ONcore Variable Annuities. Guaranteed Lifetime Withdrawal Benefit Preferred IS Rider

Transcription

1 ONcore Variable Annuities Guaranteed Lifetime Withdrawal Benefit Preferred IS Rider

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3 Building Your Retirement Income Strategy You ve spent years working hard and sacrificing to save money for your retirement. However, accumulating assets is only part of the equation. You need to make sure those assets will not only be there when you need them, but that they ll also last throughout your lifetime. Fortunately, there s a product that can help. An Ohio National ONcore variable annuity is a tax-deferred investment product that will allow you to invest your assets and will provide you guaranteed income during retirement. When you purchase an ONcore variable annuity, for an additional fee, you will also have the opportunity to add a living or death benefit rider that will provide you with additional features and benefits. The Guaranteed Lifetime Withdrawal Benefit Preferred IS (GLWB Preferred IS) Rider is one of the living benefit riders available. When you 1 add the GLWB Preferred IS Rider to your Ohio National ONcore variable annuity, you will have: Opportunities to grow your assets Guaranteed income for life Flexibility to start and stop income Guarantees are based upon the claims-paying ability of The Ohio National Life Insurance Company. 1

4 GLWB Preferred IS Rider Features 7% Annual Credits For each of the first 15 years, each year you don t take any withdrawals, you ll receive a 7% credit to your Rider s guaranteed benefit base, 2 which is the amount used to determine your income. Annual Step-Ups On each anniversary, your guaranteed benefit base will step up to the Contract Value, if it s higher, increasing your annual income. Annual Withdrawals The amount you re allowed to withdraw under the Rider each year (your Maximum Annual Withdrawal Amount, or MAW for short) is based on the age of the Annuitant (Single Life) or younger spouse (Joint Life) when you start withdrawals, as shown below. You re guaranteed this amount until the later of your 15th anniversary or the date your Contract Value is reduced to $0, if ever. Even if your Contract Value falls to $0, you re still guaranteed to receive income for the rest of your life. Ages 59½ Single Life 4.50% 5.50% 5.60% 6.00% 6.75% 7.50% Joint Life 4.50% 5.00% 5.10% 5.50% 6.50% 7.00% If your Contract Value is ever reduced to $0, your lifetime annual withdrawal amount will be based on your then-current MAW and the 90-day average of 10-year U.S. Treasury rates (see page 4 for more information). If your Contract Value is reduced to $0 during your 15-year guaranteed period, you ll receive the greater of your lifetime withdrawal amount or MAW until your 15th anniversary, and the lifetime withdrawal amount from then on. This withdrawal amount will always be between 3% and 9%. Partial Annual Credits For each of the first 15 years, if you withdraw less than the total allowed amount in a year, you ll receive a pro-rated partial credit to your withdrawal base on the following anniversary. For example, if you were allowed to withdraw 6% but only withdrew 3% (50% of your allowed amount), you d receive 50% of your 7% credit, or 3.5%. 2

5 Your Rider in Action Accumulating Assets His credits in later years are then based on the higher amount. When his Contract Value exceeds his guaranteed benefit base on any anniversary, his benefit base increases to the higher amount. David receives 7% credits on each anniversary because he isn t taking withdrawals. Meet David 50 years old Planning to retire at 65 Preparing now for his future income needs David benefits from: 7% annual credits Step-Ups Age Age Contract Value Guaranteed Benefit Base David s outcome: After 15 years of 7% credits, David s guaranteed benefit base is more than double its original value, which will increase his annual income. Rose doesn t need as much income at this point, so she decreases her withdrawals. Guaranteed Withdrawals Taking a partial withdrawal makes her eligible for partial credits to her benefit base. Partial credits increase her future withdrawals. Meet Rose 75 years old Needs income immediately Rose benefits from: Age Age Guaranteed withdrawals Partial annual credits Guaranteed withdrawal amount for at least 15 years Contract Value Guaranteed Benefit Base Withdrawals These hypothetical examples are for illustration purposes only and may not be used to predict or project investment results. It is not representative of any future performance of any particular product. Past performance is no guarantee of future results. 3

6 Your Rider in Action (continued) A recent study by Morningstar indicates an annual withdrawal rate of 2.8% is recommended to sustain income for life. With the GLWB Preferred IS Rider, Phillip can withdraw nearly twice this much each year until his Contract Value is depleted. When his Contract Value is depleted, his lifetime income rate still exceeds this percentage. Cumulative Withdrawals Meet Phillip Purchased an ONcore variable annuity with the GLWB Preferred IS Rider at age 65 Currently age 80 After taking withdrawals for 15 years, Contract Value is depleted If Phillip s Contract Value runs out, his total withdrawals would fall within this range. 9% 3% 5.5% 2.8% Age Age Phillip benefits from: 15 years of guaranteed withdrawals Cumulative Withdrawals at 2.8% Cumulative Withdrawals at 5.5% Cumulative Lifetime Withdrawal Range Mercado, D. (2013, February 7). The magic withdrawal number in a low-interest-rate retirement? You ll be surprised. Investment News. This hypothetical example is for illustration purposes only and may not be used to predict or project investment results. It is not representative of any future performance of any particular product. Past performance is no guarantee of future results. Determining Your Lifetime Withdrawals The GLWB Preferred IS Rider provides guaranteed lifetime withdrawals beginning at age 59½, even if the Contract Value falls to $0. If your Contract Value is depleted, the formula that determines your lifetime withdrawal percentage is shown below. These lifetime withdrawals can never be less than 3% or greater than 9%. Lifetime Withdrawals = MAW + (90-day average of 10-Year U.S. Treasury rates 6%) Maximum Annual Withdrawals = 5.5% Treasury Average Rate = 5% Lifetime Withdrawals 4 = MAW + (Treasury 6%) = 5.5% + (5% 6%) = 4.5% Treasury Average Rate = 7% Lifetime Withdrawals = MAW + (Treasury 6%) = 5.5% + (7% 6%) = 6.5% 90

7 Frequently Asked Questions Can I take Required Minimum Distributions (RMDs)? You ll be able to take your RMD amount based on this contract without negatively affecting your guaranteed benefit base, even if this amount exceeds the amount you d be allowed to withdraw annually under other circumstances. 3 If your RMD amount is less than your allowed withdrawals, you may also benefit from partial credits. What options does my spouse have when I pass away? Upon your death, your spouse may elect to continue the contract with your riders, or receive the payable death benefit amount. With the single life version of the GLWB Preferred IS Rider, if you have begun taking withdrawals, your spouse s guaranteed benefit base will equal your Contract Value as of your death, whether that amount is higher or lower. If you have never taken any withdrawals, your spouse s guaranteed benefit base will either stay the same, or increase to the Contract Value as of your death if it s higher. With the joint life 4 version, your spouse s guaranteed benefit base will either stay the same, or increase to the Contract Value as of your death, if it s higher. Can I add an enhanced death benefit to my contract? Yes, you may choose to add either the Annual Step-Up Death Benefit Rider or the Premium Protection Death Benefit Rider to your ONcore variable annuity. For more specific information on these riders, please see Ohio National s Living and Death Benefit Riders Brochure (Form 9211). To obtain a copy, please visit ohionational.com or contact your financial adviser. GLWB Preferred IS Rider: Additional Information Availability Single Life: Annuitant issue ages Joint Life: Issue ages for both Participating Spouses. Riders available at issue only and may not be dropped. Not available with ONcore Xtra products. Funds must be allocated in accordance with the investment requirements of the GLWB Preferred IS Riders. See product prospectus for additional details. Cost Single Life: 0.95% (2.00% maximum charge) 5 of the Guaranteed Lifetime Withdrawal Benefit Base at contract anniversary Joint Life: 1.25% (2.50% maximum charge) 5 of the Guaranteed Lifetime Withdrawal Benefit Base at contract anniversary When you are ready to build your retirement income strategy, Ohio National is ready to help. Contact your financial adviser today. 5

8 Annual expenses for the entire ONcore variable annuity product line (without optional added benefits) range from 0.65% to 1.80%, depending upon product. Product availability varies by broker/dealer. See individual product prospectuses for specific per-product fees. Rider fees are deducted on each anniversary. 1 For purposes of this Rider brochure you means Owner. Owner and Annuitant are presumed to be the same person, which is typically the case. Consult your registered representative for other situations. 2 The guaranteed benefit base (GLWB Base) is not available as a cash option and is used solely for the purpose of calculating GLWB payments. It does not provide a Contract Value or guarantee performance of any investment option. 3 The RMD amount based on this contract will not be calculated until December 31 of each calendar year. As a result, you will not be eligible to receive RMD treatment under this Rider for the calendar year in which the Rider is purchased. Any RMD withdrawals taken that exceed the Maximum Annual Withdrawal amount for the first contract year would be considered excess withdrawals and negatively affect the guaranteed benefit base. Therefore, if you are required to take an RMD in the current calendar year, you may wish to do so before purchasing this Rider. 4 The Joint Life Rider guarantees lifetime withdrawals for you and your spouse that will not be diminished upon the death of a spouse if the death occurs during the Lifetime Withdrawal Period. Your contract can be jointly held with both husband and wife as Owners, or it can be a sole Owner contract with your spouse listed as the sole beneficiary. The Guaranteed Lifetime Withdrawal Amount is based on the age of the Youngest Participating Spouse. As a result, if there is a substantial age difference between the two participating spouses, there is the possibility of a longer waiting period before withdrawals allowed under the Rider can begin. Spouses must be legally married to each other in order to be eligible for Rider benefits. See the product prospectus for additional details. The joint life version may not be available on certain qualified plans. Please note that civil union partners may encounter adverse tax consequences as a result of withdrawals or other transactions upon the death of the first partner. Consult with your tax adviser before purchasing these Riders, especially the joint life version, which may be inappropriate and/or unavailable for civil union partners. 5 Rider charge may increase upon a Step-Up on or after the third anniversary. Variable annuities are sold by prospectuses, which contain more complete information including fees, surrender (contingent deferred sales) charges and other costs that may apply. Contact your registered representative or visit to obtain current prospectuses. Please read the product and fund prospectuses carefully before you invest or send money. Investors should consider the investment objectives, strategies, risk factors, charges and expenses of the underlying variable portfolios carefully before investing. The fund prospectus contains this and other information about the underlying variable portfolios. Early withdrawals or surrenders may be subject to surrender charges. Withdrawals are also subject to ordinary income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply. For tax purposes only, withdrawals will come first from any gain in the contract. Federal and state tax laws in this area are complex and subject to change. Consult your personal tax adviser on all tax matters. Withdrawals may reduce the death benefit, cash surrender value and any living benefit amount. Guarantees are based upon the claims-paying ability of The Ohio National Life Insurance Company. Guarantees do not apply to the investment performance or account value of the underlying variable portfolios. As with any investment, investing in variable portfolios involves risk, including possible loss of principal. Past performance is not a guarantee of future results. Variable annuities are long-term investment vehicles designed to accumulate money on a tax-deferred basis for retirement purposes. Upon retirement, variable annuities may pay out an income stream of a series of payments or a lump sum. If you die during the accumulation or payout phase, your beneficiary may be eligible to receive any remaining Contract Value. There is no additional tax-deferral benefit for contracts purchased in an Individual Retirement Account (IRA) or other tax-qualified plan because these are already afforded tax-deferred status. An annuity should only be purchased in an IRA or qualified plan if the client values some of the other features of the annuity and is willing to incur any additional costs associated with the annuity. Product, product features and rider availability vary by state. Issuer not licensed to conduct business and products not distributed in AK, HI or NY. Issued by: The Ohio National Life Insurance Company One Financial Way Cincinnati, Ohio Telephone: Distributed by: Ohio National Equities, Inc. Member FINRA One Financial Way Cincinnati, Ohio Telephone: Form NOT A DEPOSIT MAY LOSE VALUE NOT GUARANTEED BY ANY BANK NOT FDIC INSURED NOT INSURED BY ANY GOVERNMENT AGENCY 2013 Ohio National Financial Services, Inc. Annual Step-Up Death Benefit Rider 05-AMD-1 and any variations Guaranteed Lifetime Withdrawal Benefit Preferred IS Riders 13-GLWB-I.1/I.2. Premium Protection Death Benefit Rider 12-PPD-1/2