefit Payment Provisions................................................................. 24
Required Distribution Provisions for Non-Qualified Contracts..................................... 25
</TABLE>
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<TABLE>
<CAPTION>
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Required Distribution For Tax Sheltered Annuities and Qualified Plans............................ 25
Required Distribution for Individual Retirement Annuities and SEP IRAs........................... 26
Generation-Skipping Transfers.................................................................... 27
GENERAL INFORMATION.......................................................................................... 27
Contract Owner Inquiries......................................................................... 27
Statements and Reports........................................................................... 27
Advertising...................................................................................... 28
FEDERAL TAX CONSIDERATIONS................................................................................... 29
Federal Income Taxes............................................................................. 29
Non-Qualified Contracts-Natural Persons as Owners................................................ 29
Non-Qualified Contracts-Non-Natural Persons as Owners............................................ 30
Qualified Plans, Individual Retirement Annuities, SEP IRAs, and Tax Sheltered Annuities.......... 31
Withholding...................................................................................... 31
Non-Resident Aliens.............................................................................. 31
Federal Estate, Gift, and Generation Skipping Transfer Taxes..................................... 32
Charge for Tax Provisions........................................................................ 32
Diversification.................................................................................. 32
Tax Changes...................................................................................... 32
LEGAL PROCEEDINGS............................................................................................ 34
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION..................................................... 34
APPENDIX .................................................................................................... 35
</TABLE>
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SUMMARY OF CONTRACT EXPENSES
CONTRACT OWNER TRANSACTION EXPENSES
Maximum Contingent Deferred Sales Charge1.......................... 6 %
----
- --------------------------------------------------------------------------------
RANGE OF CONTINGENT DEFERRED SALES CHARGE OVER TIME
<TABLE>
<CAPTION>
Number of Completed Years from Contingent Deferred Sales Load
Date of Purchase Payment Percentage
<S> <C>
0 6%
1 6%
2 5%
3 5%
4 4%
5 3%
6 2%
7 0%
</TABLE>
- --------------------------------------------------------------------------------
VARIABLE ACCOUNT ANNUAL EXPENSES
<TABLE>
<CAPTION>
<S> <C>
Mortality and Expense Risk Charges................................ 1.25%
Administration Charge............................................. 0.15%
Total Variable Account Annual Expenses....................... 1.40%
</TABLE>
(1)Each Contract Year, the Contract Owner may withdraw without a
Contingent Deferred Sales Charge (CDSC), the greater of (a) an amount
equal to 10% of the total sum of all Purchase Payments made to the
Contract or (b) any amount withdrawn in order for the Contract to meet
minimum distribution requirements under the Code. Withdrawals may be
restricted for Contracts issued pursuant to the terms of a Tax
Sheltered Annuity Plan or other Qualified 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).
UNDERLYING MUTUAL FUND ANNUAL EXPENSES(2)
(as a percentage of underlying Mutual Fund average net assets)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Management Total Mutual
Fees Other Expenses Fund Expenses
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Evergreen Variable Trust-Evergreen VA Foundation 0.82% 0.18% 1.00%
Fund
- --------------------------------------------------------------------------------------------------------------
Evergreen Variable Trust-Evergreen VA Fund 0.95% 0.05% 1.00%
- --------------------------------------------------------------------------------------------------------------
Evergreen Variable Trust-Evergreen VA Growth and 0.95% 0.05% 1.00%
Income Fund
- --------------------------------------------------------------------------------------------------------------
Nationwide Separate Account Trust-Government 0.50% 0.01% 0.51%
Bond Fund
- --------------------------------------------------------------------------------------------------------------
Nationwide Separate Account Trust-Money Market 0.50% 0.02% 0.52%
Fund
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(2)The Mutual Fund expenses shown above are assessed at the underlying
Mutual Fund level and are not direct charges against separate account
assets or reductions from Contract Values. These underlying Mutual Fund
expenses are taken into consideration in computing each underlying
Mutual Fund's net asset value, which is the share price used to
calculate the unit values of the Variable Account. The management fees
and other expenses, are more fully described in the prospectuses for
each individual underlying Mutual Fund. The information relating to the
underlying Mutual Fund expenses was provided by the underlying Mutual
Fund and was not independently verified by the Company.
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EXAMPLE
The following chart depicts the dollar amount of expenses that would be incurred
under this Contract assuming a $1000 investment and 5% annual return. These
dollar figures are illustrative only and should not be considered a
representation of past or future expenses. Actual expenses may be greater or
lesser than those shown below.
<TABLE>
<CAPTION>
- --------------------- -------------------------- ---------------------------- ----------------------------
If you surrender your If you do not surrender your If you annuitize your
Contract at the end of the Contract at the end of the Contract at the end of the
applicable time period applicable time period applicable time period
- --------------------- -------------------------- ---------------------------- ----------------------------
1 Yr 3 Yrs 5 Yrs 10 Yrs 1 Yr 3 Yrs 5 Yrs 10 Yrs 1 Yr 3 Yrs 5 Yrs 10 Yrs
- --------------------- ---- ----- ----- ------ ------ ------- ------ ------ ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Evergreen Variable 79 122 168 282 25 77 132 282 * 77 132 282
Trust-Evergreen VA
Foundation Fund
- --------------------- ---- ----- ----- ------ ------ ------- ------ ------ ------ ------ ------- ------
Evergreen Variable 79 122 168 282 25 77 132 282 * 77 132 282
Trust-Evergreen VA
Fund
- --------------------- ---- ----- ----- ------ ------ ------- ------ ------ ------ ------ ------- ------
Evergreen Variable 79 122 168 282 25 77 132 282 * 77 132 282
Trust-Evergreen VA
Growth and Income
Fund
- --------------------- ---- ----- ----- ------ ------ ------- ------ ------ ------ ------ ------- ------
Nationwide Separate 74 107 142 230 20 62 106 230 * 62 106 230
Account
Trust-Government
Bond Fund
- --------------------- ---- ----- ----- ------ ------ ------- ------ ------ ------ ------ ------- ------
Nationwide Separate 74 107 143 231 20 62 107 231 * 62 107 231
Account Trust-Money
Market Fund
- --------------------- ---- ----- ----- ------ ------ ------- ------ ------ ------ ------ ------- ------
</TABLE>
*The Contracts sold under this prospectus do not permit annuitizations during
the first two Contract Years.
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 underlying Mutual Funds are reflected
in the Example. For more complete descriptions of the expenses of the Variable
Account, see "Variable Account Charges, Purchase Payments, and Other
Deductions." For more complete information regarding expenses paid out of the
assets of the underlying Mutual Fund options, see the underlying Mutual Fund
prospectuses. Deductions for premium taxes may also apply but are not reflected
in the Example shown above (see "Premium Taxes" provision).
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SYNOPSIS
The Individual Deferred Variable Annuity Contracts described in this
prospectus are designed for use in connection with the following types of
Contracts: (1) Non-Qualified, (2) Individual Retirement Annuities, (3) Tax
Sheltered Annuities, (4) SEP IRAs, and (5) Qualified.
The Company does not deduct a sales charge from Purchase Payments made
for these Contracts. However, if any part of the Contract Value of such
Contracts is surrendered, the Company will, with certain exceptions, deduct from
the Contract Owner's Contract Value a Contingent Deferred Sales Charge not to
exceed 6% of the lesser of the total of all Purchase Payments made within 84
months prior to the date of the request to surrender or the amount surrendered.
This charge, when applicable, is imposed to permit the Company to recover sales
expenses which have been advanced by the Company (see "Contingent Deferred Sales
Charge").
The Company will also assess an Administration Charge equal to an
annual rate of 0.15% of the daily net asset value of the Variable Account. This
charge is to reimburse the Company for administrative expenses related to the
issue and maintenance of the Contracts. The Company does not expect to recover
from this charge an amount in excess of accumulated administrative expenses (see
"Administration Charge").
The Company deducts a Mortality Risk Charge equal to an annual rate of
0.80% of the daily net asset value of the Variable Account for mortality risk
assumed by the Company (see "Mortality Risk Charge").
The Company deducts an Expense Risk Charge equal to an annual rate of
0.45% of the daily net asset value of the Variable Account as compensation for
the Company's risk in undertaking not to increase administrative charges on the
Contracts regardless of the actual administrative costs (see "Expense Risk
Charge").
For Non-Qualified Contracts, Individual Retirement Annuities and SEP
IRAs, the initial Purchase Payment must be at least $1000 and subsequent
Purchase Payments must be at least $50. However, if periodic payments are
expected by the Company, this initial first year minimum may be satisfied by
Purchase Payments made on an annualized basis. The cumulative total of all
Purchase Payments under this Contract and any other contract issued by the
Company may not exceed $1,000,000 issued on the life of any one Annuitant
without the prior written consent of the Company (see "Allocation of Purchase
Payments and Contract Value").
Upon Annuitization, the selected Annuity Payment Option will begin (see
"Annuity Payment Option"). However, if the net amount to be applied to any
Annuity Payment Option at the Annuitization Date is less than $5000, the Company
has the right to pay such amount in one lump sum. If any annuity payment would
be less than $50, the Company shall have the right to change the frequency of
payments to such intervals as will result in payments of at least $50. In no
event, however, will annuity payments be made less frequently than annually (see
"Frequency and Amount of Annuity Payments").
Premium taxes payable to any governmental entity will be charged
against the Contracts. If any such premium taxes are payable by the Company at
the time Purchase Payments are made, an equal premium tax deduction may be made
from the Contract prior to the allocation of any Purchase Payment to any
underlying Mutual Fund option (see "Premium Taxes").
To be sure that the Contract Owner is satisfied with the Contract, the
Contract Owner has a ten day free look. Within ten days of the day the Contract
is received, it may be returned to the Home Office of the Company, at the
address shown on page 1 of this prospectus. If a Contract is returned to the
Company in a timely manner, the Company will void the Contract and refund the
Contract Value in full unless otherwise required by state and/or federal law.
State and/or federal law may provide additional free look privileges. All
Individual Retirement Annuities refunds will be return of Purchase Payments (see
"Right to Revoke").
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NATIONWIDE LIFE INSURANCE COMPANY
The Company is a stock life insurance company organized under the laws
of the State of Ohio in March, 1929. The Company is a member of the "Nationwide
Insurance Enterprise" with its Home Office at One Nationwide Plaza, Columbus,
Ohio 43215. The Company offers a complete line of life insurance, including
annuities and accident and health insurance. It is admitted to do business in
all states, the District of Columbia, and Puerto Rico.
THE VARIABLE ACCOUNT
The Variable Account was established by the Company on February 2,
1994, pursuant to the provisions of Ohio law. The Company has caused the
Variable Account to be registered with the Securities and Exchange Commission as
a Unit Investment Trust pursuant to the provisions of the Investment Company Act
of 1940. Such registration does not involve supervision of the management of the
Variable Account or the Company by the Securities and Exchange Commission.
The Variable Account is a separate investment account of the Company
and as such, is not chargeable with liabilities arising out of any other
business the Company may conduct. The Company does not guarantee the investment
performance of the Variable Account. Obligations under the Contracts, however,
are obligations of the Company. Income, gains and losses, whether or not
realized, from the assets of the Variable Account are, in accordance with the
Contracts, credited to or charged against the Variable Account without regard to
other income, gains, or losses of the Company.
Purchase Payments are allocated within the Variable Account among one
or more Sub-Accounts made up of shares in the underlying Mutual Fund option(s)
designated by the Contract Owner. A separate Sub-Account is established within
the Variable Account for each underlying Mutual Fund option that may be
designated by the Contract Owner.
UNDERLYING MUTUAL FUND OPTIONS
Contract Owners may choose from among a number of different Sub-Account
options. More detailed information may be found in the current prospectus for
each underlying Mutual Fund offered. Such a prospectus for the underlying Mutual
Fund option(s) should be read in conjunction with this prospectus. A copy of
each prospectus may be obtained without charge from Nationwide Life Insurance
Company by calling 1-800-240-5054, TDD 1-800-238-3035 or writing P.O. Box
182008, Columbus, Ohio 43216.
The underlying Mutual Fund options may also be available to registered
separate accounts offering variable annuity and variable life products of other
participating insurance companies, as well as to the Variable Account and other
separate accounts of the Company. Although the Company does not anticipate any
disadvantages to this, there is a possibility that a material conflict may arise
between the interest of the Variable Account and one or more of the other
separate accounts participating in the underlying Mutual Funds. A conflict may
occur due to a change in law affecting the operations of variable life and
variable annuity separate accounts, differences in the voting instructions of
the Contract Owners and those of other companies, or some other reason. In the
event of conflict, the Company will take any steps necessary to protect the
Contract Owners and variable annuity payees, including withdrawal of the
Variable Account from participation in the underlying Mutual Fund or Mutual
Funds which are involved in the conflict. Contract Owners may choose from among
the following underlying Mutual Fund options under the Contracts.
EVERGREEN VARIABLE TRUST
The Evergreen Variable Trust ("Trust") is an open-end management
investment company. The Trust is designed to provide investors with a selection
of investment alternatives which seek to provide capital growth, income and
diversification through its three investment series (the "Funds"). Shares of the
Funds are sold to separate accounts funding variable annuity contracts and
variable life insurance policies issued by life insurance companies. Evergreen
Asset Management Corp. (the "Adviser"), a wholly-owned subsidiary of First Union
Corporation, serves as investment adviser to the Funds.
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-EVERGREEN VA FOUNDATION FUND
Investment Objective: Seeks, in order of priority, reasonable income,
conservation of capital and capital appreciation by investing principally
in income-producing common and preferred stocks, securities convertible
into or exchangeable for common stocks and fixed income securities. The
Fund's common stock investments will include those which (at the time of
purchase) pay dividends and in the view of the Adviser have potential for
capital enhancement. The Fund may also invest up to 25% of its assets in
foreign securities. While income will be a factor in the selection of
equity securities, the Adviser will attempt to identify securities that
offer potential for long term capital appreciation, but that do not
exhibit any speculative characteristics.
-EVERGREEN VA FUND
Investment Objective: Seeks to achieve capital appreciation by primarily
investing in common stock and securities convertible into or exchangeable
for common stock of little-known or relatively small companies, or
companies undergoing changes which the Adviser believes will have
favorable consequences. Income will not be a factor in the selection of
portfolio investments.
-EVERGREEN VA GROWTH AND INCOME FUND
Investment Objective: Seeks to achieve a return composed of capital
appreciation in the value of its shares and current income. The Fund will
attempt to meet its objective by investing primarily in common stock and
securities convertible into or exchangeable for common stock of companies
which are undervalued in the market place relative to those companies'
assets, breakup value, earnings, or potential growth earnings. These
companies are often found among those which have had a record of
financial success but are currently in disfavor in the market place for
reasons the Adviser perceives as temporary or erroneous. The Fund may
invest up to 25% of its assets in foreign securities, as well as invest
up to 5% of its total assets in debt securities which are rated below
investment grade, commonly known as "junk bonds." There can be no
assurance that the Fund's investment objective will be achieved.
NATIONWIDE SEPARATE ACCOUNT TRUST
Nationwide Separate Account Trust (the "Trust") is a diversified
open-end management investment company created under the laws of Massachusetts.
The Trust offers shares in the separate Mutual Funds listed below, each with its
own investment objectives. Currently, shares of the Trust will be sold only to
life insurance company separate accounts to fund the benefits under variable
life insurance policies or variable annuity contracts issued by life insurance
companies. The assets of the Trust are managed by Nationwide Advisory Services,
Inc. of One Nationwide Plaza, Columbus, Ohio 43215, a wholly-owned subsidiary of
Nationwide Life Insurance Company.
-GOVERNMENT BOND FUND
Investment Objective: To provide as high a level of income as is
consistent with the preservation of capital. It seeks to achieve its
objective by investing in a diversified portfolio of securities issued
or backed by the U.S. Government, its agencies or instrumentalities.
-MONEY MARKET FUND
Investment Objective: To seek as high a level of current income as is
considered consistent with the preservation of capital and liquidity by
investing primarily in money market instruments.
VOTING RIGHTS
Voting rights under the Contracts apply ONLY with respect to Purchase
Payments or accumulated amounts allocated to the Variable Account.
In accordance with its view of present applicable law, the Company will
vote the shares of the underlying Mutual Funds held in the Variable Account at
regular and special meetings of the shareholders of the underlying Mutual Funds.
These shares will be voted in accordance with instructions received from
Contract Owners who have an interest in the Variable Account. If the Investment
Company Act of 1940 or any regulation thereunder should be amended or if the
present interpretation thereof should change, and as a result
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the Company determines that it is permitted to vote the shares of the underlying
Mutual Funds in its own right, it may elect to do so.
The Contract Owner shall be the person who has the voting interest
under the Contract. The number of underlying Mutual Fund shares attributable to
each Contract Owner is determined by dividing the Contract Owner's interest in
each respective Sub-Account of the Variable Account by the net asset value of
the underlying Mutual Fund corresponding to the Sub-Account. The number of
shares which a person has the right to vote will be determined as of the date to
be chosen by the Company not more than 90 days prior to the meeting of the
underlying Mutual Fund. Each person having a voting interest will receive
periodic reports relating to the underlying Mutual Fund, proxy material and a
form with which to give such voting instructions.
Voting instructions will be solicited by written communication at least
21 days prior to such meeting. Underlying Mutual Fund shares held in the
Variable Account as to which no timely instructions are received will be voted
by the Company in the same proportion as the voting instructions which are
received with respect to all Contracts participating in the Variable Account.
SUBSTITUTION OF SECURITIES
If the shares of the underlying Mutual Funds described in this
prospectus should no longer be available for investment by the Variable Account
or if, in the judgment of the Company's management, further investment in such
underlying Mutual Fund shares should become inappropriate, the Company may
eliminate Sub-Accounts, combine two or more Sub-Accounts or substitute one or
more underlying Mutual Funds for other underlying Mutual Fund shares already
purchased or to be purchased in the future by Purchase Payments under the
Contract. No substitution of securities in the Variable Account may take place
without prior approval of the Securities and Exchange Commission, under such
requirements as it may impose
VARIABLE ACCOUNT CHARGES, PURCHASE PAYMENTS, AND OTHER DEDUCTIONS
EXPENSES OF VARIABLE ACCOUNT
The Variable Account is responsible for the following types of
expenses: (1) administrative expenses relating to the issuance and maintenance
of the Contracts; (2) the mortality risk charges associated with guaranteeing
the annuity purchase rates at issue for the life of the Contracts; and (3)
charges associated with guaranteeing that the Mortality Risk, Expense Risk, and
Administration Charges described in this prospectus will not be changed
regardless of actual expenses. If these charges are insufficient to cover these
expenses, the loss will be borne by the Company. Deductions from and expenses
paid out of the assets of the underlying Mutual Funds are described in each
underlying Mutual Fund's prospectus.
MORTALITY RISK CHARGE
The Company assumes a "mortality risk" by virtue of annuity rates
incorporated into the Contract which cannot be changed regardless of the death
rates of persons receiving annuity payments or of the general population.
For assuming this mortality risk, the Company deducts a Mortality Risk
Charge from the Variable Account. This amount is computed on a daily basis and
is equal to an annual rate of 0.80% of the daily net asset value of the Variable
Account. The Company expects to generate a profit through assessing this charge.
EXPENSE RISK CHARGE
The Company will not increase charges for administration of the
Contracts regardless of its actual expenses. For assuming this expense risk, the
Company deducts an Expense Risk Charge from the Variable Account. This amount is
computed on a daily basis and is equal to an annual rate of 0.45% of the daily
net asset value of the Variable Account. The Company expects to generate a
profit through assessing this charge.
ADMINISTRATION CHARGE
The Company assesses an Administration Charge equal on an annual basis
to 0.15% of the daily net asset value of the Variable Account. The
Administration Charge is designed only to reimburse the Company for
administrative expenses related to the issuance and maintenance of the Contract.
The Company will monitor this charge to ensure that it does not exceed annual
administration expenses.
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CONTINGENT DEFERRED SALES CHARGE
No deduction for a sales charge is made from the Purchase Payments for
these Contracts. However, if any part of the Contract Value of such Contracts is
surrendered, the Company will, with certain exceptions, deduct a Contingent
Deferred Sales Charge not to exceed 6% of the lesser of the total of all
Purchase Payments made within 84 months prior to the date of the request to
surrender, or the amount surrendered. The Contingent Deferred Sales Charge, when
it is applicable, will be used to cover expenses relating to the sale of the
Contracts, including commissions paid to sales personnel, the costs of
preparation of sales literature and other promotional activity. The Company
attempts to recover its distribution costs relating to the sale of the Contracts
from the Contingent Deferred Sales Charge. Any shortfall will be made up from
the General Account of the Company, which may indirectly include portions of the
Mortality and Expense Risk Charges, since the Company expects to generate a
profit from these charges. The maximum amount that may be paid to a selling
agent on the sale of these Contracts is 6.55% of Purchase Payments. In addition
to commissions paid by the Company, additional forms of compensation or
incentives may be paid to sales agents by the broker-dealer firm with which they
are associated. Such incentives, which may be conditioned on a specified number
of Contracts sold, may include payment for attendance at seminars, lunches,
dinners, sporting events, or theater performances; or payment for travel,
lodging and entertainment expenses incurred in connection with travel by sales
agents and their immediate family members to urban or resort locations within or
outside the United States. Sales agents may elect to receive cash incentives of
equivalent amounts in lieu of such payments.
The Contingent Deferred Sales Charge is calculated by multiplying the
applicable Contingent Deferred Sales Charge percentages noted below by the
Purchase Payments that are surrendered. For purposes of calculating the
Contingent Deferred Sales Charge, surrenders are considered to come first from
the oldest Purchase Payment made to the Contract, then the next oldest Purchase
Payment and so forth, with any earnings attributable to such Purchase Payments
considered only after all Purchase Payments made to the Contract have been
considered. For tax purposes, a surrender is usually treated as a withdrawal of
earnings first.
THE CONTINGENT DEFERRED SALES CHARGE APPLIES TO PURCHASE PAYMENTS AS FOLLOWS:
<TABLE>
<CAPTION>
NUMBER OF COMPLETED CONTINGENT DEFERRED NUMBER OF COMPLETED CONTINGENT DEFERRED
YEARS FROM DATE OF SALES CHARGE YEARS FROM DATE OF SALES CHARGE
PURCHASE PAYMENT PERCENTAGE PURCHASE PAYMENT PERCENTAGE
---------------- ---------- ---------------- ----------
<S> <C> <C> <C>
0 6% 4 4%
1 6% 5 3%
2 5% 6 2%
3 5% 7 0%
</TABLE>
WAIVER OF THE CONTINGENT DEFERRED SALES CHARGE
During each Contract Year, the Contract Owner may withdraw, without a
Contingent Deferred Sales Charge (CDSC), the greater of: (a) a total amount
equal to 10% of the sum of all Purchase Payments made to the Contract or (b) any
amount withdrawn from the Contract to meet minimum distribution requirements
under the Code. 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.
In addition, no Contingent Deferred Sales Charge will be deducted: (1)
upon the Annuitization of Contracts which have been in force for at least two
years, (2) upon payment of a death benefit pursuant to the death of the
Annuitant, or (3) from any values which have been held under a Contract for at
least 84 months.
No Contingent Deferred Sales Charge applies upon the transfer of value
among the Sub-Accounts or between the Fixed Account and the Variable Account.
When a Contract described in this prospectus is exchanged for another Contract
issued by the Company or any of its affiliated insurance companies, of the type
and class which the Company determined is eligible for such exchange, the
Company may waive the Contingent Deferred Sales Charge on the first Contract. A
Contingent Deferred Sales Charge may apply to the contract received in the
exchange.
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When a Contract is held by a Charitable Remainder Trust, the amount
which may be withdrawn from this Contract without application of a Contingent
Deferred Sales Charge, shall be the larger of (a) or (b), where (a) is the
amount which would otherwise be available for withdrawal without application of
a Contingent Deferred Sales Charge; and where (b) is the difference between the
total Purchase Payments made to the Contract as of the date of the withdrawal
(reduced by previous withdrawals of such Purchase Payments), and the Contract
Value at the close of the day prior to the date of the withdrawal.
For Tax Sheltered Annuity Contracts, Qualified Contracts and SEP IRAs,
the Contingent Deferred Sales Charge will be waived when:
A. the Plan Participant experiences a case of hardship (as
provided in Code Section 403(b) and as defined for purposes of
Code Section 401(k));
B. the Plan Participant becomes disabled (within the meaning of
Code Section 72(m)(7));
C. the Plan Participant attains age 59 1/2 and has participated
in the Contract for at least 5 years, as determined on the
Contract Anniversary date immediately preceding the
Distribution.
D. the Plan Participant has participated in the Contract for at
least 15 years as determined on the Contract Anniversary date
immediately preceding the Distribution.
E. the Plan Participant dies; or
F. the Contract annuitizes more than 2 years after the Date of
Issue
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 "Non-Qualified Contracts").
PREMIUM TAXES
The Company will charge against the Contract Value the amount of any
premium taxes levied by a state or any other governmental entity upon Purchase
Payments received by the Company. Premium taxes currently imposed by certain
jurisdictions range from 0% to 3.5%. This range is subject to change. The method
used to recoup premium tax expense will be determined by the Company at its sole
discretion and in compliance with applicable state law. The Company currently
deducts such charges from a Contract Owner's Contract Value either: (1) at the
time the Contract is surrendered, (2) at Annuitization, or (3) at such earlier
date as the Company may become subject to such taxes.
OPERATION OF THE CONTRACT
INVESTMENTS OF THE VARIABLE ACCOUNT
At the time of application, each Contract Owner elects to have Purchase
Payments attributable to his or her participation in the Variable Account
allocated among one or more of the Sub-Accounts which consist of shares in the
underlying Mutual Funds. Shares of the respective underlying Mutual Funds
specified by the Contract Owner are purchased at net asset value for the
respective Sub-Account(s) and converted into Accumulation Units. At the time of
application, the Contract Owner designates the underlying Mutual Funds to which
he or she desires to have Purchase Payments allocated. The Contract Owner may
change the election as to allocation of Purchase Payments or may elect to
exchange amounts among the Sub-Account options pursuant to such terms and
conditions applicable to such transactions as may be imposed by each of the
underlying Mutual Funds, in addition to those set forth in the Contracts.
ALLOCATION OF PURCHASE PAYMENTS AND CONTRACT VALUE
Purchase Payments are allocated to one or more Sub-Accounts within the
Variable Account, in accordance with the designation of the underlying Mutual
Funds by the Contract Owner, and converted into Accumulation Units.
For Non-Qualified Plans, Individual Retirement Annuities and SEP IRAs,
the initial Purchase Payment must be at least $1,000. Subsequent Purchase
Payments, must be at least $50. However, if periodic payments are expected by
the Company, this initial first year minimum may be satisfied by Purchase
Payments made on an annualized basis. The Company reserves the right to lower
the subsequent Purchase Payment $50
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minimum for certain employer sponsored programs. The cumulative total of all
Purchase Payments under Contracts issued by the Company on the life of any one
Annuitant may not exceed $1,000,000 without prior written consent of the
Company.
The initial Purchase Payment allocated to designated Sub-Accounts of
the Variable Account will be priced no later than 2 business days after receipt
of an order to purchase, if the application and all information necessary for
processing the purchase order are complete. The Company may, however, retain the
Purchase Payment for up to 5 business days while attempting to complete an
incomplete application. If the application cannot be made complete within 5
days, the prospective purchaser will be informed of the reasons for the delay
and the Purchase Payment will be returned immediately unless the prospective
purchaser specifically consents to the Company retaining the Purchase Payment
until the application is made complete. Thereafter, subsequent Purchase Payments
will be priced on the basis of the Accumulation Unit Value next completed for
the appropriate Sub-Account after the additional Purchase Payment is received.
Purchase Payments will not be priced on the following nationally
recognized holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
VALUE OF AN ANNUITY UNIT
The value of an Annuity Unit was arbitrarily set initially at $10 when
the first underlying Mutual Fund shares were purchased. The value of an Annuity
Unit for a Sub-Account for any subsequent Valuation Period is determined by
multiplying the Annuity Unit Value for the immediately preceding Valuation
Period by the Net Investment Factor for the Valuation Period for which the
Annuity Unit Value is being calculated, and multiplying the result by an
interest factor to neutralize the assumed investment rate of 3.5% per annum (see
"Net Investment Factor").
VALUE OF A VARIABLE ACCOUNT ACCUMULATION UNIT
The value of a Variable Account Accumulation Unit for each Sub-Account was
arbitrarily set initially at $10 when the underlying Mutual Fund shares in that
Sub-Account were available for purchase. The value for any subsequent 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 during the subsequent Valuation Period. The value of
an Accumulation Unit may increase or decrease from Valuation Period to Valuation
Period. The number of Accumulation Units will not change as a result of
investment experience.
NET INVESTMENT FACTOR
The Net Investment Factor for any Valuation Period is determined by
dividing (a) by (b) and subtracting (c) from the result where:
(a) is the net of:
(1) the net asset value per share of the underlying Mutual Fund
held in the Sub-Account determined at the end of the current
Valuation Period, plus
(2) the per share amount of any dividend or capital gain
Distributions made by the underlying Mutual Fund held in the
Sub-Account if the "ex-dividend" date occurs during the
current Valuation Period.
(b) is the net of:
(1) the net asset value per share of the underlying Mutual Fund
held in the Sub-Account determined at the end of the
immediately preceding Valuation Period, plus or minus
(2) the per share charge or credit, if any, for any taxes reserved
for in the immediately preceding Valuation Period (see "Charge
For Tax Provisions").
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(c) is a factor representing the daily Mortality Risk Charge, Expense Risk
Charge and Administration Charge deducted from the Variable Account.
Such factor is equal to an annual rate of 1.40% of the daily net asset
value of the Variable Account.
For underlying Mutual Funds that credit dividends on a daily basis and
pay such dividends once a month (the Nationwide Separate Account Trust - Money
Market Fund), the Net Investment Factor allows for the monthly reinvestment of
these daily dividends.
The Net Investment Factor may be greater or less than one; therefore,
the value of an Accumulation Unit may increase or decrease. 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 Risk Charge, Expense Risk Charge and Administration
Charge.
VALUATION OF ASSETS
Underlying Mutual Fund shares in the Variable Account will be valued at
their net asset value.
DETERMINING THE CONTRACT VALUE
The sum of the value of all Variable Account Accumulation Units
attributable to the Contract and amounts credited to the Fixed Account is the
Contract Value. The number of Accumulation Units credited per 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 Purchase Payment is received by the Company. If part or all of the
Contract Value is surrendered or charges or deductions are made against the
Contract 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 Contract Owner's interest in the Variable Account and
the Fixed Account bears to the total Contract Value.
RIGHT TO REVOKE
Unless otherwise required by state and/or federal law, the Contract
Owner may revoke the Contract at any time between the Date of Issue and the date
10 days after receipt of the Contract and receive a refund of the Contract
Value. All Individual Retirement Annuity refunds will be a return of Purchase
Payments. In order to revoke the Contract, it must be mailed or delivered to the
Home Office of the Company at the mailing address shown on page 1 of this
prospectus. Mailing or delivery must occur on or before 10 days after receipt of
the Contract for revocation to be effective. In order to revoke the Contract, if
it has not been received, written notice must be mailed or delivered to the Home
Office of the Company at the mailing address shown on page 1 of this prospectus.
The liability of the Variable Account under this provision is limited
to the Contract Value in each Sub-Account on the date of revocation. Any
additional amounts refunded to the Contract Owner will be paid by the Company.
TRANSFERS
Transfers must be made prior to the Annuitization Date. The Contract
Owner may request a transfer up to 100% of the Variable Account Contract Value
from the Variable Account to the Fixed Account, without penalty or adjustment.
However, the Company reserves the right to restrict transfers from the Variable
Account to the Fixed Account to 10% of the Variable Account Contract Value for
any 12 month period. The Company reserves the right to refuse transfers or
Purchase Payments into the Fixed Account if the Fixed Account is greater than or
equal to 30% of the Contract Value. All amounts transferred to the Fixed Account
must remain on deposit in the Fixed Account until the expiration of the Interest
Rate Guarantee Period. Transfers from the Fixed Account may not be made prior to
the end of the then current Interest Rate Guarantee Period. The Interest Rate
Guarantee Period for any amount allocated to the Fixed Account expires on the
final day of a calendar quarter during which the one year anniversary of the
allocation of the Fixed Account occurs. For all transfers involving the Variable
Account, the Contract Owner's value in each Sub-Account will be determined as of
the date the transfer request is received in the Home Office in good order.
The Contract Owner may at the maturity of an Interest Rate Guarantee
Period, transfer a portion of the value of the Fixed Account to the Variable
Account. The amount that may be transferred from the Fixed Account to the
Variable Account will be determined by the Company, at its sole discretion, but
will not be less
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than 10% of the total value of the portion of the Fixed Account that is
maturing. The amount that may be transferred from the Fixed Account will be
declared upon the expiration date of the then current Interest Rate Guarantee
Period. Transfers from the Fixed Account must be made within 45 days after the
expiration date of the Interest Rate Guarantee Period. Contract Owners who have
entered into a Dollar Cost Averaging agreement with the Company (see "Dollar
Cost Averaging") may transfer from the Fixed Account to the Variable Account
under the terms of that agreement.
Transfers may be made either in writing or, in states allowing such
transfers, by telephone. This telephone exchange privilege is made available to
Contract Owners automatically without the Owner's election. The Company will
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. Such procedures may include the following: requesting
identifying information, such as name, contract number, Social Security Number,
and/or personal identification number; tape recording all telephone
transactions; providing written confirmation thereof to both the Contract Owner
and any agent of record, at the last address of record; or such other procedures
as the Company may deem reasonable. The Company will not be liable for following
instructions communicated by telephone, or otherwise, which it reasonably
believes to be genuine, including those instructions forwarded by third party
representatives of the Contract Owner who are duly authorized to make transfers
or exchanges on behalf of the Contract Owner. Any losses incurred pursuant to
actions taken by the Company in reliance on telephone instructions reasonably
believed to be genuine shall be borne by the Contract Owner. The Company may
withdraw the telephone exchange privilege upon 30 days' written notice to
Contract Owners.
CONTRACT OWNERSHIP PROVISIONS
Unless otherwise provided, the Contract Owner has all rights under the
Contract. IF THE PURCHASER NAMES SOMEONE OTHER THAN HIMSELF OR HERSELF AS OWNER,
THE PURCHASER WILL HAVE NO RIGHTS UNDER THE CONTRACT. Prior to the Annuitization
Date, the Contract Owner may name a new Contract Owner in Non-Qualified
Contracts. Such change may be subject to state and federal gift taxes and may
also result in federal income taxation. Any change of Contract Owner designation
will automatically revoke any prior Contract Owner designation. Once proper
notice of the change is received and recorded by the Company, the change will
become effective as of the date the written request is signed. A change of Owner
will not apply and will not be effective with respect to any payment made or
action taken by the Company prior to the time that the change was received and
recorded by the Company.
Prior to the Annuitization Date, the Contract Owner may request a
change in the Annuitant, the Contingent Annuitant, Contingent Owner,
Beneficiary, or Contingent Beneficiary. Such a request must be made in writing
on a form acceptable to the Company and must be signed by both the Contract
Owner and the person to be named as Annuitant, Contingent Annuitant, or
Contingent Owner, as applicable. Such request must be received by the Company at
its Home Office prior to the Annuitization Date. Any such change is subject to
underwriting and approval by the Company. If the Contract Owner is not a natural
person and there is a change of the Annuitant, such change shall be treated as
the death of a Contract Owner and Distributions shall be made as if the Contract
Owner died at the time of such change.
On and after the Annuitization Date, the Annuitant shall become the
Contract Owner.
JOINT OWNERSHIP PROVISIONS
Joint Owners must be spouses at the time joint ownership is requested.
If a Joint Owner is named, the Joint Owner will possess an undivided interest in
the Contract. Unless otherwise provided, the exercise of any ownership right in
the Contract (including the right to surrender or partially surrender the
Contract, to change the Contract Owner, the Contingent Owner, the Annuitant, the
Contingent Annuitant, the Beneficiary, the Contingent Beneficiary, the Annuity
Payment Option or the Annuitization Date) shall require a written request signed
by both Joint Owners.
CONTINGENT OWNERSHIP PROVISIONS
The Contingent Owner is the person who may receive certain benefits
under the Contract if the Contract Owner, who is not the Annuitant, dies prior
to the Annuitization Date and there is no surviving Joint Owner. If more than
one Contingent Owner survives the Contract Owner, each will share equally unless
otherwise specified in the Contingent Owner designation. If no Contingent Owner
survives a Contract Owner and there is no surviving Joint Owner, all rights and
interest of the Contingent Owner will vest in the Contract Owner's estate. If a
Contract Owner, who is also the Annuitant, dies before the Annuitization Date
and there is no surviving Joint Owner, then the
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Contingent Owner does not have any rights in the Contract; however, if the
Contingent Owner is also the Beneficiary, the Contingent Owner will have all the
rights of a beneficiary.
Subject to the terms of any existing assignment, the Contract Owner may
change the Contingent Owner prior to the Annuitization Date by written notice to
the Company. The change, upon receipt and recording by the Company at its Home
Office, will take effect as of the time the written notice was signed, whether
or not the Contract Owner is living at the time of recording, but without
further liability as to any payment or settlement made by the Company before
receipt of such change.
BENEFICIARY PROVISIONS
The Beneficiary is the person or persons who may receive certain
benefits under the Contract in the event the Annuitant dies prior to the
Annuitization Date. If more than one Beneficiary survives the Annuitant, each
will share equally unless otherwise specified in the Beneficiary designation. If
no Beneficiary survives the Annuitant, all rights and interest of the
Beneficiary shall vest in the Contingent Beneficiary, and if more than one
Contingent Beneficiary survives, each will share equally unless otherwise
specified in the Contingent Beneficiary designation. If no Contingent
Beneficiaries survive the Annuitant, all rights and interest of the Contingent
Beneficiary will vest with the Contract Owner or the estate of the last
surviving Contract Owner.
Subject to the terms of any existing assignment, the Contract Owner may
change the Beneficiary or Contingent Beneficiary during the lifetime of the
Annuitant, by written notice to the Company. The change, upon receipt and
recording by the Company at its Home Office, will take effect as of the time the
written notice was signed, whether or not the Annuitant is living at the time of
recording, but without further liability as to any payment or settlement made by
the Company before receipt of such change.
SURRENDER (REDEMPTION)
While the Contract is in force and prior to the earlier of the
Annuitization Date or the death of the Annuitant, the Company will, upon proper
written application by the Contract Owner deemed by the Company to be in good
order, allow the Contract Owner to surrender a portion or all of the Contract
Value. "Proper written application" means that the Contract Owner must request
the surrender in writing and include the Contract. The Company may require that
the signature(s) be guaranteed by a member firm of a major stock exchange or
other depository institution qualified to give such a guaranty.
The Company will, upon receipt of any such written request, surrender a
number of Accumulation Units from the Variable Account and an amount from the
Fixed Account necessary to equal the gross dollar amount requested, less any
applicable Contingent Deferred Sales Charge (see "Contingent Deferred Sales
Charge"). In the event of a partial surrender, the Company will, unless
instructed to the contrary, surrender Accumulation Units from all Sub-Accounts,
in which the Contract Owner has an interest, and the Fixed Account. The number
of Accumulation Units surrendered from each Sub-Account and the amount
surrendered from the Fixed Account will be in the same proportion that the
Contract Owner's interest in the Sub-Accounts and Fixed Account bears to the
total Contract Value.
The Company will pay any funds applied for from the Variable Account
within 7 days of receipt of such application in the Company's Home Office.
However, the Company reserves the right to suspend or postpone the date of any
payment of any benefit or values for any Valuation Period (1) when the New York
Stock Exchange ("Exchange") is closed, (2) when trading on the Exchange is
restricted, (3) when an emergency exists as a result of which disposal of
securities held in the Variable Account is not reasonably practicable or it is
not reasonably practicable to determine the value of the Variable Account's net
assets, or (4) during any other period when the Securities and Exchange
Commission, by order, so permits for the protection of security holders,
provided that applicable rules and regulations of the Securities and Exchange
Commission shall govern as to whether the conditions prescribed in (2) and (3)
exist. The Contract Value on surrender may be more or less than the total of
Purchase Payments made by a Contract Owner, depending on the market value of the
underlying Mutual Fund shares.
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SURRENDERS UNDER A TAX SHELTERED ANNUITY CONTRACT OR QUALIFIED CONTRACT
Except as provided below, the Owner may surrender part or all of the
Contract Value at any time this Contract is in force prior to the earlier of the
Annuitization Date or the death of the Annuitant:
A. The surrender of Contract Value attributable to contributions made
pursuant to a salary reduction agreement (within the meaning of Code
Section 402(g)(3)(A) or (C)), or transfers from a Custodial Account
described in Section 403(b)(7) of the Code, may be executed only:
1. when the Contract Owner attains age 59 1/2, separates from
service, dies, or becomes disabled (within the meaning of Code
Section 72(m)(7)); or
2. in the case of hardship (as defined for purposes of Code
Section 401(k)), provided that any surrender of Contract Value
in the case of hardship may not include any income
attributable to salary reduction contributions.
B. The surrender limitations described in A. above also apply to:
1. salary reduction contributions to Tax Sheltered Annuities made
for plan years beginning after December 31, 1988;
2. earnings credited to such contracts after the last plan year
beginning before January 1, 1989, on amounts attributable to
salary reduction contributions; and
3. all amounts transferred from 403(b)(7) Custodial Accounts
(except that earnings, and employer contributions as of
December 31, 1988 in such Custodial Accounts may be withdrawn
in the case of hardship).
C. Any Distribution other than the above, including exercise of a
contractual ten-day free look provision (when available) may result in
the immediate application of taxes and penalties and/or retroactive
disqualification of a Qualified Plan Contract or Tax Sheltered Annuity.
A premature Distribution may not be eligible for rollover treatment. To
assist in preventing disqualification of a Tax Sheltered Annuity in the event of
a ten-day free look, the Company will agree to transfer the proceeds to another
contract which meets the requirements of Section 403(b) of the Code, upon proper
direction by the Contract Owner. The foregoing is the Company's understanding of
the withdrawal restrictions which are currently applicable under Section
401(k)(2)(B), Section 403(b)(11) and Revenue Ruling 90-24. Such restrictions are
subject to legislative change and/or reinterpretation from time to time.
Distributions pursuant to Qualified Domestic Relations Orders will not be
considered to be a violation of the restrictions stated in this provision.
The Contract surrender provisions may also be modified pursuant to the
plan terms and Code tax provisions when the Contract is issued to fund a
Qualified Plan.
LOAN PRIVILEGE
Prior to the Annuitization Date, the Owner of a Tax Sheltered Annuity
Contract or Qualified Contract may receive a loan from the Contract Value
subject to the terms of the Contract, the Plan, and the Code, which may impose
restrictions on loans.
Loans from Tax Sheltered Annuities and Qualified Contracts are
available beginning 30 days after the Date of Issue. The Contract Owner may
borrow a minimum of $1,000. In non-ERISA plans, for Contract Values up to
$20,000, the maximum loan balance which may be outstanding at any time is 80% of
the Contract Value, but not more than $10,000. If the Contract Value is $20,000
or more, the maximum loan balance which may be outstanding at any time is 50% of
the Contract Value, but not more than $50,000. For ERISA plans, the maximum loan
balance which may be outstanding at any time is 50% of the Contract Value, but
not more than $50,000. The $50,000 limit will be reduced by the highest loan
balances owed during the prior one-year period. Additional loans are subject to
the contract minimum amount. The aggregate of all loans may not exceed the
Contract Value limitations stated in this provision.
For salary reduction Tax Sheltered Annuities, loans may only be secured
by the Contract Value. For loans from Qualified Contracts and other Tax
Sheltered Annuities, the Company reserves the right to limit a loan to 50% of
the Contract Value subject to the acceptance by the Contract Owner of the
Company's loan
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agreement. Where permitted, the Company may require other named collateral where
the loan from a Contract exceeds 50% of the Contract Value.
All loans are made from a collateral fixed account. An amount equal to
the principal amount of the loan will be transferred to the collateral fixed
account. Unless instructed to the contrary by the Contract Owner, the Company
will first transfer to the collateral fixed account the Variable Account units
from the Contract Owner's investment options in proportion to the assets in each
option until the required balance is reached or all such variable units are
exhausted. The remaining required collateral will next be transferred from the
Fixed Account. No withdrawal charges are deducted at the time of the loan, or on
the transfer from the Variable Account to the collateral fixed account.
Until the loan has been repaid in full, that portion of the collateral
fixed account equal to the outstanding loan balance shall be credited with
interest at a rate 2.25 percentage points less than the loan interest rate fixed
by the Company for the term of the loan. However, the interest rate credited to
the collateral fixed account will never be less than 3.0%. Specific loan terms
are disclosed at the time of loan application or loan issuance.
Loans must be repaid in substantially level payments, not less
frequently than quarterly, within five years. Loans used to purchase the
principal residence of the Contract Owner must be repaid within 15 years. During
the loan term, the outstanding balance of the loan will continue to earn
interest at an annual rate as specified in the loan agreement. Loan repayments
will consist of principal and interest in amounts set forth in the loan
agreement. Loan repayments will be allocated between the Fixed and Variable
Accounts in the same proportion that existed when the loan was made.
If the Contract is surrendered while the loan is outstanding, the
surrender value will be reduced by the amount of the loan outstanding plus
accrued interest. If the Contract Owner/Annuitant dies while the loan is
outstanding, the Death Benefit will be reduced by the amount of the loan
outstanding plus accrued interest. If annuity payments start while the loan is
outstanding, the Contract Value will be reduced by the amount of the outstanding
loan plus accrued interest. Until the loan is repaid, the Company reserves the
right to restrict any transfer of the Contract which would otherwise qualify as
a transfer as permitted in the Code.
If a loan payment is not made when due, interest will continue to
accrue. A grace period may be available under the terms of the loan agreement.
If a loan payment is not made when due, or by the end of the applicable grace
period, the entire loan will be treated as a deemed Distribution, may be taxable
to the borrower, and may be subject to the early withdrawal tax penalty.
Interest that subsequently accrues on defaulted amounts may also be treated as
additional deemed Distributions each year. Any defaulted amounts, plus accrued
interest, will be deducted from the Contract when the participant becomes
eligible for a Distribution of at least that amount, and this amount may again
be treated as a Distribution where required by law. Additional loans may not be
available while a previous loan remains in default.
Loans may also be subject to additional limitations or restrictions
under the terms of the employer's plan. Loans permitted under this Contract may
still be taxable in whole or part if the participant has additional loans from
other plans or contracts. The Company will calculate the maximum nontaxable loan
based on the information provided by the participant or the employer.
Loan repayments must be identified as such or else they will be treated
as Purchase Payments and will not be used to reduce the outstanding loan
principal or interest due. The Company reserves the right to modify the loan's
terms or procedures if there is a change in applicable law. The Company also
reserves the right to assess a loan processing fee. Individual Retirement
Annuities, SEP IRAs, and Non-Qualified Contracts are not eligible for loans.
ASSIGNMENT
Where permitted, the Contract Owner may assign some or all rights
under the Contract at any time during the lifetime of the Annuitant prior to the
Annuitization Date. Such assignment will take effect upon receipt and recording
by the Company at its Home Office of a written notice executed by the Contract
Owner. The Company is not responsible for the validity or tax consequences of
any assignment. The Company shall not be liable as to any payment or other
settlement made by the Company before recording of the assignment. Where
necessary for the proper administration of the terms of the Contract, an
assignment will not be recorded until the Company has received sufficient
direction from the Contract Owner and assignee as to the proper allocation of
Contract rights under the assignment.
If this Contract is a Non-Qualified Contract, any portion of the Contract
Value which is pledged or assigned shall be treated as a Distribution and shall
be included in gross income to the extent that the cash
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value exceeds the investment in the Contract for the taxable year in which
assigned or pledged. In addition, any Contract Values assigned may, under
certain conditions, be subject to a tax penalty equal to 10% of the amount which
is included in gross income. All rights in this Contract are personal to the
Contract Owner and may not be assigned without written consent of the Company.
Assignment of the entire Contract Value may cause the portion of the Contract
Value exceeding the total investment in the Contract and previously taxed
amounts to be included in gross income for federal income tax purposes each year
that the assignment is in effect. Individual Retirement Annuities, SEP IRAs, Tax
Sheltered Annuities, and Qualified Contracts, may not be assigned, pledged or
otherwise transferred except under such conditions as may be allowed by law.
CONTRACT OWNER SERVICES
ASSET REBALANCING
The Contract Owner may direct the automatic reallocation of Contract
Values to the underlying Mutual Fund options on a predetermined percentage basis
every three months or other frequency as authorized by the Company. If the last
day of the period falls on a Saturday, Sunday, recognized holiday or any other
day when the New York Stock Exchange is closed, the Asset Rebalancing exchange
will occur on the next business day after that day. Asset Rebalancing will not
affect future allocations of Purchase Payments. An Asset Rebalancing request
must be in writing on a form provided by the Company. The Contract Owner may
want to contact a financial adviser in order to discuss the use of Asset
Rebalancing in his or her Contract.
Contracts issued to a Tax Sheltered Annuity Plan or a Qualified Plan as
defined by the Code may have superseding plan restrictions with regard to
frequency of underlying Mutual Fund exchanges and underlying Mutual Fund
options.
The Company reserves the right to discontinue offering Asset
Rebalancing upon 30 days' written notice; such discontinuation will not affect
Asset Rebalancing programs which have already commenced. The Company also
reserves the right to assess a processing fee for this service.
DOLLAR COST AVERAGING
If the Contract Value is $15,000 or more, the Contract Owner may direct
the Company to automatically transfer a specified amount from the Money Market
Fund Sub-Account or the Fixed Account to any other Sub-Account within the
Variable Account on a monthly basis or as frequently as otherwise authorized by
the Company. This service is intended to allow the Contract Owner to utilize
Dollar Cost Averaging, a long-term investment program which provides for
regular, level investments over time. The Company makes no guarantees that
Dollar Cost Averaging will result in a profit or protect against loss in a
declining market. The minimum monthly Dollar Cost Averaging transfer is $100. In
addition, Dollar Cost Averaging monthly transfers from the Fixed Account must be
equal to or less than 1/30th of the Fixed Account value when the Dollar Cost
Averaging program is requested. Transfers out of the Fixed Account, other than
for Dollar Cost Averaging, may be subject to certain additional restrictions
(see "Transfers"). A written election of this service, on a form provided by the
Company, must be completed by the Contract Owner in order to begin transfers.
Once elected, transfers from the Money Market Fund Sub-Account, or the Fixed
Account will be processed monthly or other approved frequency until either the
value in the Money Market Fund Sub-Account, or the Fixed Account is completely
depleted or the Contract Owner instructs the Company in writing to cancel the
monthly transfers.
The Company reserves the right to discontinue offering Dollar Cost
Averaging upon written notice; such discontinuation will not affect Dollar Cost
Averaging programs already commenced. The Company also reserves the right to
assess a processing fee for this service.
SYSTEMATIC WITHDRAWALS
The Contract Owner may elect in writing on a form provided by the
Company to take Systematic Withdrawals of a specified dollar amount (of at least
$100) on a monthly, quarterly, semi-annual or annual basis. The Company will
process the withdrawals as directed by surrendering on a pro-rata basis
Accumulation Units from all of the Sub-Accounts in which the Contract Owner has
an interest, and the Fixed Account. A Contingent Deferred Sales Charge may apply
to Systematic Withdrawals in accordance with the considerations set forth in the
"Contingent Deferred Sales Charge" section. Systematic Withdrawal is subject to
federal income taxes on the taxable portion. In addition, a 10% federal penalty
tax may be assessed on Systematic
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Withdrawals if the Contract Owner is under age 59 1/2. Unless directed by the
Contract Owner, the Company will withhold federal income taxes from each
Systematic Withdrawal.
An aged-based systematic withdrawal program will terminate
automatically at the end of each Contract Year and may be reinstated only
pursuant to a new request. Unless the Contract Owner has made an irrevocable
election of distributions of substantially equal payments, the Systematic
Withdrawals may be discontinued at any time by notifying the Company in writing.
If the Contract Owner withdraws amounts pursuant to a Systematic
Withdrawal program, then the Contract Owner may withdraw each Contract Year
without a CDSC an amount up to the greater of (1) 10% of the total sum of all
Purchase Payments made to the Contract at the time of withdrawal, (2) an amount
withdrawn from any Individual Retirement Annuity, Tax Sheltered Annuity, SEP
IRA, or Qualified Contract, in order to meet minimum distribution requirements
or (3) the specified percentage of the Contract Value based on the Contract
Owner's age, as shown in the following table:
<TABLE>
<CAPTION>
-------------------------------------------------------
CONTRACT OWNER'S PERCENTAGE OF
AGE CONTRACT VALUE
-------------------------------------------------------
-------------------------------------------------------
<S> <C>
Under 59-1/2 5%
-------------------------------------------------------
59-1/2 to 70-1/2 7%
-------------------------------------------------------
70-1/2 to 75 9%
-------------------------------------------------------
75 and Over 13%
-------------------------------------------------------
</TABLE>
If the total amounts withdrawn in any Contract Year exceed the
CDSC-free amount as calculated under the Systematic Withdrawal method described
above, then such total withdrawn amounts will be eligible only for the 10% of
Purchase Payment CDSC-free withdrawal privilege described in the "Contingent
Deferred Sales Charge" section, and the total amount of CDSC charged during the
Contract Year will be determined in accordance with that provision.
The Contract Value and the Contract Owner's age for purposes of
applying the CDSC-free withdrawal percentage described in this provision are
determined as of the date the request for a Systematic Withdrawal program is
received and recorded by the Company at its Home Office. (In the case of Joint
Owners, the older Owner's age will be used.) The Contract Owner may make the
election to take such CDSC-free amounts only once each Contract Year.
Furthermore, this CDSC-free withdrawal privilege for Systematic Withdrawals 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.
Systematic Withdrawals are not available prior to the expiration of the
ten day free look provision of the Contract or of applicable state/federal
provisions. The Company also reserves the right to assess a processing fee for
this service.
ANNUITY PAYMENT PERIOD, DEATH BENEFIT, AND OTHER DISTRIBUTIONS
ANNUITY COMMENCEMENT DATE
The Contract Owner selects an Annuity Commencement Date at the time of
application. Such date may be the first day of a calendar month or any other
agreed upon date and must be at least 2 years after the Date of Issue. In the
event the Contract is issued subject to the terms of a Tax Sheltered Annuity
Plan or Qualified Plan, Annuitization may occur during the first two years
subject to approval by the Company.
CHANGE IN ANNUITY COMMENCEMENT DATE
If the Contract Owner requests in writing and the Company approves the
request, the Annuity Commencement Date may be changed. The new date must comply
with the Annuity Commencement Date provisions above.
ANNUITY PAYMENT PERIOD-VARIABLE ACCOUNT
At the Annuitization Date, the Variable Account Contract Value is
applied to the Annuity Payment Option elected and the amount of the first such
payment made shall be determined in accordance with the Annuity Table in the
Contract.
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Subsequent Variable Annuity payments vary in amount in accordance with
the investment performance of the Variable Account. The dollar amount of the
first annuity payment determined above is divided by the value of an Annuity
Unit as of the Annuitization Date to establish the number of Annuity Units
representing each monthly annuity payment. This number of Annuity Units remains
fixed during the annuity payment period. The dollar amount of the second and
subsequent payments is not predetermined and may change from month to month. The
dollar amount of each subsequent payment is determined by multiplying the fixed
number of Annuity Units by the Annuity Unit Value for the Valuation Period in
which the payment is due. The Company guarantees that the dollar amount of each
payment after the first will not be affected by variations in mortality
experience from mortality assumptions used to determine the first payment.
ASSUMED INVESTMENT RATE
A 3.5% Assumed Investment Rate is built into the Annuity Tables
contained in the Contracts. A higher assumption would mean a higher initial
payment but more slowly rising or more rapidly falling subsequent payments. A
lower assumption would have the opposite effect. If the actual investment rate
is at the annual rate of 3.5%, the annuity payments will be level.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity payments will be paid as monthly installments. However, if the
net amount available to apply under any Annuity Payment Option is less than
$5,000, the Company shall have the right to pay such amount in one lump sum in
lieu of the payments otherwise provided for. In addition, if the payments
provided for would be or become less than $50, the Company shall have the right
to change the frequency of payments to such intervals as will result in payments
of at least $50. In no event will the Company make payments under an annuity
option less frequently than annually.
CHANGE IN FORM OF ANNUITY
The Contract Owner may, upon prior written notice to the Company, at
any time prior to the Annuitization Date, elect one of the Annuity Payment
Options.
ANNUITY PAYMENT OPTIONS
Any of the following Annuity Payment Options may be elected:
Option 1-Life Annuity-An annuity payable periodically, but at least
annually, during the lifetime of the Annuitant, ceasing with the last
payment due prior to the death of the Annuitant. IT WOULD BE POSSIBLE UNDER
THIS OPTION FOR THE ANNUITANT TO RECEIVE ONLY ONE ANNUITY PAYMENT IF HE OR
SHE DIED BEFORE THE SECOND ANNUITY PAYMENT DATE, TWO ANNUITY PAYMENTS IF HE
OR SHE DIED BEFORE THE THIRD ANNUITY PAYMENT DATE, AND SO ON.
Option 2-Joint and Last Survivor Annuity-An annuity payable periodically,
but at least annually, during the joint lifetimes of the Annuitant and
designated second person and continuing thereafter during the lifetime of
the survivor. AS IS THE CASE UNDER OPTION 1 ABOVE, THERE IS NO MINIMUM
NUMBER OF PAYMENTS GUARANTEED UNDER THIS OPTION. PAYMENTS CEASE UPON THE
DEATH OF THE LAST SURVIVING ANNUITANT REGARDLESS OF THE NUMBER OF PAYMENTS
RECEIVED.
Option 3-Life Annuity With 120 or 240 Monthly Payments Guaranteed-An
annuity payable monthly during the lifetime of the Annuitant with the
guarantee that if at the death of the Annuitant payments have been made for
fewer than 120 or 240 months, as selected, payments will be made as
follows:
(1) If the Annuitant is the payee, any guaranteed annuity payments will
be continued during the remainder of the selected period to such
recipient as chosen by the Annuitant at the time the Annuity Payment
Option was selected. In the alternative, the recipient may, at any
time, elect to have the present value of the guaranteed number of
annuity payments remaining paid in a lump sum as specified in section
(2) below.
(2) If someone other than the Annuitant is the payee, the present
value, computed as of the date on which notice of death is received by
the Company at its Home Office, of the guaranteed number of annuity
payments remaining after receipt of such notice and to which the
deceased would have been entitled had he or she not died, computed at
the Assumed Investment Rate effective in determining the Annuity
Tables, shall be paid in a lump sum.
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Some of the stated Annuity Options may not be available in all states.
The Contract Owner may request an alternative non-guaranteed option by giving
notice in writing prior to Annuitization. If such a request is approved by the
Company, it will be permitted under the Contract.
If the Contract Owner of a Non-Qualified Contract fails to elect an
Annuity Payment Option, no distribution will be made until an effective Annuity
Payment Option has been elected. Individual Retirement Annuities Tax Sheltered
Annuities, SEP IRAs and Qualified Plans are subject to the minimum Distribution
requirements set forth in the Plan, Contract, or Code.
DEATH OF CONTRACT OWNER PROVISIONS - NON-QUALIFIED CONTRACTS
For Non-Qualified Contracts, if the Contract Owner and the Annuitant
are not the same person and such Contract Owner dies prior to the Annuitization
Date, then the Joint Owner, if any, becomes the new Contract Owner. If there is
no surviving Joint Owner, the Contingent Owner becomes the new Contract Owner.
If there is no surviving Contingent Owner, the last surviving Contract Owner's
estate becomes the Contract Owner. The entire interest in the Contract Value,
less any applicable deductions (which may include a Contingent Deferred Sales
Charge), must be distributed in accordance with the "Required Distribution
Provisions- Non-Qualified Contracts" provisions.
DEATH OF THE ANNUITANT PROVISIONS - NON-QUALIFIED CONTRACTS
If the Contract Owner and Annuitant are not the same person, and the
Annuitant dies prior to the Annuitization Date, a Death Benefit will be payable
to the Beneficiary, the Contingent Beneficiary, the Contract Owner, or the last
surviving Contract Owner's estate, as specified in the "Beneficiary Provisions",
unless there is a surviving Contingent Annuitant. In such case, the Contingent
Annuitant becomes the Annuitant, and no Death Benefit is payable.
The Beneficiary may elect to receive such Death Benefits in the form
of: (1) a lump sum distribution; (2) election of an annuity payout; or (3) any
distribution that is permitted under state and federal regulations and is
acceptable by the Company. Such election must be received by the Company within
60 days of the Annuitant's death.
If the Annuitant dies after the Annuitization Date, any benefit that
may be payable shall be paid according to the Annuity Payment Option selected.
DEATH OF THE CONTRACT OWNER/ANNUITANT PROVISIONS
If any Contract Owner and Annuitant are the same person, and such
person dies before the Annuitization date, a Death Benefit will be payable to
the Beneficiary, the Contingent Beneficiary, the Contract Owner, or the last
surviving Contract Owner's estate, as specified in the Beneficiary Provisions
and in accordance with the appropriate "Required Distributions Provisions."
If the Annuitant dies after the Annuitization Date, any benefit that
may be payable shall be paid according to the Annuity Payment Option selected.
DEATH BENEFIT PAYMENT PROVISIONS
The value of the Death Benefit will be determined as of the Valuation
Date coincident with or next following the date the Company receives in writing
at the Home Office the following three items: (1) proper proof of the
Annuitant's death; (2) an election specifying the distribution method; and (3)
any applicable state required form(s).
If the Annuitant dies prior to the Annuitization Date, the Death
Benefit will be the greatest of the following: (1) the sum of all Purchase
Payments made to the Contract less any amounts previously surrendered; (2) the
Contract Value; or (3) the Maximum Anniversary Value. The Maximum Anniversary
Value is equal to the greatest Anniversary Value attained from the following: As
of the date proper proof of death is received by the Company, the Contract Value
on each Contract Anniversary prior to the deceased Annuitant's attained age 81
reduced by the amount of all surrenders since that Contract Anniversary.
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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REQUIRED DISTRIBUTION PROVISIONS FOR NON-QUALIFIED CONTRACTS
Upon the death of any Owner, Contract Owner or Joint Owner (including
an Annuitant or an Annuitant who becomes the Owner of the Contract on the
Annuitization Date) (each of the foregoing "a deceased Owner"), certain
distributions are required by Section 72(s) of the Code. Notwithstanding any
provision of the Contract to the contrary, the following distributions shall be
made in accordance with such requirements:
1. If any deceased Owner died on or after the Annuitization Date and
before the entire interest under the Contract has been distributed, then the
remaining portion of such interest shall be distributed at least as rapidly as
under the method of distribution in effect as of the date of such deceased
Owner's death.
2. If any deceased Owner died prior to the Annuitization Date, then the
entire interest in the Contract (consisting of either the Death Benefit or the
Contract Value reduced by certain changes as set forth elsewhere in the
Contract) shall be distributed within 5 years of the death of the deceased
Owner, provided however:
(a) If any portion of such interest is payable to or for the benefit of
a natural person who is a surviving Contract Owner, Contingent Owner,
Joint Owner, Annuitant, Contingent Annuitant, Beneficiary, or
Contingent Beneficiary as the case may be (each a "designated
beneficiary"), such portion may, at the election of the designated
beneficiary, be distributed over the life of such designated
beneficiary, or over a period not extending beyond the life expectancy
of such designated beneficiary, provided that payments begin within one
year of the date of the deceased Owner's death (or such longer period
as may be permitted by federal income tax regulations), and
(b) If the designated beneficiary is the surviving spouse of the
deceased Owner, such spouse may elect to become the Owner of this
Contract, in lieu of a Death Benefit, and the distributions required
under these distribution rules will be made upon the death of such
spouse.
In the event that this Contract is owned by a person that is not a
natural person (e.g., a trust or corporation), then, for purposes of these
distribution provisions, (i) the death of the Annuitant shall be treated as the
death of any Owner, (ii) any change of the Annuitant shall be treated as the
death of any Owner, and (iii) in either case the appropriate distribution
required under these distribution rules shall be made upon such death or change,
as the case may be. The Annuitant is the primary annuitant as defined in Section
72(s)(6)(B) of the Code.
These distribution provisions shall not be applicable to any Contract
that is not required to be subject to the provisions of 72(s) of the Code by
reason of Section 72(s)(5) or any other law or rule (including Tax Sheltered
Annuities, Individual Retirement Annuities, Qualified Plans and SEP IRAs).
Upon the death of a "deceased Owner", the designated beneficiary must
elect a method of distribution which complies with these above distribution
provisions and which is acceptable to the Company. Such election must be
received by the Company within 60 days of the deceased Owner's death.
REQUIRED DISTRIBUTION FOR TAX SHELTERED ANNUITIES AND QUALIFIED PLANS
The entire interest of an Annuitant under a Tax Sheltered Annuity
Contract or Qualified Contract will be distributed in a manner consistent with
the Minimum Distribution and Incidental Benefit (MDIB) provisions of Section
401(a)(9) of the Code and applicable regulations, and will be paid,
notwithstanding anything else contained herein, to the Contract Owner/Annuitant
under the Annuity Payments Option selected, over a period not exceeding:
a) the life of the Contract Owner/Annuitant or the lives of the
Contract Owner/Annuitant and the Contract Owner/Annuitant's designated
beneficiary under the Selected Annuity Payment Option; or
b) a period not extending beyond the life expectancy of the Contract
Owner/Annuitant or the life expectancy of the Contract Owner/Annuitant
and the Contract Owner/Annuitant's designated beneficiary under the
selected Annuity Payment Option,
For Tax Sheltered Annuity Contracts, no distributions will be required
from this Contract if distributions otherwise required from this Contract are
being withdrawn from another Tax Sheltered Annuity, of the Annuitant.
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If the Contract Owner/Annuitant's entire interest in a Qualified Plan
or Tax Sheltered Annuity is to be distributed in equal or substantially equal
payments over a period described in (a) or (b), above, such payments will
commence no later than (i) the first day of April following the calendar year in
which the Contract Owner/Annuitant attains age 70 1/2 or (ii) when the Contract
Owner retires, whichever is later (the required beginning date). However,
provision (ii) does not apply to any employee who is a 5% Owner (as defined in
Section 416 of the Code) with respect to the plan year ending in the calendar
year in which the employee attains the age of 70 1/2.
If the Contract Owner dies prior to the commencement of his or her
Distribution, the entire interest in the Contract must be distributed by
December 31 of the calendar year in which the fifth anniversary of his or her
death occurs unless:
(a) the Contract Owner names his or her surviving spouse as the
Beneficiary and such spouse elects to receive Distribution of the
account in substantially equal payments over his or her life (or a
period not exceeding his or her life expectancy) and commencing not
later than December 31 of the year in which the Contract Owner would
have attained age 70 1/2; or
(b) the Contract Owner names a Beneficiary other than his or her
surviving spouse and such Beneficiary elects to receive a Distribution
of the account in substantially equal payments over his or her life (or
a period not exceeding his or her life expectancy) commencing not later
than December 31 of the year following the year in which the Contract
Owner dies.
If the Contract Owner/Annuitant dies after Distribution has commenced,
Distribution must continue at least as rapidly as under the schedule being used
prior to his or her death.
Payments commencing on the required beginning date will not be less
than the lesser of the quotient obtained by dividing the entire interest of the
Contract Owner/Annuitant by the life expectancy of the Contract Owner/Annuitant,
or the joint and last survivor expectancy of the Contract Owner/Annuitant and
the Contract Owner/Annuitant's designated beneficiary (if the Contract Owner
dies prior to the required beginning date) or the beneficiary under the selected
Annuity Payment Option (if the Contract Owner dies after the required beginning
date) whichever is applicable under the applicable minimum distribution or MDIB
provisions. Life expectancy and joint and last survivor expectancy are computed
by the use of return multiples contained in Section 1.72-9 of the Treasury
Regulations.
If the amounts distributed to the Contract Owner are less than those
mentioned above, penalty tax of 50% is levied on the excess of the amount that
should have been distributed for that year over the amount that actually was
distributed for that year.
REQUIRED DISTRIBUTIONS FOR INDIVIDUAL RETIREMENT ANNUITIES AND SEP IRAS
Distribution from an Individual Retirement Annuity must begin not later
than April 1 of the calendar year following the calendar year in which the
Contract Owner attains age 70 1/2. Distribution may be accepted in a lump sum
or in substantially equal payments over: (a) the Contract Owner's life or the
lives of the Contract Owner and his or her spouse or designated beneficiary, or
(b) a period not extending beyond the life expectancy of the Contract Owner or
the joint life expectancy of the Contract Owner and the Contract Owner's
designated beneficiary.
If the Contract Owner dies prior to the commencement of his or her
Distribution, the interest in the Individual Retirement Annuity must be
distributed by December 31 of the calendar year in which the fifth anniversary
of his or her death occurs, unless:
(a) The Contract Owner names his or her surviving spouse as the Beneficiary and
such spouse elects to:
(i) treat the annuity as an Individual Retirement Annuity
established for his or her benefit; or
(ii) receive Distribution of the account in substantially equal
payments over his or her life (or a period not exceeding his
or her life expectancy) and commencing not later than December
31 of the year in which the Contract Owner would have attained
age 70 1/2; or
(b) The Contract Owner names a Beneficiary other than his or her surviving
spouse and such Beneficiary elects to receive a Distribution of the account in
substantially equal payments over his or her life (or a period not exceeding his
or her life expectancy) and commencing not later that December 31 of the year
following the year in which the Contract Owner dies.
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No Distributions will be required from this Contract if Distributions
otherwise required from this Contract are being withdrawn from another
Individual Retirement Annuity or Individual Annuity Account of the Contract
Owner.
If the Contract Owner dies after Distribution has commenced,
Distribution must continue at least as rapidly as under the schedule being used
prior to his or her death, except to the extent that a surviving spouse who is a
beneficiary under the Annuity Payment Option, may treat the Contract as his or
her own, in the same manner as described in section (a)(i) of this provision.
If the amounts distributed to the Contract Owner are less than those
mentioned above, penalty tax of 50% is levied on the excess of the amount that
should have been distributed for that year over the amount that actually was
distributed for that year.
A pro-rata portion of all Distributions will be included in the gross
income of the person receiving the Distribution and taxed at ordinary income tax
rates. The portion of the Distribution which is taxable is based on the ratio
between the amount by which non-deductible Purchase Payments exceed prior
non-taxable Distributions and total account balances at the time of the
Distribution. The Contract Owner must annually report the amount of
non-deductible Purchase Payments, the amount of any Distribution, the amount by
which non-deductible Purchase Payments for all years exceed non-taxable
Distributions for all years, and the total balance of all Individual Retirement
Annuities.
Individual Retirement Annuity Distributions will not receive the
benefit of the tax treatment of a lump sum Distributions from a Qualified Plan.
If the Contract Owner dies prior to the time Distribution of the Contract
Owner's interest in the annuity is completed, the balance will also be included
in the Contract Owner's gross estate.
Simplified Employee Pension (SEPs) and Salary Reduction Simplified
Employee Pensions (SARSEPs), are described in Section 408(k) of the Code, are
taxed in a manner similar to IRAs, and are subject to similar distribution
requirements as IRAs. SARSEPs cannot be established after 1996.
GENERATION-SKIPPING TRANSFERS
The Company may determine whether the Death Benefit or any other
payment constitutes a direct skip as defined in Section 2612 of the Code, and
the amount of the tax on the generation-skipping transfer resulting from such
direct skip. If applicable, the payment will be reduced by any tax the Company
is required to pay by Section 2603 of the Code.
A direct skip may occur when property is transferred to or a Death
Benefit is paid to an individual two or more generations younger than the
Contract Owner.
GENERAL INFORMATION
CONTRACT OWNER INQUIRIES
Contract Owner inquiries may be directed to Nationwide Life Insurance
Company by writing P.O. Box 182008, Columbus, Ohio 43216, or calling
1-800-240-5054, TDD 1-800-238-3035.
STATEMENTS AND REPORTS
The Company will mail to Contract Owners, at their last known address
of record, any statements and reports required by applicable law or regulation.
Contract Owners should therefore give the Company prompt notice of any address
change. The Company will send a confirmation statement to Contract Owners each
time a transaction is made affecting the Owners' Variable Account Contract
Value, such as making additional Purchase Payments, transfers, exchanges or
withdrawals. Statements detailing the Contract activity during the calendar
quarter also will be mailed. Instead of receiving an immediate confirmation of
transactions made pursuant to some types of periodic payment plan (such as a
dollar cost averaging program) or salary reduction arrangement, the Contract
Owner may receive confirmation of such transactions in their quarterly
statements. The Contract Owner should review the information in these statements
carefully. All errors or corrections must be reported to the Company immediately
to assure proper crediting to the Owner's Contract. The Company will assume all
transactions reported on quarterly statements or confirmation statements are
accurate unless the Contract Owner notifies the Company otherwise within 30 days
after receipt of the statement. The Company
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will also send to Contract Owners each year an annual report and a semi-annual
report containing financial statements for the Variable Account, as of December
31 and June 30, respectively.
ADVERTISING
A "yield" and "effective yield" may be advertised for the Nationwide
Separate Account Trust Money Market Fund Sub-Account. "Yield" is a measure of
the net dividend and interest income earned over a specific seven-day period
(which period will be stated in the advertisement) expressed as a percentage of
the offering price of the Sub-Account's units. Yield is an annualized figure,
which means that it is assumed that the Sub-Account generates the same level of
net income over a 52-week period. The "effective yield" is calculated similarly
but includes the effect of assumed compounding, calculated under rules
prescribed by the Securities and Exchange Commission. The effective yield will
be slightly higher than yield due to this compounding effect.
The Company may also from time to time advertise the performance of the
Sub-Account of the Variable Account relative to the performance of other
variable annuity Sub-Accounts or underlying Mutual Funds with similar or
different objectives, or the investment industry as a whole. Other investments
to which the Sub-Accounts may be compared include, but are not limited to:
precious metals; real estate; stocks and bonds; closed-end Mutual funds; CDs;
bank money market deposit accounts and passbook savings; and the Consumer Price
Index.
The Sub-Accounts of the Variable Account may also be compared to
certain market indexes, which may include, but are not limited to: S&P 500;
Shearson/Lehman Intermediate Government/Corporate Bond Index; Shearson/Lehman
Long-Term Government/Corporate Bond Index; Donoghue Money Fund Average; U.S.
Treasury Note Index; Bank Rate Monitor National Index of 2 1/2 Year CD Rates;
and Dow Jones Industrial Average.
Normally these rankings and ratings are published by independent
tracking services and publications of general interest including, but not
limited to: Lipper Analytical Services, Inc., CDA/Wiesenberger, Morningstar,
Donoghue's, magazines such as Money, Forbes, Kiplinger's Personal Finance
Magazine, Financial World, Consumer Reports, Business Week, Time, Newsweek,
National Underwriter, U.S. News and World Report; rating services such as LIMRA,
Value, Best's Agent Guide, Western Annuity Guide, Comparative Annuity Reports;
and other publications such as the Wall Street Journal, Barron's, Investor's
Daily, and Standard & Poor's Outlook. In addition, Variable Annuity Research &
Data Service (The VARDS Report) is an independent rating service that ranks over
500 variable annuity funds based upon total return performance. These rating
services and publications rank the performance of the underlying Mutual Funds
against all underlying Mutual funds over specified periods and against
underlying mutual funds in specified categories. The rankings may or may not
include the effects of sales or other charges.
The Company is also ranked and rated by independent financial rating
services, among which are 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 the Company. The ratings are not intended to reflect the investment
experience or financial strength of the Variable Account. The Company may
advertise these ratings from time to time. In addition, the Company may include
in certain advertisements, endorsements in the form of a list of organizations,
individuals or other parties which recommend the Company or the Contracts.
Furthermore, the Company 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.
The Company may from time to time advertise several types of historical
performance for the Sub-Accounts of the Variable Account. The Company may
advertise for the Sub-Accounts standardized "average annual total return",
calculated in a manner prescribed by the Securities and Exchange Commission, and
nonstandardized "total return." "Average annual total return" will show the
percentage rate of return of a hypothetical initial investment of $1,000 for at
least the most recent one, five and ten year period, or for a period covering
the time the underlying Mutual Fund held in the Sub-Account has been in
existence, if the underlying Mutual Fund has not been in existence for one of
the prescribed periods. This calculation reflects the deduction of all
applicable charges made to the Contracts except for premium taxes, which may be
imposed by certain states.
Nonstandardized "total return" will be calculated in a similar manner
and for the same time periods as the average annual total return except total
return will assume an initial investment of $10,000 and will not reflect the
deduction of any applicable Contingent Deferred Sales Charge, which, if
reflected, would decrease the level of performance shown. The Contingent
Deferred Sales Charge is not reflected because the Contracts are designed for
long term investment. An assumed initial investment of $10,000 will be used
because that figure more closely approximates the size of a typical Contract
than does the $1,000 figure used in calculating the standardized average annual
total return quotations.
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For those underlying Mutual Funds which have not been held as
Sub-Accounts within the Variable Account for one of the quoted periods, the
standardized average annual total return and nonstandardized total return
quotations will show the investment performance such underlying Mutual Funds
would have achieved (reduced by the applicable charges) had they been held as
Sub-Accounts within the Variable Account for the period quoted.
ALL PERFORMANCE INFORMATION AND COMPARATIVE MATERIAL ADVERTISED BY THE COMPANY
IS HISTORICAL IN NATURE AND IS NOT INTENDED TO REPRESENT OR GUARANTEE FUTURE
RESULTS. A CONTRACT OWNER'S CONTRACT VALUE AT REDEMPTION MAY BE MORE OR LESS
THAN ORIGINAL COST.
FEDERAL TAX CONSIDERATIONS
FEDERAL INCOME TAXES
The Company does not make any guarantee regarding the tax status for
any Contract or any transaction involving the Contracts. Contract Owners should
consult a financial consultant, legal counsel or tax advisor to discuss in
detail the taxation and the use of the Contracts.
Section 72 of the Code governs federal income taxation of annuities in
general. That section sets forth different rules for: (1) Qualified Contracts;
(2) Individual Retirement Annuities including SEP IRAs; (3) Tax Sheltered
Annuities; and (4) Non-Qualified Contracts. Each type of annuity is discussed
below.
Distributions to participants from Qualified Contracts or Tax Sheltered
Annuities are generally taxed when received. A portion of each Distribution is
excludable from income based on the ratio between the after tax investment of
the Owner/Annuitant in the Contract and the value of the Contract at the time of
the withdrawal or Annuitization.
Distributions from Individual Retirement Annuities and Contracts owned
by Individual Retirement Accounts are also generally taxed when received. The
portion of each such payment which is excludable is based on the ratio between
the amount by which nondeductible Purchase Payments to all such Contracts
exceeds prior non-taxable Distributions from such Contracts, and the total
account balances in such Contracts at the time of the Distribution. The Owner of
such Individual Retirement Annuities or the Annuitant under Contracts held by
Individual Retirement Accounts must annually report to the Internal Revenue
Service the amount of nondeductible Purchase Payments, the amount of any
Distribution, the amount by which nondeductible Purchase Payments for all years
exceed non-taxable Distributions for all years, and the total balance in all
Individual Retirement Annuities and Accounts.
A change of the Annuitant or Contingent Annuitant may be treated by the
Internal Revenue Service as a taxable transaction.
NON-QUALIFIED CONTRACTS- NATURAL PERSONS AS OWNERS
The rules applicable to Non-Qualified Contracts provide that a portion of each
annuity payment received is excludable from taxable income based on the ratio
between the Contract Owner's investment in the Contract and the expected return
on the Contract until the investment has been recovered; thereafter the entire
amount is includable in income. The maximum amount excludable from income is the
investment in the Contract. If the Annuitant dies prior to excluding from income
the entire investment in the Contract, the Annuitant's final tax return may
reflect a deduction for the balance of the investment in the Contract.
Distributions made from the Contract prior to the Annuitization Date
are taxable to the Contract Owner to the extent that the cash value of the
Contract exceeds the Contract Owner's investment at the time of the
Distribution. Distributions, for this purpose, include partial surrenders,
dividends, loans, or any portion of the Contract which is assigned or pledged;
or for Contracts issued after April 22, 1987, any portion of the Contract
transferred by gift. For these purposes, a transfer by gift may occur upon
Annuitization if the Contract Owner and the Annuitant are not the same
individual. In determining the taxable amount of a Distribution, all annuity
contracts issued after October 21, 1988, by the same company to the same
contract owner during any 12 month period, will be treated as one annuity
contract. Additional limitations on the use of multiple contracts may be imposed
by Treasury Regulations. Distributions prior to the Annuitization Date with
respect to that portion of the Contract invested prior to August 14, 1982, are
treated first as a recovery of the investment in the Contract as of that date. A
Distribution in excess of the amount of the investment in the Contract as of
August 14, 1982, will be treated as taxable income.
The Tax Reform Act of 1986 has changed the tax treatment of certain
Non-Qualified Contracts held by entities other than individuals. Such entities
are taxed currently on the earnings on the Contract which are attributable to
contributions made to the Contract after February 28, 1986. There are exceptions
for immediate annuities and certain Contracts owned for the benefit of an
individual. An immediate annuity, for purposes of this discussion, is a single
premium Contract on which payments begin within one year of purchase. If this
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Contract is issued as the result of an exchange described in Section 1035 of the
Code, for purposes of determining whether the Contract is an immediate annuity,
it will generally be considered to have been purchased on the purchase date of
the contract given up in the exchange.
Code Section 72 also provides for a penalty tax, equal to 10% of the
portion of any Distribution that is includable in gross income, if such
Distribution is made prior to attaining age 59 1/2 or disability of the Contract
Owner. The penalty tax does not apply if the Distribution is one of a series of
substantially equal periodic payments made over the life or life expectancy of
the Contract Owner (or the joint lives or joint life expectancies of the
Contract Owner and the beneficiary selected by the Contract Owner to receive
payment under the Annuity Payment Option selected by the Contract Owner) or for
the purchase of an immediate annuity, or is allocable to an investment in the
Contract before August 14, 1982. A Contract Owner wishing to begin taking
Distributions to which the 10% tax penalty does not apply should forward a
written request to the Company. Upon receipt of a written request from the
Contract Owner, the Company will inform the Contract Owner of the procedures
pursuant to Company policy and subject to limitations of the Contract including
but not limited to first year withdrawals. Such election shall be irrevocable
and may not be amended or changed.
In order to qualify as an annuity contract under Section 72 of the
Code, the contract must provide for Distribution of the entire contract to be
made upon the death of a Contract Owner. If a Contract Owner dies prior to the
Annuitization Date, then the Joint Contract Owner, the Contingent Owner or other
named recipient must receive the Distribution within 5 years of the Contract
Owner's death. However, the recipient may elect for payments to be made over
his/her life or life expectancy provided that such payments begin within one
year from the death of the Contract Owner. If the Joint Contract Owner,
Contingent Owner or other named recipient is the surviving spouse, such spouse
may be treated as the Contract Owner and the Contract may be continued
throughout the life of the surviving spouse. In the event the Contract Owner
dies on or after the Annuitization Date and before the entire interest has been
distributed, the remaining portion must be distributed at least as rapidly as
under the method of Distribution being used as of the date of the Contract
Owner's death (see "Required Distribution For Qualified Plans and Tax Sheltered
Annuities"). If the Contract Owner is not an individual, the death of the
Annuitant (or a change in the Annuitant) will result in a Distribution pursuant
to these rules, regardless of whether a Contingent Annuitant is named.
The Code requires that any election to receive an annuity rather than a
lump sum payment must be made within 60 days after the lump sum becomes payable
(generally, the election must be made within 60 days after the death of an Owner
or the Annuitant). If the election is made more than 60 days after the lump sum
first becomes payable, the election would be ignored for tax purposes, and the
entire amount of the lump sum would be subject to immediate tax. If the election
is made within the 60 day period, each Distribution would be taxable when it is
paid.
NON-QUALIFIED CONTRACTS - NON-NATURAL PERSONS AS OWNERS
The foregoing discussion of the taxation of Non-Qualified Contracts
applies to Contracts owned (or, pursuant to Section 72(u) of the Code, deemed to
be owned) by individuals; it does not apply to Contracts where one or more
non-individuals is an Owner.
As a general rule, contracts owned by corporations, partnerships,
trusts, and similar entities ("Non-Natural Persons"), rather than by one or more
individuals, are not treated as annuity contracts for most purposes under the
Code; in particular, they are not treated as annuity contracts for purposes of
Section 72. Therefore, the taxation rules for Distributions, as described above,
do not apply to Non-Qualified Contracts owned by Non-Natural Persons.
Rather, the following rules will apply.
The income earned under a Non-Qualified Contract that is owned by a
Non-Natural Person is taxed as ordinary income during the taxable year that it
is earned, and is not deferred, even if the income is not distributed out of the
Contract to the Owner.
The foregoing Non-Natural Owner rule does not apply to all entity-owned
contracts. First, for this purpose, a Contract that is owned by a Non-Natural
Person as an agent for an individual is treated as owned by the individual. This
exception does not apply, however, to a Non-Natural Person who is an employer
that holds the Contract under a non-qualified deferred compensation arrangement
for one or more employees.
The Non-Natural Person rules also do not apply to a Contract that is
(a) acquired by the estate of a decedent by reason of the death of the decedent;
(b) issued in connection with certain qualified retirement plans and individual
retirement plans; (c) used in connection with certain structured settlements;
(d) purchased by an employer upon the termination of certain qualified
retirement plans; or (e) an immediate annuity.
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QUALIFIED PLANS, INDIVIDUAL RETIREMENT ANNUITIES, SEP IRAS AND TAX SHELTERED
ANNUITIES
The Contract may be purchased as a Qualified Contract, an Individual
Retirement Annuity, SEP IRA, or a Tax Sheltered Annuity. The Contract Owner
should seek competent advice as to the tax consequences associated with the use
of a Contract as an Individual Retirement Annuity.
For information regarding eligibility, limitations on permissible
amounts of Purchase Payments, and the tax consequences of distributions from
Qualified Plans, Tax Sheltered Annuities, Individual Retirement Annuities, SEP
IRAs and other plans that receive favorable tax treatment, the purchasers of
such contracts should seek competent advice.
The terms of such plans may limit the rights available under the Contracts.
Pursuant to Section 403(b)(1)(E) Code, a Contract that is issued as a
Tax-Sheltered Annuity is required to limit the amount of the Purchase Payment
for any year to an amount that does not exceed the limit set forth in Section
402(g) of the Code ($7,000), as it is from time to time increased to reflect
increases in the cost of living. This limit may be reduced by any deposits,
contributions or payments made to any other Tax-Sheltered Annuity or other plan,
contract or arrangement by or on behalf of the Owner.
The Code permits the rollover of most Distributions from Qualified
Plans to other Qualified Plans or Individual Retirement Annuities. Most
Distributions from Tax-Sheltered Annuities may be rolled into another
Tax-Sheltered Annuity, Individual Retirement Annuity, or Individual Retirement
Accounts. Distributions that may not be rolled over are those which are:
1. one of a series of substantially equal annual (or more frequent)
payments made: (a) over the life (or life expectancy) of the Contract
Owner, (b) over the joint lives (or joint life expectancies) of the
Contract Owner and the Contract Owner's designated Beneficiary, or (c)
for a specified period of ten years or more, or
2. a required minimum distribution.
Any Distribution eligible for rollover will be subject to federal tax
withholding at a rate of twenty percent (20%) unless the Distribution is
transferred directly to an appropriate plan as described above.
Individual Retirement Annuities may not provide life insurance
benefits. If the Death Benefit exceeds the greater of the cash value of the
Contract or the sum of all Purchase Payments (less any surrenders), it is
possible the Internal Revenue Service could determine that the Individual
Retirement Annuity did not qualify for the desired tax treatment.
The Contract is available for Qualified Plans electing to comply with
section 404(c) of ERISA. It is the responsibility of the plan and its
fiduciaries to determine and satisfy the requirements of section 404(c).
WITHHOLDING
The Company is required to withhold tax from certain Distributions to
the extent that such Distribution would constitute income to the Contract Owner
or other payee. The Contract Owner or other payee is entitled to elect not to
have federal income tax withheld from any such Distribution, but may be subject
to penalties in the event insufficient federal income tax is withheld during a
calendar year. However, if the Internal Revenue Service notifies the Company
that the Contract Owner or other payee has furnished an incorrect taxpayer
identification number, or if the Contract Owner or other payee fails to provide
a taxpayer identification number, the Distributions may be subject to back-up
withholding at the statutory rate, which is presently 31%, and which cannot be
waived by the Contract Owner or other payee.
NON-RESIDENT ALIENS
Distributions to nonresident aliens (NRAs) are generally subject to
federal income tax and tax withholding, at a statutory rate of thirty percent
(30%) of the amount of income that is distributed. The Company may be required
to withhold such amount from the Distribution and remit it to the Internal
Revenue Service. 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 the Company sufficient proof of his
or her residency and citizenship in the form and manner prescribed by the
Internal Revenue Service. In addition, for any Distribution made after December
31, 1997, the NRA must obtain an Individual Taxpayer Identification Number from
the Internal Revenue Service, and furnish that number to the Company prior to
the Distribution. If the Company does not have the proper proof of citizenship
or residency and (for Distributions after December 31, 1997) a proper Individual
Taxpayer Identification Number prior to any Distribution, the Company will be
required to withhold 30% of the income, regardless of any treaty provision.
A payment may not be subject to withholding where the recipient
sufficiently establishes to the Company that such payment is effectively
connected to the recipient's conduct of a trade or business in the
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United States and that such payment is includable in the recipient's gross
income for United States federal income tax purposes. Any such Distributions
will be subject to the rules set forth in the section entitled "Withholding."
FEDERAL ESTATE, GIFT, AND GENERATION SKIPPING TRANSFER TAXES
A transfer of the Contract from one Contract Owner to another, or the
payment of a Distribution under the Contract to someone other than a Contract
Owner, may constitute a gift for federal gift tax purposes. Upon the death of
the Contract Owner, the value of the Contract may be included in his or her
gross estate, even if a all or a portion of the value is also subject to federal
income taxes.
The Company may be required to determine whether the Death Benefit or
any other payment or Distribution constitutes a "direct skip" as defined in
Section 2612 of the Code, and the amount of the generation skipping transfer
tax, if any, resulting from such direct skip. A direct skip may occur when
property is transferred to, or a Death Benefit or other Distribution is made to
(a) an individual who is two or more generations younger than the Owner; or (b)
certain trusts, as described in Section 2613 of the Code (generally, trusts that
have no beneficiaries who are not 2 or more generations younger than the Owner).
If the Owner is not an individual, then for this purpose only, "Owner" refers to
any person who would be required to include the Contract, Death Benefit,
Distribution, or other payment in his federal gross estate at his death, or who
is required to report the transfer of the Contract, Death Benefit, Distribution,
or other payment for federal gift tax purposes.
If the Company determines that a generation skipping transfer tax is
required to be paid by reason of such direct skip, the Company is required to
reduce the amount of such Death Benefit, Distribution, or other payment by such
tax liability, and pay the tax liability directly to the Internal Revenue
Service.
Federal estate, gift and generation skipping transfer tax consequences,
and state and local estate, inheritance, succession, generation skipping
transfer, and other tax consequences, of owning or transferring a Contract, and
of receiving a Distribution, Death Benefit, or other payment, depend on the
circumstances of the person owning or transferring the Contract, or receiving a
Distribution, Death Benefit, or other payment.
CHARGE FOR TAX PROVISIONS
The Company is no longer required to maintain a capital gain reserve
liability on Non-Qualified Contracts since capital gains attributable to assets
held in the Company's Variable Account for such Contracts are not taxable to the
Company. However, the Company reserves the right to implement and adjust the tax
charge in the future, if the tax laws change.
DIVERSIFICATION
The Internal Revenue Service has promulgated regulations under Section
817(h) of the Code relating to diversification standards for the investments
underlying a variable annuity contract. The regulations provide that a variable
annuity contract which does not satisfy the diversification standards will not
be treated as an annuity contract, unless the failure to satisfy the regulations
was inadvertent, the failure is corrected, and the Contract Owner or the Company
pays an amount to the Internal Revenue Service. The amount will be based on the
tax that would have been paid by the Contract Owner if the income, for the
period the Contract was not diversified, had been received by the Contract
Owner. If the failure to diversify is not corrected in this manner, the Contract
Owner of an annuity Contract will be deemed the owner of the underlying
securities and will be taxed on the earnings of his or her account. The Company
believes, under its interpretation of the Code and regulations thereunder, that
the investments underlying this Contract meet these diversification standards.
Representatives of the Internal Revenue Service 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 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 Contract would no longer qualify as an annuity under Section 72 of the
Code, the Company will take whatever steps are available to remain in
compliance.
TAX CHANGES
In the recent past, 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 Contracts. It is reasonable to believe that such proposals, and other
proposals will be considered in the future, and some of them may be enacted into
law. In addition, the Treasury Department may amend existing regulations, issue
new regulations, or adopt new interpretations of existing law that may be in
variance with its
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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 Contract.
The foregoing discussion, which is based on the Company's understanding
of federal tax laws as they are currently interpreted by the Internal Revenue
Service, is general and is not intended as tax advice. Statutes, regulations,
and rulings are subject to interpretation by the courts. The courts may
determine that a different interpretation than the currently favored
interpretation is appropriate, thereby changing the operation of the rules that
are applicable to annuity contracts.
Any of the foregoing may change from time to time without any notice,
and the tax consequences arising out of a Contract may be changed retroactively.
There is no way of predicting whether, when, and 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
ANNUITY CONTRACTS. 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.
33
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<PAGE> 36
LEGAL PROCEEDINGS
There are no material legal proceedings, other than ordinary routine
litigation incidental to the business to which the Company and the Variable
Account are parties or to which any of their property is the subject.
The General Distributor, Nationwide Advisory Services, Inc. is not
engaged in any litigation of any material nature.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
PAGE
General Information and History.............................................. 1
Services..................................................................... 1
Purchase of Securities Being Offered......................................... 1
Underwriters................................................................. 2
Calculation of Yield Quotations of Money Market Sub-Accounts................. 2
Annuity Payments............................................................. 3
Financial Statements......................................................... 4
34
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<PAGE> 37
APPENDIX
FIXED ACCOUNT
Purchase Payments under the Fixed Account portion of the Contract and
transfers to the Fixed Account portion become part of the general account of the
Company, which support insurance and annuity obligations. Because of exemptive
and exclusionary provisions, interests in the general account have not been
registered under the Securities Act of 1933 ("1933 Act"), nor is the general
account registered as an investment company under the Investment Company Act of
1940 ("1940 Act"). Accordingly, neither the general account nor any interest
therein are generally subject to the provisions of the 1933 or 1940 Acts, and we
have been advised that the staff of the Securities and Exchange Commission has
not reviewed the disclosures in this prospectus which related to the guaranteed
interest portion. Disclosures regarding the Fixed Account portion of the
Contract and the general account, however, may be subject to certain generally
applicable provisions of the federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.
FIXED ACCOUNT ALLOCATIONS
The Fixed Account is made up of all the general assets of the Company,
other than those in the Variable Account and any other segregated asset account.
Fixed Account Purchase Payments will be allocated to the Fixed Account by
election of the Contract Owner at the time of purchase.
The Company will invest the assets of the Fixed Account in those assets
chosen by the Company and allowed by applicable law. Investment income from such
Fixed Account assets will be allocated by the Company between itself and the
Contracts participating in the Fixed Account.
The level of annuity payments made to Annuitants under the Contracts
will not be affected by the mortality experience (death rate) of persons
receiving such payments or of the general population. The Company assumes this
"mortality risk" by virtue of annuity rates incorporated in the Contract which
cannot be changed. In addition, the Company guarantees that it will not increase
charges for maintenance of the Contracts regardless of its actual expenses.
Investment income from the Fixed Account allocated to the Company
includes compensation for mortality and expense risks borne by the Company in
connection with Fixed Account Contracts. The amount of such investment income
allocated to the Contracts will vary from year to year in the sole discretion of
the Company at such rate or rates as the Company prospectively declares from
time to time. Any such rate or rates so determined will remain effective for a
period of not less than twelve months, and remain at such rate unless changed.
However, the Company guarantees that it will credit interest at not less than
3.0% per year (or as otherwise required under state law, or at such minimum rate
as stated in the contract when sold). ANY INTEREST CREDITED TO AMOUNTS ALLOCATED
TO THE FIXED ACCOUNT IN EXCESS OF 3.0% PER YEAR WILL BE DETERMINED IN THE SOLE
DISCRETION OF THE COMPANY. THE CONTRACT 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 Purchase Payments deposited to the Contract which
are allocated to the Fixed Account may receive a different rate of interest than
money transferred from the Variable Sub-Accounts to the Fixed Account and
amounts maturing in the Fixed Account at the expiration of an Interest Rate
Guarantee Period.
The Company guarantees that, at any time, the Fixed Account Contract
Value will not be less than the amount of the Purchase Payments allocated to the
Fixed Account, plus interest credited as described above, less the sum of all
administrative charges, any applicable premium taxes, and less any amounts
surrendered. If the Contract Owner effects a surrender, the amount available
from the Fixed Account will be reduced by any applicable Contingent Deferred
Sales Charge (see "Contingent Deferred Sales Charge").
TRANSFERS
Contract Owners may at the maturity of an Interest Rate Guarantee
Period, transfer a portion of the value of the Fixed Account to the Variable
Account. The maximum percentage that may be transferred will be determined by
the Company at its sole discretion, but will not be less than 10% of the total
value of the portion of the Fixed Account that is maturing and will be declared
upon the expiration date of the then current Interest Rate Guarantee Period. The
Company reserves the right to refuse transfers or Purchase Payments into the
Fixed Account if the Fixed Account is 30% of the Contract Value or greater. The
Interest Rate Guarantee Period expires on the final day of a calendar quarter.
Transfers must be made within 45 days after the expiration date of the guarantee
period. Owners who have entered into a Dollar Cost Averaging Agreement with the
Company (see "Dollar Cost Averaging") may transfer from the Fixed Account to the
Variable Account under the terms of that agreement.
35
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<PAGE> 38
ANNUITY PAYMENT PERIOD-FIXED ACCOUNT
FIRST AND SUBSEQUENT PAYMENTS
A Fixed Annuity is an annuity with payments which are guaranteed by the
Company as to dollar amount during the annuity payment period. The first Fixed
Annuity payment will be determined by applying the Fixed Account Contract Value
to the applicable Annuity Table in accordance with the Annuity Payment Option
elected. This will be done at the Annuitization Date on an age last birthday
basis. Fixed Annuity payments after the first will not be less than the first
Fixed Annuity payment.
The Company does not credit discretionary interest to Fixed Annuity
payments during the annuity payment period for annuity options based on life
contingencies. The Annuitant must rely on the Annuity Tables applicable to the
Contracts to determine the amount of such Fixed Annuity payments.
36
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<PAGE> 39
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1997
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACTS ISSUED
BY THE NATIONWIDE VARIABLE ACCOUNT-6
OF NATIONWIDE LIFE INSURANCE COMPANY
This Statement of Additional Information is not a prospectus. It
contains information in addition to and more detailed than set forth in the
prospectus and should be read in conjunction with the prospectus dated May 1,
1997. The prospectus may be obtained from Nationwide Life Insurance Company by
writing P.O. Box 182008, Columbus, Ohio 43216, or calling 1-800-240-5054, TDD
1-800-238-3035.
TABLE OF CONTENTS
PAGE
General Information and History............................................ 1
Services................................................................... 1
Purchase of Securities Being Offered....................................... 1
Underwriters............................................................... 2
Calculations of Performance................................................ 2
Underlying Mutual Fund Performance Summary................................. N/A
Annuity Payments........................................................... 3
Financial Statements....................................................... 4
GENERAL INFORMATION AND HISTORY
The Nationwide Variable Account-6 is a separate investment account of
Nationwide Life Insurance Company ("Company"). The Company is a member of the
Nationwide Insurance Enterprise and all of the Company's common stock is owned
by Nationwide Corporation. Nationwide Corporation is a holding company. All of
its common stock is held by Nationwide Mutual Insurance Company (95.3%) and
Nationwide Mutual Fire Insurance Company (4.7%).
SERVICES
The Company, which has responsibility for administration of the
Contracts and the Variable Account, maintains records of the name, address,
taxpayer identification number, and other pertinent information for each
Contract Owner and the number and type of Contract issued to each such Contract
Owner and records with respect to the Contract Value of each Contract.
The Custodian of the assets of the Variable Account is the Company. The
Company will maintain a record of all purchases and redemptions of shares of the
underlying Mutual Funds.
The financial statements and schedules have been included herein in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, Two Nationwide Plaza, Columbus, Ohio 43215, and upon the authority
of said firm as experts in accounting and auditing.
PURCHASE OF SECURITIES BEING OFFERED
The Contracts will be sold by licensed insurance agents in the states
where the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
("NASD").
The Contract Owner may, on written request, transfer up to 100% of the
Contract Value from the Variable Account to the Fixed Account. However, the
Company, at its sole discretion, reserves the right to limit such transfers to
10% of the Contract Value for any 12 month period. Contract Owners may at the
maturity of an Interest Rate Guarantee Period transfer a portion of the Contract
Value of the Fixed Account to the Variable Account. Such portion will be
determined by the Company at its sole discretion (but will not be less than 10%
of the total value of the portion of the Fixed Account that is maturing), and
will be declared upon the expiration date of the then current Interest Rate
Guarantee Period. The Interest Rate Guarantee Period expires on the final day of
a calendar quarter; therefore, the Interest Rate Guarantee Period for deposits
or transfers in the Fixed Account may continue for up to three months after a
one year period has expired. Transfers under this provision must be made within
45 days after the expiration date of the guarantee period. Owners who have
entered into a Dollar Cost Averaging Agreement with the Company may transfer
from the Fixed Account to the Variable Account under the terms of that
agreement. Transfers from the Fixed Account may not be made prior to the first
Contract Anniversary. Transfers must also be made prior to the Annuitization
Date.
1
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<PAGE> 40
UNDERWRITERS
The Contracts, which are offered continuously, are distributed by
Nationwide Advisory Services, Inc. ("NAS"), One Nationwide Plaza, Columbus, Ohio
43216, an affiliate of the Company. No underwriting commissions have been paid
by the Company to NAS.
CALCULATION OF YIELD QUOTATIONS OF MONEY MARKET SUB-ACCOUNTS
Any current yield quotations of the Nationwide Separate Account Trust
Money Market Fund Sub-Account, subject to Rule 482 of the Securities Act of
1933, shall consist of a seven calendar day historical yield, carried at least
to the nearest hundredth of a percent. The yield shall be calculated by
determining the net change, exclusive of capital changes, in the value of
hypothetical pre-existing account having a balance of one accumulation unit at
the beginning of the base period, subtracting a hypothetical charge reflecting
deductions from Contract Owner accounts, and dividing the net change in account
value by the value of the account at the beginning of the period to obtain a
base period return, and multiplying the base period return by (365/7) or (366/7)
in a leap year. The Nationwide Separate Account Trust Money Market Fund
Sub-Account's effective yield is computed similarly but includes the effect of
assumed compounding on an annualized basis of the current unit value yield
quotations of the Fund.
The Nationwide Separate Account Trust Money Market Fund Sub-Account's
yield and effect yield will fluctuate daily. Actual yields will depend on
factors such as the type of instruments in the Fund's portfolio, portfolio
quality and average maturity, changes in interest rates, and the Fund's
expenses. Although the Sub-Account determines its yield on the basis of seven
calendar day period, it may use a different time period on occasion. The yield
quotes may reflect the expense limitation described in "Investment Manager and
Other Services" in the Fund's Statement of Additional Information. There is no
assurance that the yields quoted on any given occasion will remain in effect for
any period of time and there is no guarantee that the net asset values will
remain constant. It should be noted that a Contract Owner's investment in the
Nationwide Separate Account Trust Money Market Fund Sub-Account is not
guaranteed or insured. Yield of other money market funds may not be comparable
if a different base period or another method of calculation is used.
All performance advertising shall also include quotations of
standardized average annual total return, calculated in accordance with the
standard method prescribed by rules of the Securities and Exchange Commission,
to facilitate comparison with standardized average annual total return
advertised for a specific period is found by first taking a hypothetical $1,000
investment in each of the Sub-Accounts' units on the first day of the period at
the offering price, which is the Accumulation Unit Value per unit ("initial
investment") and computing the ending redeemable value ("redeemable value") of
that investment at the end of the period. The redeemable value is then divided
by the initial investment and this quotient is taken to the Nth root (N
represents the number of years in the period) and 1 is subtracted from the
result which is then expressed as a percentage, carried to at least the nearest
hundredth of a percent. Standardized average annual total return reflects the
deduction of a 1.40% Mortality, Expense Risk and Administration Charge. The
redeemable value also reflects the effect of any applicable Contingent Deferred
Sales Charge that may be imposed at the end of the period (see "Contingent
Deferred Sales Charge" provision located in the prospectus). No deduction is
made for premium taxes which may be assessed by certain states. Nonstandardized
total return may also be advertised, and is calculated in a manner similar to
standardized average annual total return except the nonstandardized total return
is based on a hypothetical initial investment of $10,000 and does not reflect
the deduction of any applicable Contingent Deferred Sales Charge. Reflecting the
Contingent Deferred Sales Charge would decrease the level of the performance
advertised. The Contingent Deferred Sales Charge is not reflected because the
Contract is designed for long term investment. An assumed initial investment of
$10,000 will be used because that figure more closely approximates the size of a
typical Contract than does the $1,000 figure used in calculating the
standardized average annual total return quotations.
2
40 of 88
<PAGE> 41
The standardized average annual total return and nonstandardized
average annual total return quotations will be current to the last day of the
calendar quarter preceding the date on which an advertisement is submitted for
publication. Both the standardized average annual return and the nonstandardized
average annual total return will be based on rolling calendar quarters and will
cover periods of one, five, and ten years, or a period covering the time the
underlying Mutual Fund held in the Sub-Account has been in existence, if the
Mutual Fund has not been in existence for one of the prescribed periods. For
those underlying Mutual Funds which have not been held as Sub-Accounts within
the Variable Account for one of the quoted periods, the average annual total
return and nonstandardized total return quotations will show the investment
performance such underlying Mutual funds would have achieved (reduced by the
applicable charges ) had they been held as Sub-Accounts within the Variable
Account for the period quoted.
Quotations of average annual total return and total return are based
upon historical earnings and will fluctuate. Any quotation of performance,
therefore, would not be considered a guarantee of future performance. Factors
affecting a Sub-Account's performance include general market conditions,
operating expenses and investment management. A Contract Owner's account when
redeemed may be more or less than original cost.
ANNUITY PAYMENTS
See "Frequency and Amount of Annuity Payments" located in the
prospectus.
3
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<PAGE> 42
NATIONWIDE INSURANCE ENTERPRISE
"SEPARATE ACCOUNT FINANCIALS"*
*To be added by Pre-Effective Amendment to the Registration Statement
42 of 88
<PAGE> 43
NATIONWIDE INSURANCE ENTERPRISE
"LIFE COMPANY FINANCIALS"*
*To be added by Pre-Effective Amendment to the Registration Statement
52 of 88
<PAGE> 44
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements: PAGE
(1) Financial statements and schedule included
in Prospectus.
(Part A):
Condensed Financial Information. N/A
(2) Financial statements and schedule included
in Part B: *
Nationwide Variable Account-6: *
Nationwide Life Insurance Company: *
*To be added by Pre-Effective Amendment to the
Registration Statement
71 of 88
<PAGE> 45
Item 24. (b) Exhibits
(1) Resolution of the Depositor's Board of Directors
authorizing the establishment of the Registrant-
Filed previously with the Registration Statement for
the Nationwide Variable Account-6 (File No. 811-8684)
and hereby incorporated by reference
(2) Not Applicable
(3) Underwriting or Distribution contracts between the
Registrant and Principal Underwriter- Filed
previously with the Registration Statement for the
Nationwide Variable Account-6 (File No. 811-8684) and
hereby incorporated by reference
(4) The form of the Variable Annuity Contract - Attached
hereto
(5) Variable Annuity Application*
(6) Articles of Incorporation of Depositor- Attached
hereto
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Counsel - Attached hereto.
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Computation of Performance Quotations- Filed
previously with the Registration Statement for the
Nationwide Variable Account-6 (File No. 811-8684) and
hereby incorporated by reference
*To be added by Pre-Effective Amendment to the Registration Statement
72 of 88
<PAGE> 46
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
Lewis J. Alphin Director
519 Bethel Church Road
Mount Olives, NC 28365
Keith W. Eckel Director
1647 Falls Road
Clarks Summit, PA 18411
Willard J. Engel Director
1100 East Main Street
Marshall, MN 56258
Fred C. Finney Director
1558 West Moreland Road
Wooster, OH 44691
Charles L. Fuellgraf, Jr. Director
600 South Washington Street
Butler, PA 16001
Joseph J. Gasper President and Chief Operating Officer
One Nationwide Plaza and Director
Columbus, OH 43215
Henry S. Holloway Chairman of the
1247 Stafford Road Board
Darlington, MD 21034
D. Richard McFerson Chairman and Chief Executive Officer-
One Nationwide Plaza Nationwide Insurance Enterprise
Columbus, OH 43215 and Director
David O. Miller Director
115 Sprague Drive
Hebron, Ohio 43025
C. Ray Noecker Director
2770 State Route 674 South
Ashville, OH 43103
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
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<PAGE> 47
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
Arden L. Shisler Director
1356 North Wenger Road
Dalton, OH 44618
Robert L. Stewart Director
88740 Fairview Road
Jewett, OH 43986
Nancy C. Thomas Director
10835 Georgetown Street NE
Louisville, OH 44641
Harold W. Weihl Director
14282 King Road
Bowling Green, OH 43402
Gordon E. McCutchan Executive Vice President,
One Nationwide Plaza Law and Corporate Services
Columbus, OH 43215 and Secretary
Robert A. Oakley Executive Vice President-
One Nationwide Plaza Chief Financial Officer
Columbus, Ohio 43215
James E. Brock Senior Vice President -
One Nationwide Plaza Life Company Operations
Columbus, OH 43215
W. Sidney Druen Senior Vice President and General
One Nationwide Plaza Counsel and Assistant Secretary
Columbus, OH 43215
Harvey S. Galloway, Jr. Senior Vice President-Chief Actuary-
One Nationwide Plaza Life, Health and Annuities
Columbus, OH 43215
Richard A. Karas Senior Vice President - Sales -
One Nationwide Plaza Financial Services
Columbus, OH 43215
Michael D. Bleiweiss Vice President-
One Nationwide Plaza Deferred Compensation
Columbus, OH 43215
74 of 88
<PAGE> 48
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
Matthew S. Easley Vice President -
One Nationwide Plaza Annuity and Pension Actuarial
Columbus, OH 43215
Ronald L. Eppley Vice President-
One Nationwide Plaza Pensions
Columbus, OH 43215
Timothy E. Murphy Vice President-
One Nationwide Plaza Strategic Marketing
Columbus, Ohio 43215
R. Dennis Noice Vice President-
One Nationwide Plaza Individual Investment Products
Columbus, OH 43215
Joseph P. Rath Vice President -
One Nationwide Plaza Associate General Counsel
Columbus, OH 43215
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR
OR REGISTRANT.
* Subsidiaries for which separate financial statements
are filed
** Subsidiaries included in the respective consolidated
financial statements
*** Subsidiaries included in the respective group
financial statements filed for unconsolidated
subsidiaries
**** other subsidiaries
75 of 88
<PAGE> 49
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE ATTACHED CHART)
OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
Affiliate Agency of Ohio, Inc. Ohio Life Insurance Agency
Affiliate Agency, Inc. Delaware Life Insurance Agency
Allnations, Inc. Ohio Promotes cooperative insurance
corporations worldwide
American Marine Underwriters, Inc. Florida Underwriting Manager
Auto Direkt Insurance Company Germany Insurance Company
The Beak and Wire Corporation Ohio Radio Tower Joint Venture
California Cash Management Company California Investment Securities Agent
Colonial County Mutual insurance Texas Insurance Company
Company
Colonial Insurance Company of California Insurance Company
California
Columbus Insurance Brokerage and Germany Insurance Broker
Service GMBH
Companies Agency Insurance Services California Insurance Broker
of California
Companies Agency of Alabama, Inc. Alabama Insurance Broker
Companies Agency of Idaho, Inc. Idaho Insurance Broker
Companies Agency of Illinois, Inc. Illinois Acts as Collection Agent for
Policies placed through Brokers
Companies Agency of Kentucky, Inc. Kentucky Insurance Broker
Companies Agency of Massachusetts, Massachusetts Insurance Broker
Inc.
Companies Agency of New York, Inc. New York Insurance Broker
Companies Agency of Pennsylvania, Inc. Pennsylvania Insurance Broker
Companies Agency of Phoenix, Inc. Arizona Insurance Broker
Companies Agency of Texas, Inc. Texas Insurance Broker
Companies Annuity Agency of Texas, Texas Insurance Broker
Inc.
Companies Agency, Inc. Wisconsin Insurance Broker
Companies Annuity Agency of Texas, Texas Insurance Broker
Inc.
Countrywide Services Corporation Delaware Products Liability,
Investigative and Claims
Management Services
</TABLE>
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<PAGE> 50
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE ATTACHED CHART)
OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
Employers Insurance of Wausau A Wisconsin Insurance Company
Mutual Company
** Employers Life Insurance Company of Wisconsin Life Insurance Company
Wausau
F & B, Inc. Iowa Insurance Agency
Farmland Mutual Insurance Company Iowa Insurance Company
Financial Horizons Distributors Alabama Life Insurance Agency
Agency of Alabama, Inc.
Financial Horizons Distributors Ohio Insurance Agency
Agency of Ohio
Financial Horizons Distributors Oklahoma Life Insurance Agency
Agency of Oklahoma, Inc.
Financial Horizons Distributors Texas Life Insurance Agency
Agency of Texas, Inc.
* Financial Horizons Investment Trust Massachusetts Investment Company
Financial Horizons Securities Oklahoma Broker Dealer
Corporation
Gates, McDonald & Company Ohio Cost Control Business
Gates, McDonald & Company of Nevada Nevada Self-Insurance Administration
Claims Examinations and Data
Processing Services
Gates, McDonald & Company of New New York Workers Compensation Claims
York, Inc. Administration
Greater La Crosse Health Plans, Inc. Wisconsin Writes Commercial Health and
Medicare Supplement Insurance
InHealth Agency, Inc. Ohio Insurance Agency
InHealth Management Systems, Inc. Ohio Develops and operates Managed
Care Delivery System
Insurance Intermediaries, Inc. Ohio Insurance Broker and Insurance
Agency
Key Health Plan, Inc. California Pre-paid health plans
Landmark Financial Services of New New York Life Insurance Agency
York, Inc.
Leben Direkt Insurance Company Germany Life Insurance Company
Lone Star General Agency, Inc. Texas Insurance Agency
** MRM Investments, Inc. Ohio Owns and operates a Recreational
Ski Facility
** National Casualty Company Michigan Insurance Company
National Casualty Company of America, Great Britain Insurance Company
Ltd.
</TABLE>
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<PAGE> 51
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE ATTACHED CHART)
OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
** National Premium and Benefit Delaware Insurance Administrative Services
Administration Company
Nationwide Agribusiness Insurance Iowa Insurance Company
Company
Nationwide Cash Management Company Ohio Investment Securities Agent
Nationwide Communications, Inc. Ohio Radio Broadcasting Business
Nationwide Community Urban Ohio Redevelopment of blighted areas
Redevelopment Corporation within the City of Columbus, Ohio
Nationwide Corporation Ohio Organized for the purpose of
acquiring, holding,
encumbering, transferring, or
otherwise disposing of shares,
bonds, and other evidences of
indebtedness, securities, and
contracts of other persons,
associations, corporations,
domestic or foreign and to form
or acquire the control of other
corporations
Nationwide Development Company Ohio Owns, leases and manages
commercial real estate
Nationwide Financial Institution Delaware Insurance Agency
Distributors Agency, Inc.
Nationwide Financial Services, Inc. Delaware Organized for the purpose of
acquiring, holding,
encumbering, transferring, or
otherwise disposing of shares,
bonds, and other evidences of
indebtedness, securities, and
contracts of other persons,
associations, corporations,
domestic or foreign and to form
or acquire the control of other
corporations
** Nationwide Advisory Services, Inc. Ohio Registered Broker-Dealer,
Investment Manager and
Administrator
Nationwide General Insurance Company Ohio Insurance Company
Nationwide HMO, Inc. Ohio Health Maintenance Organization
* Nationwide Indemnity Company Ohio Reinsurance Company
Nationwide Insurance Enterprise Ohio Membership Non-Profit Corporation
Foundation
Nationwide Insurance Golf Charities, Ohio Membership Non-Profit Corporation
Inc.
Nationwide Investing Foundation Michigan Investment Company
* Nationwide Investing Massachusetts Investment Company
Foundation II
</TABLE>
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<PAGE> 52
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE ATTACHED CHART)
OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
Nationwide Investment Services Oklahoma Registered Broker-Dealer in
Corporation Deferred Compensation Market
Nationwide Investors Services, Inc. Ohio Stock Transfer Agent
** Nationwide Life and Annuity Insurance Ohio Life Insurance Company
Company
** Nationwide Life Insurance Company Ohio Life Insurance Company
Nationwide Lloyds Texas Texas Lloyds Company
Nationwide Mutual Fire Insurance Ohio Insurance Company
Company
Nationwide Mutual Insurance Company Ohio Insurance Company
Nationwide Property and Casualty Ohio Insurance Company
Insurance Company
** Nationwide Property Management, Inc. Ohio Owns, leases, manages and deals
in Real Property
* Nationwide Separate Account Trust Massachusetts Investment Company
NEA Valuebuilder Investor Services of Alabama Life Insurance Agency
Alabama, Inc.
NEA Valuebuilder Investor Services of Arizona Life Insurance Agency
Arizona, Inc.
NEA Valuebuilder Investor Services of Massachusetts Life Insurance Agency
Massachusetts, Inc.
NEA Valuebuilder Investor Services of Montana Life Insurance Agency
Montana, Inc.
NEA Valuebuilder Investor Services of Nevada Life Insurance Agency
Nevada, Inc.
NEA Valuebuilder Investor Services of Ohio Life Insurance Agency
Ohio, Inc.
NEA Valuebuilder Investor Services of Oklahoma Life Insurance Agency
Oklahoma, Inc.
NEA Valuebuilder Investor Services of Texas Life Insurance Agency
Texas, Inc.
NEA Valuebuilder Investor Services of Wyoming Life Insurance Agency
Wyoming
NEA Valuebuilder Investor Services, Delaware Life Insurance Agency
Inc.
NEA Valuebuilder Services Insurance Massachusetts Life Insurance Agency
Agency, Inc.
Neckura General Insurance Company Germany Insurance Company
Neckura Holding Company Germany Administrative Service for
Neckura Insurance Group
Neckura Insurance Company Germany Insurance Company
Neckura Life Insurance Company Germany Life Insurance Company
</TABLE>
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<PAGE> 53
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE ATTACHED CHART)
OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
NWE, Inc. Ohio Special Investments
PEBSCO of Massachusetts Insurance Massachusetts Markets and Administers Deferred
Agency, Inc. Compensation Plans for Public
Employees
PEBSCO of Texas, Inc. Texas Markets and Administers Deferred
Compensation Plans for Public
Employees
Pension Associates of Wausau, Inc. Wisconsin Pension plan administration,
record keeping and consulting
and compensation consulting
Public Employees Benefit Services Delaware Marketing and Administration of
corporation Deferred Employee Compensation
Plans for Public Employees
Public Employees Benefit Services Alabama Markets and Administers Deferred
Corporation of Alabama Compensation Plans for Public
Employees
Public Employees Benefit Services Arkansas Markets and Administers Deferred
Corporation of Arkansas Compensation Plans for Public
Employees
Public Employees Benefit Services Montana Markets and Administers Deferred
Corporation of Montana Compensation Plans for Public
Employees
Public Employees Benefit Services New Mexico Markets and Administers Deferred
Corporation of New Mexico Compensation Plans for Public
Employees
Scottsdale Indemnity Company Ohio Insurance Company
Scottsdale Insurance Company Ohio Insurance Company
SVM Sales GmbH, Neckura Insurance Germany Sales support for Neckura
Group Insurance Group
Wausau Business Insurance Company Illinois Insurance Company
Wausau General Insurance Company Illinois Insurance Company
Wausau Insurance Company (U.K.) United Kingdom Insurance and Reinsurance Company
Limited
Wausau International Underwriters California Special Risks, Excess and
Surplus Lines Insurance
Underwriting Manager
** Wausau Preferred Health Insurance Wisconsin Insurance and Reinsurance Company
Company
Wausau Service Corporation Wisconsin Holding Company
Wausau Underwriters Insurance Company Wisconsin Insurance Company
** West Coast Life Insurance Company California Life Insurance Company
</TABLE>
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<PAGE> 54
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
STATE (SEE ATTACHED CHART)
OF UNLESS OTHERWISE
COMPANY ORGANIZATION INDICATED PRINCIPAL BUSINESS
<S> <C> <C> <C>
* MFS Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* NACo Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide DC Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account Account
* Nationwide DCVA II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Separate Account No. 1 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Multi-Flex Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide VA Separate Account-A Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide VA Separate Account-B Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
Nationwide VA Separate Account-C Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide VA Separate Account-Q Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-3 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-4 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-5 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Fidelity Advisor Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account Account
* Nationwide Variable Account-6 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-8 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide VL Separate Ohio Nationwide Life and Annuity Issuer of Life Insurance
Account-A Separate Account Contracts
* Nationwide VL Separate Ohio Nationwide Life and Annuity Issuer of Life Insurance
Account-B Separate Account Contracts
* Nationwide VLI Separate Account Ohio Nationwide Life Separate Issuer of Life Insurance
Account Contracts
* Nationwide VLI Separate Account-2 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Contracts
* Nationwide VLI Separate Account-3 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Contracts
</TABLE>
81 of 88
<PAGE> 55
Nationwide Insurance Enterprise Organizational Chart*
*To be added by Pre-Effective Amendment to the Registration Statement
82 of 88
<PAGE> 56
Item 27. NUMBER OF CONTRACT OWNERS
Not Applicable.
Item 28. INDEMNIFICATION
Provision is made in the Company's Amended Code of Regulations and
expressly authorized by the General Corporation Law of the State
of Ohio, for indemnification by the Company of any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative by reason
of the fact that such person is or was a director, officer or
employee of the Company, against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action,
suit or proceeding, to the extent and under the circumstances
permitted by the General Corporation Law of the State of Ohio.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("Act") may be permitted to directors,
officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. PRINCIPAL UNDERWRITER
(a) Nationwide Advisory Services, Inc. ("NAS") acts as general
distributor for the Nationwide Multi-Flex Variable Account,
Nationwide DC Variable Account, Nationwide DCVA-II,
Nationwide Variable Account-II, Nationwide Variable
Account-5, Nationwide Variable Account-6, Nationwide
Variable Account-8, Nationwide VA Separate Account-A,
Nationwide VA Separate Account-B, Nationwide VA Separate
Account-C, Nationwide VL Separate Account-A, Nationwide VL
Separate Account-B, Nationwide VLI Separate Account-2,
Nationwide VLI Separate Account-3, NACo Variable Account and
the Nationwide Variable Account, all of which are separate
investment accounts of the Company or its affiliates.
NAS also acts as principal underwriter for the Nationwide
Investing Foundation, Nationwide Separate Account Trust,
Financial Horizons Investment Trust, and Nationwide
Investing Foundation II, which are open-end management
investment companies.
(b) NATIONWIDE ADVISORY SERVICES, INC.
DIRECTORS AND OFFICERS
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
Joseph J. Gasper President and Director
One Nationwide Plaza
Columbus, Ohio 43215
D. Richard McFerson Chairman of the Board of Directors and
One Nationwide Plaza Chairman and
Columbus, OH 43215 Chief Executive Officer--Nationwide
Insurance Enterprise and Director
Gordon E. McCutchan
One Nationwide Plaza Executive Vice President-Law and
Columbus, OH 43215 Corporate Services and Director
Robert A. Oakley Executive Vice President - Chief Financial
One Nationwide Plaza Officer and Director
Columbus, Ohio 43215
84 of 88
<PAGE> 57
(b) NATIONWIDE ADVISORY SERVICES, INC.
DIRECTORS AND OFFICERS
Robert J. Woodward Executive Vice President - Chief Investment
One Nationwide Plaza Officer and Director
Columbus, Ohio 43215
W. Sidney Druen Senior Vice President and
One Nationwide Plaza General Counsel and
Columbus, OH 43215 Assistant Secretary
James F. Laird, Jr. Vice President and General
One Nationwide Plaza Manager
Columbus, OH 43215
Peter J. Neckermann Vice President
One Nationwide Plaza
Columbus, OH 43215
Harry S. Schermer Vice President - Investments
One Nationwide Plaza
Columbus, OH 43215
Rae I. Mercer Secretary
One Nationwide Plaza
Columbus, OH 43215
William G. Goslee Treasurer
One Nationwide Plaza
Columbus, Ohio 43215
(c) NAME OF NET UNDERWRITING COMPENSATION ON
PRINCIPAL DISCOUNTS AND REDEMPTION OR BROKERAGE
UNDERWRITER COMMISSIONS ANNUITIZATION COMMISSIONS COMPENSATION
Nationwide N/A N/A N/A N/A
Advisory
Services,
Inc.
85 of 88
<PAGE> 58
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Robert O. Cline
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, OH 43216
Item 31. MANAGEMENT SERVICES
Not Applicable
Item 32. UNDERTAKINGS
The Registrant hereby undertakes to:
(a) file a post-effective amendment to this registration
statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement
are never more than 16 months old for so long as payments
under the variable annuity contracts may be accepted;
(b) include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written
communication affixed to or included in the prospectus that
the applicant can remove to send for a Statement of
Additional Information; and
(c) deliver any Statement of Additional Information and any
financial statements required to be made available under
this form promptly upon written or oral request.
The Registrant hereby represents that the fees and charges
deducted under the Contract in the aggregate are reasonable in
relation to the services rendered, the expenses expected to be
incurred and risks assumed by the Company.
The Registrant hereby represents that any contract offered by
the prospectus and which is issued pursuant to Section 403(b)
of the Code is issued by the Registrant in reliance upon, and
in compliance with, the Securities and Exchange Commission's
no-action letter to the American Council of Life Insurance
(publicly available November 28, 1988) which permits
withdrawal restrictions to the extent necessary to comply with
IRC Section 403(b)(11).
86 of 88
<PAGE> 59
Offered by
NATIONWIDE
LIFE INSURANCE COMPANY
and its
NATIONWIDE
VARIABLE ACCOUNT 6
Individual Deferred
Variable Annuity Contracts
PROSPECTUS
MAY 1, 1997
87 of 88
<PAGE> 60
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant, NATIONWIDE VARIABLE ACCOUNT-6, has caused this
Post-Effective Amendment to be signed on its behalf in the City of Columbus, and
State of Ohio, on this
------------------------
NATIONWIDE VARIABLE ACCOUNT-6
---------------------------------
(Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
---------------------------------
(Depositor)
By/s/JOSEPH P. RATH
---------------------------------
Joseph P. Rath
Vice President and
Associate General Counsel
As required by the Securities Act of 1933, this Post-Effective Amendment has
been signed by the following persons in the capacities indicated on the
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
LEWIS J. ALPHIN Director
- ----------------------------
Lewis J. Alphin
KEITH W. ECKEL Director
- ----------------------------
Keith W. Eckel
WILLARD J. ENGEL Director
- ----------------------------
Willard J. Engel
FRED C. FINNEY Director
- ----------------------------
Fred C. Finney
CHARLES L. FUELLGRAF, JR. Director
- ----------------------------
Charles L. Fuellgraf, Jr.
President/Chief Operating
JOSEPH J. GASPER Officer and Director
- ----------------------------
Joseph J. Gasper
Chairman of the Board
HENRY S. HOLLOWAY and Director
- ---------------------------
Henry S. Holloway
Chairman and Chief Executive Officer - Nationwide
D. RICHARD MCFERSON Insurance Enterprise and Director
- ----------------------------
D. Richard McFerson
DAVID O. MILLER Director
- ----------------------------
David O. Miller
C. RAY NOECKER Director
- ----------------------------
C. Ray Noecker
Executive Vice President-
ROBERT A. OAKLEY Chief Financial Officer
- ----------------------------
Robert A. Oakley
JAMES F. PATTERSON Director By/s/JOSEPH P. RATH
- ---------------------------- -------------------------
James F. Patterson Joseph P. Rath
ARDEN L. SHISLER Director Attorney-in-Fact
- ----------------------------
Arden L. Shisler
ROBERT L. STEWART Director
- ----------------------------
Robert L. Stewart
NANCY C. THOMAS Director
- ----------------------------
Nancy C. Thomas
HAROLD W. WEIHL Director
- ----------------------------
Harold W. Weihl
</TABLE>
88 of 88
<PAGE> 61
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned as
directors and/or officers of NATIONWIDE LIFE INSURANCE COMPANY, an Ohio
corporation, which has filed or will file with the Securities and Exchange
Commission under the provisions of the Securities Act of 1993, as amended,
various Registration Statements and amendments thereto for the registration
under said Act of Individual Deferred Variable Annuity Contracts in connection
with the MFS Variable Account, 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 Multi-Flex Variable Account and
Nationwide Variable Account - 8; and the registration of fixed interest rate
options subject to a market value adjustment offered under some or all of the
aforementioned individual Variable Annuity Contracts in connection with the
Nationwide Multiple Maturity Separate Account, and the registration of Group
Flexible Fund Retirement Contracts in connection with the Nationwide DC
Variable Account, Nationwide DCVA III, and the NACo Variable Account; and the
registration of Group Common Stock Variable Annuity Contracts in connection
with Separate Account No. 1; and the registration of variable life insurance
policies in connection with the Nationwide VLI Separate Account, Nationwide VLI
Separate Account - 2, Nationwide VLI Separate Account - 3 of Nationwide Life
Insurance Company, hereby constitutes and appoints D. Richard McFerson, Joseph
J. Gasper, Gordon E. McCutchan, W. Sidney Druen, and Joseph P. Rath, and each
of them with power to act without the others, his/her attorney, with full power
of substitution and resubstitution, for and in his/her name, place and stead, in
any and all capacities, to approve, and sign such Registration Statements and
any and all amendments thereto, with power to affix the corporate seal of said
corporation thereto and to attest said seal and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby granting unto said attorneys, and
each of them, full power and authority to do and perform all and every act and
thing requisite to all intents and purposes as he/she might or could do in
person, hereby ratifying and confirming that which said attorneys, or any of
them, may lawfully do or cause to be done by virtue hereof. This instrument may
be executed in one or more counterparts.
IN WITNESS WHEREOF, the undersigned have herewith set their names and
seals as of this 4th day of April, 1996.
/s/ Lewis J. Alphin /s/ David O. Miller
- ------------------------------------- ----------------------------------------
Lewis J. Alphin, Director David O. Miller, Director
/s/ Keith W. Eckel /s/ C. Ray Noecker
- ------------------------------------- ----------------------------------------
Keith W. Eckel, Director C. Ray Noecker, Director
/s/ Willard P. Engel /s/ Robert A. Oakley
- ------------------------------------- ----------------------------------------
Willard P. Engel, Director Robert A. Oakley, Executive Vice
President and Chief Financial Officer
/s/ Fred C. Finney
- ------------------------------------- /s/ James F. Patterson
Fred C. Finney, Director -------------------------------------
James F. Patterson, Director
/s/ Charles L. Fuellgraf
- ------------------------------------- /s/ Arden L. Shisler
Charles L. Fuellgraf, Director -------------------------------------
Arden L. Shisler, Director
/s/ Joseph J. Gasper
- ------------------------------------- /s/ Robert L. Stewart
Joseph J. Gasper, President and Chief -------------------------------------
Operating Officer and Director Robert L. Stewart, Director
/s/ Henry S. Holloway /s/ Nancy C. Thomas
- ------------------------------------- -------------------------------------
Henry S. Holloway, Chairman of the Nancy C. Thomas, Director
Board, Director
/s/ Harold W. Weihl
/s/ D. Richard McFerson -------------------------------------
- ------------------------------------- Harold W. Weihl, Director
D. Richard McFerson, Chairman and
Chief Executive Officer - Nationwide
Insurance Enterprise and Director
<PAGE> 62
NATIONWIDE LIFE INSURANCE COMPANY
NATIONWIDE VARIABLE ACCOUNT-6
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT
EXHIBITS TO FORM N-4
SEC FILE NO. _________
<PAGE> 1
EXHIBIT NO. 4
THE VARIABLE ANNUITY CONTRACT FORM
<PAGE> 2
[LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
P.O. BOX 182008
COLUMBUS, OHIO 43218-2008
1-800-240-5054
(Hereinafter called the Company)
NATIONWIDE LIFE INSURANCE COMPANY will make annuity payments to the Annuitant
starting on the Annuitization Date, as set forth in the Contract.
This Contract is provided in return for the Purchase Payments made as required
in the Contract.
TEN DAY LOOK
To be sure that the Owner is satisfied with this Contract, the Owner has ten
days to examine the Contract and return it for any reason to the Home Office.
When the Contract is received in the Home Office, the Company will return the
Contract Value, where permitted by state law, to the Owner, without deduction
for any sales charges or administration fees as of the date of cancellation.
Executed for the Company on the Date of Issue.
/s/ Gordon E. McCutchen /s/ Joseph J. Gasper
Secretary President
READ YOUR CONTRACT CAREFULLY
Individual Deferred Variable Annuity, Non-Participating, Non-Qualified
ANNUITY PAYMENTS, DEATH BENEFITS, AND OTHER CONTRACT VALUES PROVIDED BY THIS
CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE
VARIABLE, MAY INCREASE OR DECREASE IN ACCORDANCE WITH THE FLUCTUATIONS IN THE
NET INVESTMENT FACTOR, AND ARE NOT GUARANTEED AS TO FIXED-DOLLAR AMOUNT.
NOTICE - The details of the variable provisions in the
Contract may be found on Pages 15, 16, and 21.
<PAGE> 3
CONTENTS
DATA PAGE............................................................... INSERT
CONTENTS................................................................ 2
DEFINITIONS............................................................. 3
GENERAL PROVISIONS...................................................... 6
ACCUMULATION PROVISIONS................................................. 13
ANNUITIZATION PROVISIONS................................................ 21
ANNUITY PAYMENT OPTIONS................................................. 22
ANNUITY TABLES.......................................................... 25
2
<PAGE> 4
DEFINITIONS
ACCUMULATION UNIT- An accounting unit of measure used to calculate the Variable
Account Contract Value prior to the Annuitization Date.
ANNIVERSARY VALUE - The Contract Value on a Contract Anniversary.
ANNUITANT- The person designated to receive annuity payments and upon whose
continuation of life any annuity payments involving life contingencies depends.
This person must be age 85 or younger at the time of Contract issuance unless
the Company has approved a request for an Annuitant of greater age. The
Annuitant may be changed prior to the Annuitization Date with the consent of the
Company.
ANNUITIZATION DATE- The date the annuity payments actually commence at
Annuitization.
ANNUITY COMMENCEMENT DATE- The date on which annuity payments are scheduled to
commence. The Annuity Commencement Date is shown on the Data Page of the
Contract, and is subject to change by the Contract Owner.
ANNUITY PAYMENT OPTION- The chosen form of annuity payments. Several options are
available under the Contract.
ANNUITY UNIT- An accounting unit of measure used to calculate the value of
Variable Annuity payments.
BENEFICIARY- The Beneficiary is the person designated to receive certain
benefits under the Contract upon the death of the Annuitant prior to the
Annuitization Date. The Beneficiary can be changed by the Contract Owner as set
forth in the Contract.
CODE- The Internal Revenue Code of 1986, as amended.
COMPANY- Nationwide Life Insurance Company.
CONTINGENT ANNUITANT- The Contingent Annuitant may be the recipient of certain
rights or benefits under this Contract when the Annuitant dies before the
Annuitization Date. If a Contingent Annuitant is designated and the Annuitant
dies before the Annuitization Date, the Contingent Annuitant becomes the
Annuitant. A Contingent Annuitant may not be named for Contracts issued as
Qualified Contracts, Individual Retirement Annuities, SEP- IRAs, or Tax
Sheltered Annuities.
CONTINGENT BENEFICIARY- The Contingent Beneficiary is the person designated to
be the Beneficiary if the named Beneficiary is not living at the time of the
death of the Annuitant.
CONTINGENT OWNER- A Contingent Owner succeeds to the rights of the Contract
Owner upon the Contract Owner's death before Annuitization. For Contracts issued
in the State of New York, references throughout this prospectus to "Contingent
Owner" shall mean "Owner's Beneficiary." A Contingent Owner may not be named for
Contracts issued as Qualified
3
<PAGE> 5
Contracts, Individual Retirement Annuities, SEP IRAs, or Tax Sheltered
Annuities.
CONTRACT- The Individual Deferred Variable Annuity Contract described in this
prospectus.
CONTRACT ANNIVERSARY- An anniversary of the Date of Issue of the Contract.
CONTRACT OWNER (OWNER)- The Contract Owner is the person who possesses all
rights under the Contract, including the right to designate and change any
designations of the Owner, Contingent Owner, Annuitant, Contingent Annuitant,
Beneficiary, Contingent Beneficiary, Annuity Payment Option, and the Annuity
Commencement Date. The Contract Owner is the person named as owner in the
application unless changed.
CONTRACT VALUE- The sum of the value of all Variable Account Accumulation Units
attributable to the Contract plus any amount held under the Contract in the
Fixed Account.
CONTRACT YEAR- Each year the Contract remains in force commencing with the Date
of Issue.
DATE OF ISSUE- The date shown as the Date of Issue on the Data Page of the
Contract.
DEATH BENEFIT- The benefit is payable upon the death of the Annuitant or the
Contingent Annuitant, if applicable. This benefit does not apply upon the death
of the Contract Owner when the Owner and Annuitant are not the same person. If
the Annuitant dies after the Annuitization Date, any benefit that may be payable
shall be as specified in the Annuity Payment Option elected.
DISTRIBUTION- Any payment of part or all of the Contract Value.
FIXED ACCOUNT- The Fixed Account is made up of all assets of the Company other
than those in the Variable Account or any other segregated asset account of the
Company.
FIXED ANNUITY- An annuity providing for payments which are guaranteed by the
Company as to dollar amount during Annuitization.
HOME OFFICE- The main office of the Company located in Columbus, Ohio.
INTEREST RATE GUARANTEE PERIOD- An Interest Rate Guarantee Period is the
interval of time during which an interest rate credited to the Fixed Account is
guaranteed to remain the same. For new Purchase Payments allocated to the Fixed
Account or transfers from the Variable Account, this period begins upon the date
of deposit or transfer and ends at the end of the calendar quarter at least one
year (but not more than 15 months) from deposit or transfer. At the end of an
Interest Rate Guarantee Period, a new interest rate is declared with an Interest
Rate Guarantee Period starting at the end of the prior period and ending at the
end of the calendar quarter one year later.
JOINT OWNER- The Joint Owner, if any, possesses an undivided interest in the
entire Contract in conjunction with the Owner. If a Joint Owner is named,
references to "Contract Owner", "Owner", or "Joint Owner" in this prospectus
4
<PAGE> 6
will apply to both the Owner and Joint Owner or either of them. Joint Owners
must be spouses at the time Joint Ownership is requested. Joint Ownership may be
selected only for a Non-Qualified Contract.
MUTUAL FUND (FUND)- A registered management investment company in which the
assets of the Sub-Accounts of the Variable Account will be invested.
NON-QUALIFIED CONTRACT- A Contract which does not qualify for favorable tax
treatment under the provisions of Sections 401 or 403(a) (Qualified Plans), 408
(IRAs) or 403(b) (Tax-Sheltered Annuities) of the Code.
PURCHASE PAYMENT- A deposit of new value into the Contract. The term "Purchase
Payment" does not include transfers between the Variable Account and Fixed
Account, or among the Sub-Accounts.
SUB-ACCOUNTS- Separate and distinct divisions of the Variable Account, to which
specific underlying Mutual Fund shares are allocated and for which Accumulation
Units and Annuity Units are separately maintained.
VALUATION DATE- Each day the New York Stock Exchange and the Company's Home
Office are open for business or any other day during which there is a sufficient
degree of trading of the Variable Account's underlying Mutual Fund shares that
the current net asset value of its Accumulation Units might be materially
affected.
VALUATION PERIOD- The period of time commencing at the close of a Valuation Date
and ending at the close of business for the next succeeding Valuation Date.
VARIABLE ACCOUNT- The Nationwide Variable Account-6, a separate investment
account of the Company into which Variable Account Purchase Payments are
allocated. The Variable Account is divided into Sub-Accounts, each of which
invests in the shares of a separate underlying Mutual Fund.
VARIABLE ANNUITY- An annuity providing for payments which are not predetermined
or guaranteed as to dollar amount and which vary in amount with the investment
experience of the Variable Account.
5
<PAGE> 7
GENERAL PROVISIONS
DEDUCTION FOR PREMIUM TAXES
The Company will charge against the Contract Value the amount of any premium
taxes levied by a state or any other government entity upon Purchase Payments
received by the Company. The method used to recoup premium taxes will be
determined by the Company at its sole discretion and in compliance with
applicable state law. The Company currently deducts such charges from a Contract
Owner's Contract Value either (1) at the time the Contract is surrendered, (2)
at Annuitization, or (3) at such earlier date as the Company may be subject to
such taxes.
MORTALITY AND EXPENSE RISK CHARGE
The Company will deduct a Mortality and Expense Risk Charge equal, on an annual
basis, to [1.25%] of the daily net asset value of the Variable Account. This
deduction is made to compensate the Company for assuming the mortality risks and
expense risks under this Contract. The Company assumes a "mortality risk" that
fixed and variable annuity payments will not be affected by the death rates of
persons receiving such payments or of the general population by virtue of
annuity rates incorporated in the Contract which cannot be changed. The Company
also assumes a mortality risk by its promise to pay in certain circumstances a
Death Benefit that is greater than the Contract Value. The "expense risk"
involves the guaranty by the Company that it will not increase charges for
administration of the Contract regardless of the Company's actual administrative
expenses.
ADMINISTRATION CHARGE
The Company will deduct an Administration Charge equal, on an annual basis, to
[0.15%] of the daily net asset value of the Variable Account. This deduction is
made to reimburse the Company for expenses incurred in the administration of the
Contract and of the Variable Account.
CONTRACT OWNERSHIP PROVISIONS
Unless otherwise provided, the Contract Owner has all rights under the Contact.
IF THE PURCHASER NAMES SOMEONE OTHER THAN HIMSELF AS OWNER, THE PURCHASER WILL
HAVE NO RIGHTS UNDER THE CONTRACT. Prior to the Annuitization Date, the Contract
Owner may name a new Contract Owner. Such change may be subject to state and
federal gift taxes and may also result in current federal income taxation. Any
change of Contract Owner designation will automatically revoke any prior
Contract Owner designation. Any request for change of Contract Owner must be (1)
made by proper written application, (2)
6
<PAGE> 8
received and recorded by the Company at its Home Office, and (3) may require a
signature guarantee as specified in the "Surrender" provision of the Contract.
Once the change is received and recorded by the Company, the change will become
effective as of the date the written request is signed. Any change of Contract
Owner will not apply to any payment made or action taken by the Company prior to
the time it was received and recorded by the Company.
Prior to the Annuitization Date, the Contract Owner may request a change in the
Annuitant, Contingent Annuitant or Contingent Owner, Beneficiary, or Contingent
Beneficiary. Such a request must be made in writing on a form acceptable to the
Company and must be signed by both the Contract Owner and the person to be named
as Annuitant or Contingent Annuitant or Contingent Owner, as applicable. Such
request must be received by the Company at its Home Office prior to the
Annuitization Date. Any such change is subject to underwriting and approval by
the Company. Notwithstanding any provisions in this Contract, if any Contract
Owner is not a natural person the change of the Annuitant will be treated as the
death of the Contract Owner and will result in a distribution, regardless of
whether a Contingent Annuitant is also named. Distributions shall be made as if
the Contract Owner died at the time of such change.
On the Annuitization Date, the Annuitant shall become the Contract Owner.
JOINT OWNERSHIP PROVISIONS
Joint Owners must be spouses at the time joint ownership is requested. If a
Joint Owner is named, the Joint Owner will possess an undivided interest in the
Contract. Unless otherwise provided, the exercise of any ownership right in the
Contract (including the right to surrender or partially surrender the Contract,
to change the Contract Owner, the Contingent Owner, the Annuitant, the
Contingent Annuitant, the Beneficiary, the Contingent Beneficiary, the Annuity
Payment Option or the Annuitization Date) shall require a written request signed
by both Contract Owners.
CONTINGENT OWNERSHIP PROVISIONS
The Contingent Owner is the person who may receive certain benefits under the
Contract if the Contract Owner, who is not the Annuitant, dies prior to the
Annuitization Date and there is a surviving Annuitant. If more than one
Contingent Owner survives the Contract Owner, each will share equally unless
otherwise specified in the Contingent Owner designation. If no Contingent Owner
survives a Contract Owner and there is no Joint Owner then surviving, all rights
and interest of the Contingent Owner will vest in the Contract Owner's estate.
If a Contract Owner, who is also the Annuitant, dies before the Annuitization
Date, then the Contingent Owner does not have any rights in the Contract.
However, if the Contingent Owner is also the Beneficiary, the Contingent Owner
will have all the rights of a beneficiary.
Subject to the terms of any existing assignment, the Contract Owner may change
the Contingent Owner prior to the Annuitization Date by written notice to the
7
<PAGE> 9
Company. The change, upon receipt and recording by the Company at its Home
Office, will take effect as of the time the written notice was signed, whether
or not the Contract Owner is living at the time of recording, but without
further liability as to any payment or settlement made by the Company before
receipt of such change.
BENEFICIARY PROVISIONS
The Beneficiary is the person or persons who may receive certain benefits under
the Contract in the event the Annuitant dies prior to the Annuitization Date. If
more than one Beneficiary survives the Annuitant, each will share equally unless
otherwise specified in the Beneficiary designation. If no Beneficiary survives
the Annuitant, all rights and interest of the Beneficiary shall vest in the
Contingent Beneficiary, and if more than one Contingent Beneficiary survives,
each will share equally unless otherwise specified in the Contingent Beneficiary
designation. If no Contingent Beneficiary survives the Annuitant, all rights and
interests of the Contingent Beneficiary will vest with the Contract Owner or the
estate of the last surviving Contract Owner.
Subject to the terms of any existing assignment, the Contract Owner may change
the Beneficiary or Contingent Beneficiary during the lifetime of the Annuitant
by written notice to the Company. The change, upon receipt and recording by the
Company at Home Office, will take effect as of the time the written notice was
signed, whether or not the Annuitant is living at the time of the recording, but
without further liability as to any payment or settlement made by the Company
before receipt of such change.
DEATH OF CONTRACT OWNER PROVISIONS
If any Contract Owner and the Annuitant are not the same person and such
Contract Owner dies prior to the Annuitization Date then the Joint Owner, if
any, becomes the new Contract Owner. If there is no surviving Joint Owner, the
Contingent Owner becomes the new Contract Owner. If there is no surviving
Contingent Owner, the last surviving Contract Owner's estate becomes the new
Contract Owner. The entire interest in the Contract Value must be distributed in
accordance with the "Required Distribution Provisions".
DEATH OF CONTRACT OWNER/ANNUITANT PROVISIONS
If any Contract Owner and the Annuitant are the same person, and such person
dies prior to the Annuitization Date, the Death Benefit shall be payable to the
Beneficiary, the Contingent Beneficiary, the Contract Owner, or the last
surviving Contract Owner's estate, as specified in the "Beneficiary Provisions",
and distributed in accordance with the "Required Distribution Provisions".
DEATH OF ANNUITANT PROVISIONS
If the Contract Owner and Annuitant are not the same person, and the Annuitant
dies prior to the Annuitization Date, a Death Benefit will be payable to the
Beneficiary, the Contingent Beneficiary, the Contract Owner, or the last
surviving
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<PAGE> 10
Contract Owner's estate, as specified in the Beneficiary Provision, unless there
is a surviving Contingent Annuitant. In such case, the Contingent Annuitant
becomes the Annuitant.
The Beneficiary may elect to receive such Death Benefits in the form of: (1) a
lump sum distribution; (2) election of an annuity payout; or (3) any
distribution that is permitted under state and federal regulations and is
acceptable by the Company. Such election must be received by the Company within
60 days of the Annuitant's death.
If the Annuitant dies after the Annuitization Date, any benefit that may be
payable shall be paid according to the Annuity Payment Option selected.
REQUIRED DISTRIBUTION PROVISIONS
Upon the death of any Owner, Contract Owner, or Joint Owner (including an
Annuitant or Annuitant who becomes the Owner of the Contract on the
Annuitization Date) (each of the foregoing "a deceased Owner"), certain
distributions are required by Section 72(s) of the Code. Nothwithstanding any
provision of this Contract to the contrary, the following distributions shall be
made in accordance with such requirements.
1. If any deceased Owner died on or after the Annuitization Date and
before the entire interest under the Contract has been distributed, then the
remaining portion of such interest shall be distributed at least as rapidly as
under the method of distribution in effect as of the date of such deceased
Owner's death.
2. If any deceased Owner died prior to the Annuitization Date, then
the entire interest in the Contract (consisting of either the Death Benefit or
the Contract Value reduced by certain charges as set forth elsewhere in the
Contract) shall be distributed within 5 years of the death of the deceased
Owner, provided however:
(a) If any portion of such interest is payable to or for the benefit of
a natural person who is a surviving Contract Owner, Contingent Owner, Joint
Owner, Annuitant, Contingent Annuitant, Beneficiary, or Contingent Beneficiary
as the case may be (each a "designated beneficiary"), such portion may, at the
election of the designated Beneficiary, be distributed over the life of such
designated beneficiary, or over a period not extending beyond the life
expectancy of such designated beneficiary, provided that payments begin within
one year of the date of the deceased Owner's death (or such longer period as may
be permitted by federal income tax regulations).
(b) If the designated beneficiary is the surviving spouse of the
deceased Owner, such spouse may elect to become the Owner of this Contract, and
the distributions required under these Distribution Provisions will be made upon
the death of such spouse.
In the event that this Contract is owned by a person that is not a natural
person (e.g., a trust or corporation), then, for purposes of these distribution
provisions, (i) the
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<PAGE> 11
death of the Annuitant shall be treated as the death of any Owner, (ii) any
change of the Annuitant shall be treated as the death of any Owner, and (iii) in
either case the appropriate distribution required under these distribution rules
shall be made upon such death or change, as the case may be. The Annuitant is
the primary annuitant as defined in Section 72(s)(6)(B) of the Code.
These distribution provisions shall not be applicable to any Contract that is
not required to be subject to the provisions of 72(s) of the Code by reason of
Section 72(s)(5) or any other law or rule. Such contracts include, but are not
limited to, any Contract (i) which is provided under a plan described in Section
401(a) of the Code which includes a trust exempt from tax under Section 501 of
the Code; (ii) which is provided under a plan described in Section 403(a) of the
Code; (iii) which is described in Section 403(b) of the Code; (iv) which is an
individual retirement annuity or provided under an individual retirement account
or annuity as described in Section 408 of the Code; or (v) which is a qualified
funding asset (as defined in Section 130(d) of the Code, but without regard to
whether there is a qualified assignment).
This contract is intended to be treated as an "annuity contract" for federal
income tax purposes. Accordingly, all provisions of this Contract shall be
interpreted and administered in accordance with the requirements of Section
72(s) of the Code. In no event shall any payment be deferred beyond the time
limits permitted by Section 72(s) of the Code. The Company reserves the right to
amend this Contract to comply with requirements set out in the Code and
regulations and rulings thereunder, as they may exist from time to time.
Upon the death of a "deceased Owner", the designated Beneficiary must elect a
method of distribution which complies with these above Distribution Provisions
and which is acceptable to the Company. Such election must be made with 60 days
of the Contract Owner's death.
DEATH BENEFIT PAYMENT PROVISIONS
The value of the Death Benefit will be determined as of the Valuation Date
coincident with, or next following the date the Company receives in writing at
the Home Office the following three items: (1) proper proof of the Annuitant's
death; (2) an election specifying distribution method; and (3) any applicable
state required form(s).
Proof of death is either:
(1) a copy of a certified death certificate;
(2) a copy of a certified decree of a court of competent
jurisdiction as to the finding of death;
(3) a written statement by a medical doctor who attended the
deceased; or
(4) any other proof satisfactory to the Company.
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<PAGE> 12
If the Annuitant dies prior to the Annuitization Date, the Death Benefit will be
the greatest of the following: (1) the sum of all Purchase Payments made to the
Contract less any amounts previously surrendered; (2) the Contact Value; or (3)
the Maximum Anniversary Value. The Maximum Anniversary Value is equal to the
greatest Anniversary Value attained from the following: As of the date proper
proof of death is received by the Company, the Contract Value on each Contract
Anniversary prior to the deceased Annuitant's attained age 81 reduced by the
amount of all surrenders since that Contract Anniversary.
ALTERATION OR MODIFICATION
All changes in or to the terms of the Contract must be: (1) made in writing; and
(2) signed by the President or Secretary of the Company. No other person can
alter or change any of the terms or conditions of this Contract.
ASSIGNMENT
Where permitted, the Owner may assign some or all rights under this Contract at
any time during the lifetime of the Annuitant, prior to the Annuitization Date.
The Company shall not be liable as to any payment or other settlement made by
the Company before recording of the assignment. The Company is not responsible
for the validity or tax consequences of any assignment. Such assignment will
take effect upon receipt and recording by the Company at its Home Office of
written notice executed by the Contract Owner. Where necessary for proper
administration of the terms of the Contract, an assignment will not be recorded
until the Company has received sufficient direction from the Contract Owner and
assignee as to the proper allocation of Contract rights under the assignment.
The value of any portion of the Contract which is assigned, pledged or
transferred by gift may be treated like a cash withdrawal for federal tax
purposes and may be subject to a tax penalty. All rights in this Contract are
personal to the Contract Owner and may not be assigned without written consent
of the Company.
ENTIRE CONTRACT
This document is the whole Contract between the Owner and the Company. This
Contract, Data Page and Endorsement(s) (if any), make up the entire Contract.
MISSTATEMENT OF AGE OR SEX
If the age or sex of the Annuitant has been misstated, all payments and benefits
under this Contract will be adjusted. Payments and benefits will be made, based
on the correct age or sex. Proof of age of an Annuitant may be required at any
time, in a form satisfactory to the Company. When the age or sex of an Annuitant
has been misstated, the dollar amount of any overpayment will be deducted from
the next payment or payments due under this Contract. The dollar amount of any
underpayment made by the Company as a result of any
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<PAGE> 13
such misstatement will be paid in full with the next payment due under this
Contract.
EVIDENCE OF SURVIVAL
Where any payments under this Contract depend on the recipient being alive on a
given date, proof that such person is living may be required by the Company.
Such proof may be required prior to making the payments.
PROTECTION OF PROCEEDS
Proceeds under this Contract are not assignable by any Beneficiary prior to the
time they are due. Proceeds are not subject to the claims of creditors or to
legal process, except as mandated by applicable laws.
REPORTS
At least once each year, prior to the Annuitization Date, a report showing the
Contract Value will be provided to the Owner.
INCONTESTABILITY
This Contract will not be contested.
CONTRACT SETTLEMENT
The Company may require this Contract to be returned to the Home Office prior to
making any payments. All sums payable to or by the Company under this Contract
are payable at the Home Office.
NUMBER AND GENDER
Unless otherwise provided, all references in this Contract which are in the
singular form will include the plural; all references in the plural form will
include the singular; and all references in the male gender will include the
female and neuter genders.
NON-PARTICIPATING
This Contract is non-participating. It will not share in the surplus of the
Company.
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<PAGE> 14
ACCUMULATION PROVISIONS
SURRENDER
The Owner may surrender part or all of the Contract Value at any time this
Contract is in force and prior to the earlier of the Annuitization Date or the
death of the Annuitant or Contingent Annuitant, if any. All surrenders will have
the following conditions:
1. The request for surrender must be in writing.
2. The surrender value will be paid to the Owner after proper written
application and the Contract are received at the Home Office.
3. The Company reserves the right to require that the signature(s) be
guaranteed by a member firm of a major stock exchange or other
depository institution qualified to give such a guaranty. Payment of
the Variable Account Contract Value will be made within seven days of
receipt of both proper written application and the Contract. Payment of
the Fixed Account Contract Value may be deferred up to six months
following receipt of application.
4. When written application and the Contract are received, the Company
will surrender the number of Variable Account Accumulation Units and an
amount from the Fixed Account needed to equal: (a) the dollar amount
requested; plus (b) any Contingent Deferred Sales Charge which applies.
5. If a partial surrender is requested, unless the Owner has instructed
otherwise, the surrender will be made as follows: (a) from the Variable
Account Contract Value; and (b) from the Fixed Account Contract Value.
The amounts surrendered from the Fixed Account and the Variable
Account, will be in the same proportion that the Owner's interest in
the Fixed Account and Variable Account bears to the total Contract
Value.
CONTINGENT DEFERRED SALES CHARGE
If part or all of the Contract Value is surrendered, a Contingent Deferred Sales
Charge may be made by the Company. The Contingent Deferred Sales Charge is
designed to cover expenses relating to the sale of the Contract.
The Contingent Deferred Sales Charge is calculated by multiplying the applicable
Contingent Deferred Sales Charge percentages noted below by the Purchase
Payments that are surrendered. For purposes of calculating the amount of the
Contingent Deferred Sales Charge, surrenders are considered to come first from
the oldest Purchase Payment made to the Contract, then from the next oldest
Purchase Payment and so forth, with any earnings attributable to such Purchase
Payments considered only after all Purchase Payments made to the Contract have
been considered. (For tax purposes, a surrender is treated as a withdrawal of
earnings first.)
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<PAGE> 15
<TABLE>
<CAPTION>
Number of Number of
Completed Years Contingent Completed Years Contingent
from Date of Deferred Sales From Date of Deferred Sales
Purchase Charge Purchase Charge
Payment Percentage Payment Percentage
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
0 6% 4 4%
1 6% 5 3%
2 5% 6 2%
3 5% 7 0%
</TABLE>
WITHDRAWALS WITHOUT CHARGE
During each Contract Year, the Contract Owner may withdraw without a Contingent
Deferred Sales Charge (CDSC) a total amount equal to 10% of the sum of all
Purchase Payments made to the Contract. 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.
A CDSC will not be assessed against the withdrawal of any: (1) Purchase Payments
which have been held under the Contract for at least 84 months; (2) earnings
attributable to Purchase Payments made to the Contract; (3) Death Benefit
payments made upon the death of the Annuitant prior to the Annuitization Date;
(4) amounts applied to an Annuity Payment Option after two years from the Date
of Issue; or (5) amounts transferred among the Sub-Accounts or between the Fixed
Account and the Variable Account.
In addition, when a Contract described herein is exchanged for another Contract
issued by the Company or any of its affiliate insurance companies, of the type
and class which the Company determines is eligible for such exchange, the
Company will waive the Contingent Deferred Sales Charge on the first contract. A
Contingent Deferred Sales Charge may apply to the contract received in the
exchange.
When a Contract is held by a Charitable Remainder Trust, the amount which may be
withdrawn from this Contract without application of a Contingent Deferred Sales
Charge, shall be the larger of (a) or (b) where (a) is : The amount which would
otherwise be available for withdrawal without application of a Contingent
Deferred Sales Charge; and where (b) is: The difference between the total
Purchase Payments made to the Contract as of the date of the withdrawal (reduced
by previous withdrawals of such Purchase Payments), and the Contract Value at
the close of the day prior to the date of the withdrawal.
The amount of Contingent Deferred Sales Charge on the Contract may be reduced
when sales of the Contract are made to a trustee, employer or similar entity
pursuant to a retirement plan or when sales are made in a similar arrangement
where offering the contract to a group of individuals under which such program
results in savings of sales expenses. The entitlement of such a
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<PAGE> 16
reduction in Contingent Deferred Sales Charge will be determined by the Company.
SURRENDER VALUE
The Surrender Value is the amount that will be paid if the full Contract Value
is surrendered. The Surrender Value at any time will be:
1. The Contract Value; less
2. Any Contingent Deferred Sales Charge which applies.
SUSPENSION OR DELAY IN PAYMENT OF SURRENDER
The Company has the right to suspend or delay the date of any Surrender payment
from the Variable Account for any period:
1. When the New York Stock Exchange is closed;
2. When trading on the New York Stock Exchange is restricted;
3. When an emergency exists as a result of which: disposal of securities
held in the Variable Account is not reasonably practicable or it is not
reasonably practicable to fairly determine the value of the net assets
of the Variable Account;
4. During any other period when the Securities and Exchange Commission, by
order, so permits for the protection of security holders; or
5. When the request for Surrender is not made in writing.
Rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions set forth in numbers 1, 2, 3, and 4 above exist.
The Company further reserves the right to delay payment of a total Surrender of
Fixed Account Contract Value for up to [six] months in those states where
applicable law requires the Company to reserve such right.
FLEXIBLE PURCHASE PAYMENTS
The Contract is bought for the initial Purchase Payment and any subsequent
Purchase Payments. The cumulative total of all Purchase Payments under this and
any other annuity Contract(s) issued by the Company having the same Annuitant
may not exceed $1,000,000 without the prior written consent of the Company.
The initial Purchase Payment is due on the Date of Issue and may not be less
than [$1000]. Purchase payments, if any, after the initial Purchase Payment must
be at least [$50] and may be made at any time. However, if periodic
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<PAGE> 17
payments are expected by the Company, the initial first year minimum may be
satisfied by Purchase Payments made on an annualized basis.
ALLOCATION OF PURCHASE PAYMENTS
The Owner elects to have the Purchase Payments allocated among the Fixed Account
and the Sub-Accounts of the Variable Account at the time of application. The
allocation of future Purchase Payments may be changed by the owner by a proper
submission that is received and recorded by the Company.
CONTRACT VALUE
The Contract Value at any time will be the sum of: (1) the Variable Account
Contract Value; and (2) the Fixed Account Contract Value.
FIXED ACCOUNT CONTRACT VALUE
The Fixed Account Contract Value at any time will be: the sum of all amounts
credited to the Fixed Account under this Contract less any amounts canceled or
withdrawn for charges, deductions, or surrenders.
INTEREST TO BE CREDITED
The Company will credit interest to the Fixed Account Contract Value. Such
interest will be credited at such rate or rates as the Company prospectively
declares from time to time, at the sole discretion of the Company. Such rates
will be declared to the Owner in writing after each quarterly period. Any such
rate or rates so determined, for which deposits are received, will remain in
effect for a period of not less than 12 months. However, the Company guarantees
that it will credit interest at not less than [3.0%] per year or any lesser
amount as permitted by state law.
VARIABLE ACCOUNT CONTRACT VALUE
The Variable Account Contract Value is the sum of the value of all Variable
Account Accumulation Units under this Contract.
If: (1) part or all of the Variable Account Contract Value is surrendered; or
(2) charges or deductions are made against the Variable Account Contract Value;
then, an appropriate number of Accumulation Units will be canceled or
surrendered to equal such amount.
THE VARIABLE ACCOUNT
The Variable Account is a separate investment account of the Company. The
Company has allocated a part of its assets for this Contract and certain other
contracts to the Variable Account. Such assets of the Variable Account remain
the property of the Company. However, they may not be charged with the
liabilities from any other business in which the Company may take part.
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<PAGE> 18
The Variable Account is divided into Sub-Accounts which invest in shares of the
Mutual Funds. Purchase payments are allocated among one or more of these
Sub-Accounts, as designated by the Owner.
INVESTMENTS OF THE VARIABLE ACCOUNT
The Purchase Payments applied to the Variable Account will be invested at net
asset value in one or more of the Sub-Accounts.
VALUATION OF ASSETS
Mutual Fund shares in the Variable Account will be valued at their net asset
value.
VARIABLE ACCOUNT ACCUMULATION UNITS
The number of Accumulation Units for each Sub-Account of the Variable Account is
found by dividing: (1) the net amount allocated to the Sub-Account; by (2) the
Accumulation Unit value for the Sub-Account for the Valuation Period during
which the Company received the Purchase Payment.
VARIABLE ACCOUNT ACCUMULATION UNIT VALUE
The value of an Accumulation Unit for each Sub-Account of the Variable Account
was arbitrarily set at $10 when the first Mutual Fund shares were available for
purchase. The value for any later Valuation Period is found as follows:
The Accumulation Unit Value for each Sub-Account for the last prior Valuation
Period is multiplied by the Net Investment Factor for the Sub-Account for the
next following Valuation Period. The result is the Accumulation Unit Value. The
value of an Accumulation Unit may increase or decrease from one Valuation Period
to the next. The number of Accumulation Units will not change as a result of
investment experience.
NET INVESTMENT FACTOR
The Net Investment Factor is an index applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. The Net
Investment Factor may be greater or less than one; therefore, the value of an
Accumulation Unit may increase or decrease.
The Net Investment Factor for any Sub-Account for any Valuation Period is
determined by: dividing (1) by (2) and subtracting (3) from the result, where:
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1. is the net result of:
a. the net asset value per share of the Mutual Fund held in the
Sub-Account, determined at the end of the current Valuation
Period; plus
b. the per share amount of any dividend or capital gain
Distributions made by the Mutual Fund held in the Sub-Account,
if the "ex-dividend" date occurs during the current Valuation
Period.
2. is the net result of:
a. the net asset value per share of the Mutual Fund held in the
Sub-Account, determined at the end of the last prior Valuation
Period; plus or minus
b. the per share charge or credit for any taxes reserved for the
last prior Valuation Period, plus or minus
c. a per share charge or credit for any taxes reserved for, which
is determined by the Company to have resulted from the
investment operations of the Sub-Account.
3. is a factor representing the Mortality and Expense Risk Charge and the
Administration Charge deducted from the Variable Account. Such factor
is equal, on an annual basis, to [1.40%] of the daily net asset value
of the Variable Account.
For funds that credit dividends on a daily basis and pay such dividends once a
month, the Net Investment Factor allows for the monthly reinvestment of these
daily dividends.
FIXED ACCOUNT PROVISIONS
The Fixed Account is the general account of the Company. It is made up of all
assets of the Company other than: (1) those in the Variable Account; and (2)
those in any other segregated asset account.
TRANSFER PROVISIONS
The Owner may annually transfer a portion of the value of the Fixed Account to
the Variable Account and a portion of the Variable Account to the Fixed Account,
without penalty or adjustment. In any 12 month period, the Company reserves
the right to restrict transfers from the Variable Account to the Fixed Account
to 10% of the Variable Account Contract Value.
The Contract Owner may, at the maturity of the Interest Rate Guarantee Period,
transfer a portion of the value of the Fixed Account to the Variable Account.
The
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<PAGE> 20
amount that may be transferred from the Fixed Account to the Variable Account
will be determined by the Company, at its sole discretion, but will not be less
than 10% of the total value of the portion of the Fixed Account that is
maturing. The amount that may be transferred from the Fixed Account will be
declared upon the expiration date of the then current Interest Rate Guarantee
Period. Transfers from the Fixed Account must be made within [45] days after the
expiration date of the Interest Rate Guarantee Period.
Nationwide reserves the right to refuse transfers or Purchase Payments into the
Fixed Account if the Fixed Account is greater than or equal to 30% of total
Contract Value. Transfers must be made prior to the Annuitization Date.
Transfers may occur among the Sub-Accounts once daily.
SYSTEMATIC WITHDRAWALS
The Contract Owner may elect in writing on a form provided by the Company to
take Systematic Withdrawals of a specified dollar amount (of at least $100) on a
monthly, quarterly, semi-annual or annual basis. The Company will process the
withdrawals as directed by surrendering on a pro-rata basis Accumulation Units
from all of the Sub-Accounts in which the Contract Owner has an interest, and
the Fixed Account. A Contingent Deferred Sales Charge may apply to Systematic
Withdrawals in accordance with the considerations set forth in the "Contingent
Deferred Sales Charge" and "Withdrawals Without Charge" provisions of the
Contract. Each Systematic Withdrawal is subject to federal income taxes on the
taxable portion. In addition, a 10% federal penalty tax may be assessed on
Systematic Withdrawals if the Contract Owner is under age 59 1/2. Unless
otherwise directed by the Contract Owner, the Company will withhold federal
income taxes from each Systematic Withdrawal. An age-based Systematic Withdrawal
program will terminate automatically at the end of each Contract Year and may be
reinstated only on or after the next Contract Anniversary pursuant to a new
request. Unless the Contract Owner has made an irrevocable election of
distributions of substantially equal periodic payments, the Systematic
Withdrawals may be discontinued at any time by notification to the Company in
writing.
If the Contract Owner withdraws amounts pursuant to a Systematic Withdrawal
program, then the Contract Owner may withdraw each Contract Year without a CDSC
an amount up to the greater of (i) 10% of the total sum of all Purchase Payments
made to the Contract at the time of withdrawal, or (ii) the specified percentage
of the Contract Value based on the Contract Owner's age, as shown in the
following table:
<TABLE>
<CAPTION>
CONTRACT OWNER'S AGE PERCENTAGE OF CONTRACT VALUE
- -------------------- ----------------------------
<S> <C>
Under 59-1/2 5%
59-1/2 to 70-1/2 7%
70-1/2 to 75 9%
75 and Over 13%
</TABLE>
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<PAGE> 21
If the total amounts withdrawn in any Contract Year exceed the CDSC-free amount
as calculated under the Systematic Withdrawal method described above, then such
total withdrawn amounts will be eligible only for the 10% of Purchase Payment
CDSC-free withdrawal privilege described in the "Withdrawals Without Charge"
provision of the Contract, and the total amount of CDSC charged during the
Contract Year will be determined in accordance with that provision.
The Contract Value and the Contract Owner's age for purposes of applying the
CDSC-free withdrawal percentage described above are determined as of the date
the request for a Systematic Withdrawal program is received and recorded by the
Company at its Home Office. (In the case of Joint Owners, the older Owner's age
will be used.) The Contract Owner may elect to take such CDSC-free amounts only
once each Contract Year. Furthermore, this CDSC-free withdrawal privilege for
Systematic Withdrawals 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.
Systematic Withdrawals are not available prior to the expiration of the free
look provision of the Contract. The Company also reserves the right to assess a
processing fee for this service.
DISTRIBUTION PROVISIONS
The following events will give rise to a Distribution:
1. Reaching the Annuitization Date - Distribution will be made pursuant to
the Annuity Payment Option selected.
2. Death of the Annuitant prior to the Annuitization Date - Distribution
to be made in accordance with the options available under the Annuitant
provisions of this Contract.
3. Death of the Owner - Distribution to be made in a manner consistent
with the Required Distribution Provisions this Contract.
4. Other Surrender - Distribution to be made in accordance with the
Surrender provisions of this Contract.
ANNUITIZATION PROVISIONS
GENERAL
All of the provisions within this section are subject to the restrictions set
forth in the Section entitled "Death Of Contract Owner Provisions".
ANNUITIZATION
This is the process of selecting an Annuity Payment Option to begin the payout
phase of the Contract. As of the Annuitization Date, the Contract Value is
surrendered and applied to the purchase rate then in effect for the option
selected. The purchase rates for any options guaranteed to be available will be
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<PAGE> 22
determined on a basis not less favorable than the 1983 "Table a" with ages set
back 6 years, with minimum interest at 3.0%. The rates shown in the Annuity
Tables are calculated on this guaranteed basis. The Annuity Payment Option is
irrevocable once payments have begun.
ANNUITY COMMENCEMENT DATE
The Annuity Commencement Date may be the first day of a calendar month or any
other agreed upon date. It must be at least [two] years after the Date of Issue.
The Annuity Commencement Date may not be later than the first day of the first
calendar month after the Annuitant's [90th] birthday, unless a later date has
been requested by the Contract Owner and approved by the Company. This date is
selected by the Contract Owner at the time of application. Any applicable
premium taxes not already deducted may be deducted from the Contract Value at
the Annuity Commencement Date. The remaining Contract Value will then be applied
to the Annuity Payment Option selected by the Owner.
CHANGE OF ANNUITY COMMENCEMENT DATE
The Owner may change the Annuity Commencement Date. A change of Annuity
Commencement Date must be made by written request, approved by the Company and
must comply with Annuity Commencement Date Provisions above.
CHANGE OF ANNUITY PAYMENT OPTION
The Owner may change the Annuity Payment Option prior to the Annuitization Date.
A change of the Annuity Payment Option must be made by written request and must
be received at the Home Office prior to the Annuitization Date. After a change
of Annuity Payment Option is received at the Home Office, it will become
effective as of the date it was requested. A change of Annuity Payment Option
will not apply to any payment made or action taken by the Company before it is
received.
ANNUITY PAYMENT OPTIONS
An Annuity Payment Option may be selected prior to Annuitization. Any Annuity
Payment Option NOT set forth in the Contract or a combination of available
options which is satisfactory to both the Company and the Annuitant may be
selected.
SUPPLEMENTARY AGREEMENT
A Supplementary Agreement will be issued within 30 days following the
Annuitization Date. The Supplementary Agreement will set forth the terms of the
Annuity Payment Option selected.
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FREQUENCY AND AMOUNT OF PAYMENTS
Payments will be made based on the Annuity Payment Option selected. However, if
the net amount to be applied to any annuity payment option at the Annuitization
Date is less than [$5000], the Company has the right to pay such amount in one
lump sum.
If any payment provided for would be or becomes less than [$50], the Company has
the right to change the frequency of payment to an interval that will result in
payments of at least [$50]. In no event will the Company make payments under an
annuity option less frequently than annually, unless otherwise required.
FIXED ANNUITY PROVISIONS
A Fixed Annuity is an annuity with level payments which are guaranteed by the
Company as to dollar amount during the annuity payment period. At the
Annuitization Date, a designated portion of the Contract Value will be applied
to the applicable Annuity Table. This will be done in accordance with the
Annuity Payment Option selected.
VARIABLE ANNUITY PROVISIONS
A Variable Annuity is a series of payments which are not predetermined or
guaranteed as to dollar amount and which vary in amount with the investment
experience of the Variable Account.
DETERMINATION OF FIRST VARIABLE ANNUITY PAYMENT
At the Annuitization Date, a designated portion of the Contract Value will be
applied to purchase rates based on the 1971 Individual Annuity Mortality Table
with ages set back one year and 3.5% interest.
ANNUITY UNIT VALUE
An Annuity Unit is used to calculate the value of annuity payments. The value of
an Annuity Unit for each Sub-Account was arbitrarily set at $10 when the first
Mutual Fund shares were bought. The value for any later Valuation Period is
found as follows:
1. The Annuity Unit Value for each Sub-Account for the last prior
Valuation Period is multiplied by the Net Investment Factor for the
Sub-Account for the Valuation Period for which the Annuity Unit Value
is being calculated.
2. The result is multiplied by an interest factor. This is done because
the Assumed Investment Rate of 3.5% per year is built into the Annuity
Tables.
22
<PAGE> 24
VARIABLE ANNUITY PAYMENTS AFTER THE FIRST PAYMENT
Variable Annuity payments after the first vary in amount. The payment amount
changes with the investment performance of the Sub-Accounts within the Variable
Account. The dollar amount of such payments is determined as follows:
1. The dollar amount of the first annuity payment is divided by the unit
value as of the Annuitization Date. This result establishes the fixed
number of Annuity Units for each monthly annuity payment after the
first. This number of Annuity Units remains fixed during the annuity
payment period.
2. The fixed number of Annuity Units is multiplied by the Annuity Unit
Value for the Valuation Date for which the payment is due. This result
establishes the dollar amount of the payment.
The Company guarantees that the dollar amount of each payment after the first
will not be affected by variations in expenses or mortality experience.
ANNUITY PAYMENT OPTIONS
GENERAL
All annuity payments will be mailed within [10] working days of the first of the
month in which they are scheduled to be made. The following is a list of options
guaranteed to be made available by the Company.
LIFE ANNUITY
The amount to be paid under this option will be paid during the lifetime of the
Annuitant. Payments will cease with the last payment due prior to the death of
the Annuitant.
JOINT AND LAST SURVIVOR ANNUITY
The amount to be paid under this option will be paid during the lifetimes of the
Annuitant and designated second person. Payments will continue as long as either
is living.
LIFE ANNUITY WITH [120] OR [240] MONTHLY PAYMENTS GUARANTEED
The amount to be paid under this option will be paid during the lifetime of the
Annuitant. A guaranteed period of [120] or [240] months may be selected. If the
Annuitant dies prior to the end of this guaranteed period, the recipient chosen
by the Annuitant to receive the remaining payments may choose to continue
receiving payments until the end of the guaranteed period, or receive the
commuted value of the remaining guaranteed payments in a lump sum. Such lump sum
payment will be equal to the present value of the remaining guaranteed payments.
The payment will be computed as of the date on which proof of the death of the
Annuitant is received at the Home Office and computed
23
<PAGE> 25
at an assumed investment rate which is that used in the Annuity Tables in effect
on the Annuitization Date.
ANY OTHER OPTION
The amount and period under any other option will be determined by the Company.
Payment options not set forth in the Contract are available only if they are
approved by both the Company and the Annuitant.
24
<PAGE> 26
MONTHLY BENEFITS PER $1000 APPLIED
ANNUITY TABLES
JOINT AND SURVIVOR MONTHLY ANNUITY PAYMENTS
ANNUITANT'S AGE LAST BIRTHDAY
<TABLE>
<CAPTION>
FEMALE AGE
----------
50 55 60 65 70
-- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
MALE AGE 50 3.36 3.46 3.56 3.64 3.71
-------- 55 3.42 3.56 3.69 3.82 3.93
60 3.47 3.64 3.82 3.99 4.16
65 3.70 3.92 4.15 4.39
70 4.00 4.30 4.61
</TABLE>
LIFE ANNUITY: MONTHLY ANNUITY PAYMENTS
<TABLE>
<CAPTION>
Male Guaranteed Period Female Guaranteed Period
ANNUITANT'S ANNUITANT'S
ATTAINED AGE 120 240 ATTAINED AGE 120 240
LAST BIRTHDAY NONE MONTHS MONTHS LAST BIRTHDAY NONE MONTHS MONTHS
------------- ---- ------ ------ ------------- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
40 3.41 3.40 3.38 40 3.23 3.23 3.22
41 3.44 3.44 3.41 41 3.26 3.26 3.24
42 3.48 3.48 3.45 42 3.29 3.29 3.27
43 3.52 3.52 3.48 43 3.32 3.32 3.30
44 3.57 3.56 3.52 44 3.35 3.35 3.33
45 3.61 3.60 3.56 45 3.39 3.38 3.37
46 3.66 3.65 3.60 46 3.42 3.42 3.40
47 3.71 3.69 3.64 47 3.46 3.46 3.43
48 3.76 3.74 3.68 48 3.50 3.50 3.47
49 3.81 3.79 3.73 49 3.55 3.54 3.51
50 3.87 3.85 3.77 50 3.59 3.58 3.55
51 3.93 3.90 3.82 51 3.64 3.63 3.59
52 3.99 3.96 3.87 52 3.68 3.67 3.63
53 4.05 4.02 3.92 53 3.74 3.72 3.68
54 4.12 4.09 3.97 54 3.79 3.78 3.72
55 4.19 4.15 4.03 55 3.85 3.83 3.77
56 4.27 4.22 4.08 56 3.90 3.89 3.82
57 4.34 4.30 4.14 57 3.97 3.95 3.88
58 4.43 4.37 4.20 58 4.03 4.01 3.93
59 4.51 4.45 4.26 59 4.10 4.08 3.99
60 4.60 4.54 4.32 60 4.18 4.15 4.04
61 4.70 4.62 4.39 61 4.25 4.22 4.11
62 4.80 4.72 4.45 62 4.34 4.30 4.17
63 4.91 4.82 4.51 63 4.42 4.38 4.23
64 5.03 4.92 4.58 64 4.52 4.47 4.30
65 5.15 5.03 4.65 65 4.61 4.56 4.37
66 5.28 5.14 4.71 66 4.72 4.66 4.44
67 5.43 5.27 4.78 67 4.83 4.76 4.51
68 5.58 5.39 4.84 68 4.95 4.87 4.58
69 5.74 5.53 4.90 69 5.08 4.98 4.65
70 5.91 5.66 4.96 70 5.21 5.10 4.72
71 6.10 5.81 5.02 71 5.36 5.22 4.79
72 6.30 5.96 5.08 72 5.51 5.36 4.86
73 6.51 6.12 5.13 73 5.67 5.50 4.93
74 6.73 6.28 5.18 74 5.85 5.65 5.00
75 6.97 6.44 5.23 75 6.04 5.80 5.06
</TABLE>
25
<PAGE> 1
EXHIBIT NO. 6
ARTICLES OF INCORPORATION
OF DEPOSITOR
<PAGE> 2
AMENDED ARTICLES OF INCORPORATION
NATIONWIDE LIFE INSURANCE COMPANY
First: The name of said Corporation shall be "NATIONWIDE LIFE INSURANCE
COMPANY."
Second: Said Corporation is to be located, and its principal office
maintained in the City of Columbus, Ohio.
Third: Said Corporation is formed for the purpose of (a) making
insurance upon the lives of individuals and every insurance appertaining thereto
or connected therewith on both participating and non-participating plans, (b)
granting, purchasing or disposing of annuities on both participating and
non-participating plans, (c) taking risks connected with or appertaining to
making insurance on life or against accidents to persons, or sickness, temporary
or permanent disability on both participating and non-participating plans, (d)
investing funds, (e) borrowing money on either a secured or unsecured basis in
furtherance of the foregoing, and (f) engaging in all activities permitted life
insurance companies under the laws of the State of Ohio.
Fourth: No holder of shares of this Corporation shall be entitled as
such, as a matter of right, to subscribe for or purchase shares now or hereafter
authorized.
The capital stock of this Corporation shall be Five Million Dollars
($5,000,000.00) divided into Five Million (5,000,000) Common shares of the par
value of One Dollar ($1.00) each, which may be subscribed and purchased, or
otherwise acquired for such consideration at not less than par, and under such
terms and conditions as the Board of Directors may prescribe.
Fifth: Dividends may be declared and paid on the outstanding stock,
subject to the restrictions herein contained. Dividends on the capital stock
shall be paid only from the earned surplus of the Corporation. Unless those
policyholders owning participating insurance policies or contracts shall have
received an equitable dividend arising out of savings in mortality, savings in
expense loadings and excess interest earnings, if any, from such participating
policies, no dividend from such savings and earnings shall be declared or paid
on capital stock in an amount in excess of seven percent (7%) per annum,
computed on the par value of the stock from date of original issue to date of
retirement or date of payment of dividend.
<PAGE> 3
* Sixth: The corporate powers and business of the Corporation
shall be exercised, conducted and controlled, and the corporate
property managed by a Board of Directors consisting of not less than
three (3), nor more than twenty-one (21), as may from time to time be
fixed by the Code of Regulations of the Corporation. At the first
election of directors one-third of the directors shall be elected to
serve until the next annual meeting, one-third shall be elected to
serve until the second annual meeting, and one-third shall be elected
to serve until the third annual meeting; thereafter all directors shall
be elected to serve for terms of three (3) years each, and until their
successors are elected and qualified. Vacancies in the Board of
Directors, arising from any cause, shall be filled by the remaining
directors.
The directors shall be elected at the annual meetings of the
stockholders by a majority vote of the stockholders present in person
or by proxy, provided that vacancies may be filled as herein provided
for.
The stockholders of the Corporation shall have the right,
subject to the statutes of the State of Ohio and these Articles of
Incorporation, to adopt a Code of Regulations governing the transaction
of the business and affairs of the Corporation which may be altered,
amended or repealed in the manner provided by law.
The Board of Directors shall elect from their own number a
Chairman of the Board of Directors, a General Chairman, and a
President. The Board of Directors shall also elect a Vice President and
a Secretary and a Treasurer, or a Secretary-Treasurer. The Board of
Directors may also elect or appoint such additional vice presidents,
assistant secretaries and assistant treasurers as may be deemed
advisable or necessary, and may fix their duties. The Board of
Directors may appoint such other officers as may be provided in the
Code of Regulations. All officers, unless sooner removed by the Board
of Directors, shall hold office for one (1) year, or until their
successors are elected and qualified. Other than the Chairman of the
Board of Directors, the General Chairman and the President, the
officers need not be members of the Board of Directors. Officers shall
be elected at each annual organization meeting of the Board of
Directors, but elections or appointments to fill vacancies may be had
at any meeting of the directors.
A majority of the Board of Directors and officers shall, at
all times, be citizens of the State of Ohio.
* Amended Effective March 14, 1986.
- 2 -
<PAGE> 4
Seventh: The annual meeting of the stockholders of the Corporation
shall be held at such time as may be fixed in the Code of Regulations of the
Corporation. Any meeting of the stockholders, annual or special, may be held in
or outside of the State of Ohio. Reasonable notice of all meetings of
stockholders shall be given, by mail or publication, or as prescribed by the
Code of Regulations or by law.
Eighth: These Amended Articles of Incorporation shall supersede and
take the place of the Articles of Incorporation and all amendments thereto
heretofore filed with the Secretary of State by and on behalf of this
Corporation.
Amended Effective March 14, 1986
- 3 -
<PAGE> 1
EXHIBIT NO. 9
OPINION OF COUNSEL
<PAGE> 2
DRUEN, RATH & DIETRICH
ATTORNEYS AT LAW
ONE NATIONWIDE PLAZA
COLUMBUS, OHIO 43216
<TABLE>
<CAPTION>
<S> <C> <C> <C>
BRIAN M. BACON ROBERT M. PARSONS (614) 249-7617 TELECOPIER
THOMAS E. BARNES THOMAS J. PRUNTE (614) 249-2418
ROGER A. CRAIG JOSEPH P. RATH WRITER'S DIRECT DIAL NUMBER
ELIZABETH A. DAVIN ARLENE L. REILLY
THOMAS W. DIETRICH LUCINDA A. REYNOLDS (614) 249-7470
W. SIDNEY DRUEN DANIEL R. RUPP
JEANNE A. GRIFFIN STEVEN R. SAVINI
LEROY JOHNSTON, III ANNE DANZA SAXON
MARK B. KOOGLER THERESA R. SCHAEFER
WALTER R. LEAHY W. JOSEPH SCHLEPPI
GEORGE K. MACKLIN DAVID E. SIMAITIS
RANDALL W. MAY KENT N. SIMMONS
M. LINDA MAZZITTI LEE A. THORNBURY
SANDRA L. NEELY PHILIP W. WHITAKER
PETER J. OESTERLING DAVID L. WHITE
RANDALL L. ORR STEVEN L. ZISSER
</TABLE>
Practice Limited to Nationwide Insurance Companies
and their associated companies
February 14, 1997
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, Ohio 43216
To the Company:
We have prepared the Registration Statement filed with the Securities and
Exchange Commission for the purpose of registering under the Securities Act of
1933, as amended, Individual Deferred Variable Annuity Contracts to be sold by
Nationwide Life Insurance Company ("Nationwide") and to be issued and
administered through the Nationwide Variable Account-6. In connection therewith,
we have examined the Articles of Incorporation, Code of Regulations and Bylaws
of Nationwide, minutes of meetings of the Board of Directors, pertinent
provisions of federal and Ohio laws, together with such other documents as we
have deemed relevant for the purposes of this opinion. Based on the foregoing,
it is our opinion that:
1. Nationwide is a stock life insurance corporation duly
organized and validly existing under the laws of the State of
Ohio and duly authorized to issue and sell life insurance and
Annuity contracts.
2. The Nationwide Variable Account-6 has been properly created
and is a validly existing separate account pursuant to the
laws of the State of Ohio.
<PAGE> 3
Nationwide Life Insurance Company
February 14, 1997
Page 2
3. The issuance and sale of the Individual Deferred Variable
Annuity contracts have been duly authorized by Nationwide.
When issued and sold in the manner stated in the prospectus
constituting a part of the Registration Statement, the
contracts will be legal and binding obligations of Nationwide
in accordance with their terms, except that clearance must be
obtained, or the contract form must be approved, prior to the
issuance thereof in certain jurisdictions.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name as the firm determining the
legality of the securities being registered. In addition, we hereby attest that
the securities being registered will be legally issued and will represent
binding obligations of the depositor.
Very truly yours,
DRUEN, RATH & DIETRICH
