Avoiding Common Annuity Mistakes Brought to you by

Avoiding Common Annuity Mistakes Brought to you by the Nationwide® Advanced Consulting Group NFM-8802 AO. 2 (5/13) For Client Use

Some things you need to know • • The following information was created to support the general promotion of life insurance, annuities, and/or other products and services from Nationwide Life Insurance Company, which are described within. Neither Nationwide nor any of its employees provide tax or legal advice. For answers to your specific questions, you should consult with your legal and tax advisors to see how the information may apply to your personal situation. This information is not intended to be used — and cannot be used — to avoid penalties under the Internal Revenue Code. As your personal situations change (i. e. , marriage, birth of a child or job promotion), so will your life insurance needs. Care should be taken to ensure these strategies and products are suitable for long-term life insurance needs. You should weigh your objectives, time horizon and risk tolerance as well as any associated costs before investing. Also, be aware that market volatility can lead to the possibility of the need for additional premium in the policy. Variable life insurance has fees and charges associated with it that include costs of insurance that vary with such characteristics of the insured as gender, health and age, underlying fund charges and expenses, and additional charges for riders that customize a policy to fit your individual needs. NFM-8802 AO. 2 (5/13) For Client Use 2

Some things you need to know • • • This information assumes that the life insurance is not a modified endowment contract, or MEC. As long as the contract meets the non. MEC definitions of IRC Section 7702 A, most distributions are taxed on a first-in/first-out basis. Surrender charges may apply to partial surrenders. Loans and partial surrenders from a MEC will generally be taxable, and if taken prior to age 59 ½, may be subject to a 10% tax penalty. Loans and partial surrenders will reduce the cash value and the death benefits payable to your beneficiaries, and withdrawals above the available free amount will incur surrender charges. If your contract were to lapse with a loan outstanding, the loan amount in excess of basis will be treated as a distribution and all or a portion will be subject to income tax. Investing involves risk, including possible loss of principal. Variable products are sold by prospectus. Both the product prospectus and underlying fund prospectuses can be obtained from your investment professional or by visiting us at www. nationwide. com or calling 1 -877 -669 -6877. Before investing, carefully consider the fund's investment objectives, risks, charges and expenses. The product prospectus and underlying fund prospectus contain this and other important information. Read the prospectuses carefully before investing. NFM-8802 AO. 2 (5/13) For Client Use 3

Some things you need to know • • All guarantees and protections are subject to the claims-paying ability of Nationwide Life Insurance Company, and do not apply to variable underlying investment options. Nationwide and its representatives do not provide tax, accounting, or legal advice. It is your responsibility as a Registered Representative of you affiliated broker/dealer to determine suitability of any product, rider, service, or strategy you introduce to a customer. Before investing, understand that annuities and/or life insurance products are not insured by the FDIC, NCUSIF, or any other Federal government agency, and are not deposits or obligations of, guaranteed by, or insured by the depository institution where offered or any of its affiliates. Annuities and/or life insurance products that involve investment risk may lose value. © 2013, Nationwide Financial Services, Inc. All rights reserved. • Not a deposit • Not FDIC or NCUSIF insured • Not guaranteed by the institution • Not insured by any federal government agency • May lose value NFM-8802 AO. 2 (5/13) For Client Use 4

Agenda • Contract Structure • Beneficiary Designations • Annuitant • Ownership NFM-8802 AO. 2 (5/13) For Client Use 5

Annuity Contract Mistake # 1 They are all the same How to Avoid: Read and understand the annuity contract! NFM-8802 AO. 2 (5/13) For Client Use 6

Annuity Contract – Death of Owner Mistake # 2 Not Understanding the Difference Between Annuitant and Owner Driven How to Avoid: Owner and Annuitant are the same NFM-8802 AO. 2 (5/13) For Client Use 7

Contract Structure – Death of Annuitant Mistake # 3 Gift from Owner to Beneficiary How to Avoid • Keep Owner & Annuitant Same • Understand Contract NFM-8802 AO. 2 (5/13) For Client Use 8

Sample Contract Structure Owner – Husband or Wife Annuitant - Same as the Owner Beneficiary – Spouse, Children or Trust NFM-8802 AO. 2 (5/13) For Client Use 9

Beneficiary – The Estate Mistake # 4 No Beneficiary or Naming the Estate as Beneficiary How to Avoid: • Name specific people as beneficiaries or, when appropriate, a trust • Spousal Continuation • Keep Beneficiaries up-to-date NFM-8802 AO. 2 (5/13) For Client Use 10

Beneficiary - Contingent Mistake # 5 No Contingent Beneficiary How to Avoid: Name a Contingent Beneficiary NFM-8802 AO. 2 (5/13) For Client Use 11

Sample Beneficiary Arrangement Primary Beneficiary – Spouse Contingent – Children or Trust NFM-8802 AO. 2 (5/13) For Client Use 12

Beneficiary - Minor Mistake # 6 Naming a Minor as a Beneficiary How to Avoid: • Name a Trust for the Minor’s Share • If Appropriate, UTMA NFM-8802 AO. 2 (5/13) For Client Use 13

Ownership – Joint Owners Mistake # 7 Multiple Owners – Confusion with Joint Ownership with Rights of Survivorship How to Avoid: One Owner NFM-8802 AO. 2 (5/13) For Client Use 14

Ownership – Non-Natural Owners Mistake # 8 Loss of Tax-Deferral Because a Business is the Owner How to Avoid: Don’t Name a Business as Owner NFM-8802 AO. 2 (5/13) For Client Use 15

Ownership – Revocable Trusts Mistake # 9 Making the Revocable Living Trust the Owner when it is Unnecessary How to Avoid: Leave Ownership in the Individual’s Name to Keep it Simple NFM-8802 AO. 2 (5/13) For Client Use 16

Ownership – Irrevocable Trusts Mistake # 10 Not Understanding the Type of Trust Being Named as Owner How to Avoid: 1. Have Client Seek Competent Legal Counsel for Direction 2. Understand Type of Trust and Consequences NFM-8802 AO. 2 (5/13) For Client Use 17

Ownership – Changing Owners Mistake # 11 Taxes when Changing Ownership How to Avoid: • Don’t Change Ownership NFM-8802 AO. 2 (5/13) For Client Use 18

Ownership – Assignments Mistake # 12 Taxes when Assigning Ownership How to Avoid: Don’t Assign; Use Other Collateral NFM-8802 AO. 2 (5/13) For Client Use 19

Ownership – Charitable Gifts Mistake # 13 Unintended Tax Consequences from Gift to Charity How to Avoid: Name Charity as Beneficiary NFM-8802 AO. 2 (5/13) For Client Use 20

Ownership – Surrender Charges Mistake # 14 Incurring CDSC or Surrender Charges How to Avoid: Consider the Costs of Surrendering NFM-8802 AO. 2 (5/13) For Client Use 21

Ownership – Issue Date & Taxes Mistake # 15 Not Paying Attention to the Issue Date & Combining Annuities How to Avoid: Know When the Annuity is Issued NFM-8802 AO. 2 (5/13) For Client Use 22

Ownership – Owning More Than One Mistake # 16 Selling Two Annuities to the Same Person in the Same Tax Year From the Same Insurance Company How to Avoid: Different Owners, Different Tax Years, Different Insurance Companies NFM-8802 AO. 2 (5/13) For Client Use 23

Ownership – 10% Penalty Mistake # 17 Annuitizing a Deferred Annuity or doing a 1035 Exchange to an Immediate Annuity before age 59 1/5 How to Avoid: Remember the Exceptions to the 10% Premature Distribution Penalty NFM-8802 AO. 2 (5/13) For Client Use 24

Ownership – Surrender or 1035 Mistake # 18 Not Knowing When to Surrender or to 1035 How to Avoid: Consider the Tax Consequences 1035 Exchange to Save Basis NFM-8802 AO. 2 (5/13) For Client Use 25

Ownership – Surrender or 1035 Mistake # 19 Buying a New Annuity to Soon After Surrendering an Annuity How to Avoid: Consider the Tax Consequences and the “Wash Sale” Rules NFM-8802 AO. 2 (5/13) For Client Use 26

Ownership – Partial Exchanges Mistake # 20 Unintended Tax Consequences From Partial Exchanges and Withdrawals How to Avoid: Don’t Withdrawal for a 180 Days After the Exchange NFM-8802 AO. 2 (5/13) For Client Use 27

Ownership – Partial Exchanges Contract A Deferred Annuity Basis & Gain are Prorated Between A & B Partial Exchange to Contract B May a withdrawal be taken from contract A within 180 days of the exchange without negative tax consequences? NO! Contract B NFM-8802 AO. 2 (5/13) For Client Use 28

Ownership – 1035 Mistake # 21 Loss of Benefits & Guarantees How to Avoid: Read the Existing Annuity Contract Compare Benefits & Guarantees NFM-8802 AO. 2 (5/13) For Client Use 29

Ownership – 1035 Compare Features and Benefits • • • Guaranteed Interest Rates Death Benefit Guaranteed Income Benefit CDSC or Surrender Charges Annuitization Payout Rates NFM-8802 AO. 2 (5/13) For Client Use 30

Summary • • Read the Contract or Prospectus Coordinate With Client’s Other Planning Understand Tax Consequences Understand Benefits & Features of Current and Proposed Annuity • Whenever Possible, Keep It Simple • Ask for Help NFM-8802 AO. 2 (5/13) For Client Use 31

Questions? • • Independent Dealer: Financial Institutions: Wirehouse/Regionals: Nationwide Agents: Nationwide Financial Network: BGA: NFM-8802 AO. 2 (5/13) For Client Use 1 -800 -321 -6064 1 -800 -893 -5399 1 -800 -720 -1511 1 -888 -333 -4202 1 -877 -223 -0795 1 -888 -767 -7373 32