Jeffrey Wade
Nationwide annuities are insured by Nationwide Life Insurance Company, one of the largest insurance providers in the US. The company offers a range of annuity types, including fixed and variable annuities, to help customers meet their retirement goals. Nationwide annuities are designed to provide tax-deferred growth and an income stream for life. While investing always involves risk, Nationwide annuities offer certain guarantees and protections, such as a specified minimum that the contract value will not fall below. Overall, Nationwide has a positive reputation for customer satisfaction and has received relatively few consumer complaints.
| Characteristics | Values |
|---|---|
| Customer satisfaction | Ranked 3rd in J.D. Power's 2023 Customer Satisfaction Index Ranking |
| Number of complaints | 5 complaints from annuity customers in 2022 |
| Market share | 1.41% share of the U.S. annuity market |
| Types of annuities | Fixed, variable, fixed indexed, registered index-linked, single premium immediate |
| Investment risk | Minimal exposure to market fluctuations |
| Tax status | Tax-deferred |
| Early withdrawal penalty | 10% federal tax penalty for withdrawals before age 59 1/2 |
| Minimum investment | $1,000 to $10,000 |
| Insurance company | Nationwide Life Insurance Company |
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What You'll Learn
Fixed indexed annuities
Annuities are a type of insurance product that can help you save for retirement. Nationwide annuities are insured by the claims-paying ability of the issuing insurance company. However, guarantees do not apply to variable accounts, which are subject to investment risk.
Now, focusing on fixed indexed annuities:
A fixed indexed annuity is a contract purchased from a life insurance company that can help you accumulate assets for retirement. It is a tax-deferred, long-term savings option, meaning you don't pay taxes on any gains until you withdraw your money. This type of annuity can provide principal protection in a down market while also offering growth potential. Returns are based on the performance of an underlying index, such as the S&P 500 Composite Stock Price Index. While your money follows the market, it is never directly exposed to the stock market. This means that even if the index performs negatively, your original deposit will not decline. However, it's important to note that all guarantees are subject to the claims-paying ability of the issuing insurance company.
Withdrawals from a fixed indexed annuity can be subject to contingent deferred surrender charges (CDSC) and income tax. Early withdrawals, before the age of 59½, may incur a 10% federal tax penalty. Additionally, all withdrawals will reduce the death benefit and contract value.
Overall, fixed indexed annuities can be a useful tool for those seeking to protect retirement savings, guarantee income, and enjoy potential growth. However, it is important to carefully consider your income needs, risk tolerance, and investment objectives before deciding on any annuity product.
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Variable annuities
Nationwide offers various variable annuity products, including Nationwide Heritage® Single Premium Whole Life, Nationwide® SVUL II, and Nationwide® VUL Protector II. These products aim to help clients protect their families, plan for long-term care expenses, and potentially earn cash value for the future.
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Customer satisfaction
Nationwide annuities are designed to help customers grow their retirement income and protect them from outliving their savings. They offer a broad range of competitive annuities, including fixed, variable, indexed, registered index-linked, and immediate annuities.
Nationwide annuities have consistently ranked high on customer satisfaction measures. In the J.D. Power 2020 U.S. Life Insurance Study, they ranked No. 1 for overall satisfaction, with a score of 802 out of 1,000. They also ranked No. 3 for their Individual Life products. Nationwide demonstrated strength across various categories, including product offerings, interaction, statements, price, and communication.
In 2023, Nationwide placed third in the J.D. Power Customer Satisfaction Index Ranking, which measures the overall customer satisfaction of annuity providers. Their ranking dropped to tenth overall in 2024. According to data from the NAIC, Nationwide received only five complaints from annuity customers reported to state insurance commissions in 2022, indicating relatively few consumer complaints for a company of its size.
Nationwide's commitment to customer satisfaction is further reflected in their annuity buyer consumer surveys. In a 2024 survey of 300 annuity owners, 82% attributed their positive purchase experience to the opinion of their financial professional, followed by the performance of the annuity (76%), market performance (70%), and interest rate changes (67%). The survey also revealed that annuity education driven by financial professionals increases investor satisfaction. Over 90% of investors felt confident about their annuity purchase, and this confidence was enhanced when they understood the complexities of annuity solutions.
Nationwide provides customers with secure online access to their annuity accounts, enabling them to make informed decisions. They offer various tools, resources, and calculators to assist customers in understanding their investment options and planning for retirement. Nationwide's financial professionals are committed to helping clients anticipate future challenges and tailor their portfolios to meet their specific needs.
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Tax implications
Nationwide annuities are tax-deferred, long-term savings options. This means that the value of your annuity grows tax-free, and you won't pay taxes on any growth until you make a withdrawal. This can increase your contract value over time as you accumulate more assets without paying taxes on the interest earned. However, withdrawals are generally subject to income tax. Withdrawals made before the age of 59½ may be subject to a 10% early withdrawal federal tax penalty in addition to ordinary income taxes. These early withdrawals may also trigger contingent deferred surrender charges (CDSC) and a market value adjustment (MVA) on the withdrawal, further reducing the death benefit and contract value.
It's important to note that annuity regulations and tax implications can vary by state. While most states have adopted uniform standards, some states like New York have established their own regulations. Consumers should educate themselves about their specific state's rules, guarantee limits, and tax implications before purchasing an annuity. Additionally, select states and Puerto Rico impose additional taxes on certain annuity contracts, which are typically passed on to the consumer indirectly through commissions.
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Early withdrawal penalties
Early withdrawals from annuities are generally discouraged and may result in surrender charges and tax penalties. These penalties are designed to minimise risk to the issuer and encourage long-term use of annuities.
When considering withdrawing money from an annuity, it is important to review your financial needs, retirement goals, and long-term income requirements, as well as the potential fees and tax implications. While some annuity products allow free withdrawals of up to 10% of the account value annually without penalties, others may impose surrender charges on withdrawals exceeding the allowed amount.
If you are under the age of 59½, you may incur an early withdrawal penalty of 10% on the withdrawal amount, in addition to income tax on the earnings. This federal tax penalty is separate from any surrender charges, which are typically around 7% of the withdrawn amount but decrease the longer you hold the annuity. Even if you withdraw money after reaching age 59½, you will still need to pay ordinary income tax on the portion of your withdrawal that comes from earnings.
It is important to note that certain annuity contracts include crisis waivers that exempt surrender charges in special situations, such as nursing home confinement or a terminal illness. Additionally, annuities like the Nationwide Defender Annuity are long-term vehicles designed for retirement purposes and not intended for emergency funds or short-term savings goals. Before making any withdrawals, it is advisable to consult your financial professional or insurance company to understand the specific penalties and implications for your annuity contract.
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Frequently asked questions
Nationwide offers a range of annuity types, including fixed annuities, variable annuities, and fixed indexed annuities. They also offer the Nationwide Defender Annuity, a registered index-linked annuity (RILA).
Nationwide annuities are insured to the extent that the guarantees and protections offered are subject to the claims-paying ability of the issuing insurance company. However, these guarantees do not apply to variable accounts or the investment performance and safety of underlying investment options.
A fixed indexed annuity from Nationwide offers the potential for tax-deferred growth, principal protection in a down market, and the opportunity for growth based on the performance of an underlying index. It provides a specified minimum value that the contract will not fall below, regardless of index performance.
