Nationwide New Heights Fixed Indexed Annuity

Transcription

1 Fixed Indexed Annuity Fixed Indexed Annuity Hypothetical Illustration Report Prepared for: Prepared on: Valued Client 6/24/2015 Prepared by: Sample NC The purpose of this hypothetical illustration is to demonstrate the effect of hypothetical guaranteed and nonguaranteed performances on your contract s values. The following pages illustrate the potential charges and hypothetical performance of your contract based on the riders and strategy option you select. You should consider the investment objectives, risks, charges and expenses of the fixed indexed annuity product carefully before investing. Please refer to the Disclosure Summary document and Buyer s Guide (included in the sales kit/contract package) for additional information. Not a deposit Not FDIC or NCUSIF insured Not guaranteed by the institution Not insured by any federal government agency May lose value FAM0345AO.2 Page 1 of 14

2 Important Information What are fixed indexed annuities? Fixed indexed annuities are contracts you buy from an insurance company to help you build assets for retirement. They are called fixed indexed because their interest earnings will be based on the performance of the underlying indexed strategy option you selected. What are the charges associated with a fixed indexed annuity? Because you can customize your contract by selecting additional riders that meet your unique needs, charges will vary. Specific information about the cost of your annuity can be found on the Summary page (p3). Fixed Indexed Annuities can provide Principal protection Indexed linked interest earnings that may outperform fixed investments Taxdeferred earnings 1 Death benefit protection Access to your money 1 Tax deferral offers no additional value if an annuity is used to fund a qualified plan, such as a 401(k) or IRA, and may not be available if the annuity is owned by a nonnatural person such as certain types of trusts. 2 A charge that may be assessed on withdrawal or full surrender prior to the end of the CDSC schedule. In CA, CDSC is called a surrender charge. What else should you know? Fixed indexed annuities do have some limitations. Because they re designed for long term savings, you may be charged penalties if you take your money out early (it can trigger Contingent Deferred Sales Charges 2 (CDSC) and a market value adjustment (MVA) and/or recoupment of unvested purchase payment bonus, if applicable). If you take withdrawals before age 5½, you may have to pay a 10% early withdrawal federal tax penalty in addition to ordinary income taxes. Also, withdrawals will reduce your death benefit and contract value. All of the guarantees and protections of this fixed indexed annuity and riders are subject to the financial strength and claimspaying ability of Nationwide Life and Annuity Insurance Company. Fixed indexed annuities don t guarantee that the Contract Value will grow at a fixed interest rate. Rather, interest earnings are linked to the performance of an index. Optional riders may be elected to help protect you or your beneficiaries by offering guarantees of lifetime income or enhanced death benefits. A fixed indexed annuity is not a registered security, and while the values of the contract may be affected by an index, the contract does not directly participate in any stock or equity investments. Financial terms are presented throughout this report. See detailed explanations on the Definitions pages. Important Information regarding J.P. Morgan MOZAIC SM index (USD) (the "MOZAIC Index"): The MOZAIC index launched on April 17, 200. Values in this illustration are based on a combination of actual live index performance and hypothetical backtested performance prior to the launch date. These backtested results are achieved by looking at the historical performance of the index constituents prior to the index launch date and applying the existing methodology of the MOZAIC Index. The hypothetical backtested performance of the MOZAIC Index is purely theoretical and does not represent the actual historical performance of the MOZAIC Index and has not been verified by an independent third party. Alternative modeling techniques or assumptions may produce different hypothetical historical performance that might prove to be more appropriate and that might differ significantly from the hypothetical historical performance set forth herein. As with actual historical performance, hypothetical backtested performance should not be taken as an indication of future performance. FAM0345AO.2 Page 2 of 14

3 Summary This illustration has been prepared specifically for Valued Client to assist in understanding how this contract can work. Prepared for Owner Joint Owner Annuitant CoAnnuitant State Prepared on Contract type Contract funding Purchase payment amount Total contract funding Balanced Allocation Strategy Option illustrated 3 Equity Indexed Declared Rate Declared Strategy Strategy Allocation Allocation Rate Spread 4 Term 5 135% 0% 0.00% 1.25% 3 years CDSC schedule Completed contract years 0 CDSC percentage Valued Client Valued Client NC 6/24/2015 Qualified % % % % 8% 7% 6% 5% 4% 0% 3 This illustration assumes that the Balanced Allocation Strategy option crediting factors remain unchanged for the life of the contract. These crediting factors are only guaranteed for the initial strategy term, crediting factors for each subsequent strategy term may vary. Refer to the description of the strategy options and crediting factors, how earnings are calculated and credited, as well as your contract for more detail. 4 An annual percentage rate that is deducted when calculating strategy earnings. 5 For purposes of this illustration the strategy term length is 3 years for the life of the contract. For purposes outside of this illustration, once the CDSC period is complete the strategy term length may be reduced to annual. 6 Geometric average is the compounded annual growth rate and is the calculation commonly used to determine the performance results of an index Male, 50 Male, 50 Annualized growth rates Hypothetical growth rates Index return 6 New Heights net return 7 Most recent 12 years 8 Highest 12 years 8 Lowest 12 years 8 Variable assumed growth rate Crediting index J.P. Morgan MOZAIC Cap rate 10 Uncapped New Heights does not cap the amount of index performance used to calculate earnings, however growth potential may be limited by the equity indexed allocation and strategy spread. These limitations may reduce future earnings for your contract. Withdrawals Free withdrawal schedule Completed contract years Free withdrawal percentage % 6.58% 5.2% 5.50% 0% 7% 7% 7% 7% 7% 7% 7 Based on the surrender value that includes return of purchase payment guarantee amount and minimum guaranteed contract value with the Balanced Allocation Strategy option and any optional rider, if elected. 8 Hypothetical annualized growth rates calculated as follows: assume a new contract issued each business day over the last 30year period (highest or lowest 12 years) ending 3/31/2015 or most recent 12year period ending 3/31/2015 utilizing the closing price of the J.P. Morgan MOZAIC on those days. The annualized growth rates shown assume that the contract was held for 12 years with no withdrawals. Variable Assumed Growth Rate is a series of 30 years of variable index returns of which the geometric average is 5.50%, which results in the 6.01% hypothetical growth rate for the contract. 10 A cap is a common feature of indexed annuities which places a limit on the maximum interest rate that can be credited to your contract. New Heights does not have a cap rate on the earnings of the strategy options % 8 7% % 7.45% 5.76% 10% 6.01% FAM0345AO.2 Page 3 of 14

4 Prepared for: Valued Client Purchase Payment: J.P. Morgan MOZAIC Option A Guaranteed contract minimum (assumed 0%) illustration table 11 Contract year end Valued Client age 12 Index return percentage This illustration reflects the guarantees in the New Heights contract. It is not intended to predict or project future performance results. Your performance could be different than the hypothetical example shown. 12 Calculations based on oldest annuitant s age. 13 Shows the hypothetical J.P. Morgan MOZAIC annual rate of return for each year. 14 Surrender value includes CDSC charges and assumes no Market Value Adjustment (MVA). An MVA is not applicable in all states. 15 Balanced Allocation Values are calculated daily within a strategy term based on the crediting factors. This illustration displays the BAV at each contract yearend. The BAV is the greater of (1) the contract value, plus any unrealized strategy earnings (strategy earnings that have not yet been credited to the contract), or (2) the Return of Purchase Payment Guarantee Amount. Please note the Return of Purchase Payment Guarantee Amount is only available if the Return of Purchase Payment Guarantee criteria are met. 16 Death Benefit shown is the greater of the Balanced Allocation Value (BAV) or surrender value. Death benefit is based on the oldest annuitant. 17 Withdrawals may reduce your death benefit and contract value. Contract value Surrender value 14 Balanced Allocation Value 15 Death benefit 16 Withdrawals 17 At issue N/A 100,000 1, , , % 100,000 1, , , % 100,000 1, , , % 100,000 1, , , % 100,000 2, , , % 100,000 3,40 100, , % 100,000 4, , , % 100,000 5, , , % 100,000 6, , , % 100, , , , % 100, , , , % 100, , , , % 100, , , , % 100, , , , % 100, ,57 100, , % 100, , , , % 100, , , , % 100, , , , % 100, , , , % 100, , , , % 100, , , , % 100, , , , % 100, ,13 100, , % 100, , , , % 100, , , , % 100, , , , % 100, , , , % 100, , , , % 100, , , , % 100, ,76 100, , % 100, ,37 100, ,37 Annuitization will occur on the Annuity Commencement Date and will be based on the annuitization value of $143,05. Cumulative withdrawals FAM0345AO.2 Page 4 of 14

5 Prepared for: Valued Client Purchase Payment: J.P. Morgan MOZAIC Option A Most recent 12 years repeated (nonguaranteed) hypothetical illustration table 18 Contract year end Valued Client age 1 Index return percentage 20 Contract value Surrender value 21 Balanced Allocation Value 22 Death benefit 23 Withdrawals 24 At issue N/A 100,000 1, , , % 100,000 6, ,0 112, % 100, , , , % 135, , , , % 135, , , , % 135, , ,11 157, % 157,22 148, ,22 157, % 157,22 151,38 161, , % 157,22 165, , , % 12,545 12,545 12,545 12, % 12,545 12,545 12,545 12, % 12,545 16,455 18,138 18, % 215, , , , % 215, , , , % 215, , , , % 21,775 21,775 21,775 21, % 21,775 23,723 26,658 26, % 21, , , , % 338,53 338,53 338,53 338, % 338,53 341,02 346,80 346, % 338,53 370, , , % 414, , , , % 414, , , , % 414, ,82 426, , % 463, , , , % 463, , ,03 523, % 463, , , , % 627,87 627,87 627,87 627, % 627,87 632,17 638,46 638, % 627,87 67, , , % 728, , , ,635 Annuitization will occur on the Annuity Commencement Date and will be based on the annuitization value of $2,411,538. Cumulative withdrawals 18 These illustrations aren t intended to reflect the performance of any available options or to predict or project future performance results. Your performance could be different than the hypothetical examples shown. With the exception of the at issue row, all values shown are as of contract year end. 1 Calculations based on oldest annuitant s age. 20 Shows the hypothetical J.P. Morgan MOZAIC annual rate of return for the most recent 12 years period ending 3/31/2015 repeated. 21 Surrender value includes CDSC charges and assumes no Market Value Adjustment (MVA). An MVA is not applicable in all states. 22 Balanced Allocation Values are calculated daily within a strategy term based on the crediting factors. This illustration displays the BAV at each contract yearend. For an explanation of BAV, see the glossary. 23 Death Benefit shown is the greater of the Balanced Allocation Value (BAV) or surrender value. Death benefit is based on the oldest annuitant. 24 Withdrawals may reduce your death benefit and contract value. FAM0345AO.2 Page 5 of 14

6 Prepared for: Valued Client Purchase Payment: J.P. Morgan MOZAIC Option A Variable assumed 5.5% hypothetical (nonguaranteed) illustration table 25 Contract year end Valued Client age 26 Index return percentage 27 Contract value Surrender value 28 Balanced Allocation Value 2 Death benefit 30 Withdrawals 31 At issue N/A 100,000 1, , , % 100,000 4,24 10,631 10, % 100, , , , % 127, , , , % 127, , , , % 127, , ,42 148, % 14, ,738 14,055 14, % 14, ,05 160, , % 14, , ,5 166, % 180,51 180,51 180,51 180, % 180,51 185,860 14,02 14, % 180,51 13,856 1,65 1, % 20,70 20,70 20,70 20, % 20,70 218, , , % 20,70 223, , , % 241,6 241,6 241,6 241, % 241,6 248, , , % 241,6 26, ,70 281, % 301,34 301,34 301,34 301, % 301,34 312, , , % 301,34 332, , , % 377,61 377,61 377,61 377, % 377,61 378, , , % 377,61 36,64 405, , % 421, , , , % 421, , ,13 456, % 421,676 46,55 40,54 40, % 503, , , , % 503, , , , % 503, , , , % 575, , , ,603 Cumulative withdrawals 25 These illustrations aren t intended to reflect the performance of any available options or to predict or project future performance results. Your performance could be different than the hypothetical examples shown. With the exception of the at issue row, all values shown are as of contract year end. 26 Calculations based on oldest annuitant s age. 27 Shows the hypothetical J.P. Morgan MOZAIC annual rate of return for each year. 28 Surrender value includes CDSC charges and assumes no Market Value Adjustment (MVA). An MVA is not applicable in all states. 2 Balanced Allocation Values are calculated daily within a strategy term based on the crediting factors. This illustration displays the BAV at each contract yearend. For an explanation of BAV, see the glossary. 30 Death Benefit shown is the greater of the Balanced Allocation Value (BAV) or surrender value. Death benefit is based on the oldest annuitant. 31 Withdrawals may reduce your death benefit and contract value. FAM0345AO.2 Page 6 of 14

7 Prepared for: Valued Client Purchase Payment: J.P. Morgan MOZAIC Option A Hypothetical illustrations across different historical periods of the J.P. Morgan MOZAIC SM Index 32 Contract year end threeyear MOZAIC growth % Lowest 12 years 33 Most recent 12 years 33 Highest 12 years 33 Oct 02, 2002 Oct 02, 2014 Strategy earnings growth % 34 Contract value threeyear MOZAIC growth % Mar 31, 2003 Mar 31, 2015 Strategy earnings growth % 34 Contract value threeyear MOZAIC growth % Sep 22, 1 Sep 22, 2011 Strategy earnings growth % 34 Contract value % 23.16% $123, % 35.56% $135, % 24.14% $124,145 4 $123,162 $135,565 $124,145 5 $123,162 $135,565 $124, % 21.0% $150, % 16.03% $157, % 23.11% $152,833 7 $150,137 $157,22 $152,833 8 $150,137 $157,22 $152, % 24.28% $186, % 22.41% $12, % 23.43% $188, $186,58 $12,545 $188, % 4.1% $186,58 $15, % 11.50% $12,545 $214, % 25.4% $188,636 $236,720 Geometric average 35 Geometric average 35 Geometric average % 5.76% 5.2% 6.57% 6.58% 7.45% Growth of the contract value without any withdrawals 33 Highest 12 years Most recent 12 years $300,000 $200, These illustrations aren t intended to reflect the performance of any available options or to predict or project future performance results. Your performance could be different than the hypothetical examples shown. 33 Lowest 12 years 34 Represents the rate of earnings that would have been credited to your contract value at the end of each year term. Strategy earnings growth percentage calculated from issue date through the 10th contract anniversary for the illustrated historical period. Year 0 Year 3 Year 6 Year Year 12 Contract year Each scenario is calculated as follows: assume a new contract issued at the beginning of each 12year period over the past 30 years listed at the current strategy option rates and held for 12 years with no withdrawals. The Highest and Lowest dates are based on the highest and lowest 12 year index returns. 35 Geometric average is the compounded annual growth rate and is the calculation commonly used to determine the performance results of an index. $0 FAM0345AO.2 Page 7 of 14

8 Prepared for: Valued Client Purchase Payment: J.P. Morgan MOZAIC Option A The potential impact of a Market Value Adjustment 36 (MVA) on cash surrender values Market Value Adjustment (MVA) Upon issuance of a New Heights contract, Nationwide Life and Annuity Insurance Company faces the risk that contract owners may choose to withdraw money from the contract at times when the market value of investments backing the annuity contract is low. The market value adjustment (MVA) provision allows you to share some of that risk and in return, Nationwide is able to offer you strategy options with more favorable longterm growth potential relative to strategy options offered without an MVA. The MVA is an adjustment (positive or negative) that may be applied to the contract if you make a partial withdrawal or full surrender of your contract value before the end of the Contingent Deferred Sales Charge (CDSC) period. An MVA will not apply to free withdrawals, Required Minimum Distributions, death benefit, annuitization, withdrawals qualifying under the longterm care event or terminal illness or injury 37 provisions, and any withdrawal made from contracts continued under the joint option for death benefit. When an MVA applies, it will be based on the portion of a withdrawal or full surrender that is greater than the remaining free withdrawal amount. Subject to several limits, the calculation for the MVA will depend on the change in the yield of the Barclays U.S. Corporate Index 38 between the date of the withdrawal or full surrender and the date your contract was issued. The MVA may be positive, negative, or zero. If the MVA is negative, it could decrease the amount that you receive when you take a withdrawal or surrender. Conversely if the MVA is positive, it could increase the amount you receive. The following example illustrates the effect of the MVA on the surrender value if the change in the yield on the Barclays U.S. Corporate Index is positive or negative after you purchase your contract. This example assumes a full surrender in the 5th contract year for an initial premium 3 : Contract value at surrender Remaining free withdrawal amount CDSC Surrender value before MVA MVA base MVA index change MVA factor MVA adjustment Surrender value after MVA $127,738 $8,42 ($8,316) $11,422 $118, % 4.00% ($4,752) $114,670 $127,738 $8,42 ($8,316) $11,422 $118,76 $0 $11,422 $127,738 $8,42 ($8,316) $11,422 $118, % 4.00% $4,752 $124, Not applicable in all states. 37 This may not be available in all states and longterm care may be referred to as confinement. 38 Barclays Capital Inc. and its affiliates ( Barclays ) is not the issuer or producer of Nationwide New Heights Fixed Indexed Annuity ( New Heights ) and Barclays has no responsibilities, obligations or duties to purchasers of New Heights. The Barclays U.S. Corporate Index is a trademark owned by Barclays Bank PLC and licensed for use by Nationwide Life and Annuity Insurance Company ( Nationwide ) as the Issuer of New Heights. Barclays only relationship to Nationwide is the licensing of the Barclays U.S. Corporate Index which is determined, composed and calculated by Barclays without regard to Nationwide or the New Heights. While Nationwide may for itself execute transaction(s) with Barclays in or relating to the Barclays U.S. Corporate Index in connection with New Heights that purchasers acquire from Nationwide, purchasers of New Heights neither acquire any interest in Barclays U.S. Corporate Index nor enter into any relationship of any kind whatsoever with Barclays upon purchasing New Heights. New Heights is not sponsored, endorsed, sold or promoted by Barclays, and Barclays makes no representation or warranty (express or implied) to the owners of New Heights, the Issuer or members of the public regarding the advisability, legality or suitability of New Heights or use of the Barclays U.S. Corporate Index or any data included therein. Barclays shall not be liable in any way to the Issuer, purchasers, or to other third parties in respect of the use or accuracy of the Barclays U.S. Corporate Index or any data included therein or in connection with the administration, marketing, purchasing or performance of New Heights. 3 These illustrations aren t intended to reflect the performance of any available options or to predict or project future performance results. Your performance could be different than the hypothetical examples shown. FAM0345AO.2 Page 8 of 14

9 New Heights features Balanced Allocation Strategy New Heights offers you multiple Balanced Allocation Strategy options, known as strategy options, all of which protect your principal and include the potential of strategy earnings. Strategy earnings are credited at the end of each strategy term, on withdrawals, when a full surrender is requested and when death benefits are payable. Strategy options are a blend of an equity indexed component, declared rate component and strategy spread component. New Heights does not cap the amount of index performance used to calculate your earnings, offering the potential to receive higher longterm accumulation based on the performance of the underlying index. The other crediting factors, such as the equity indexed allocation and the strategy spread may limit growth potential and reduce future earnings for your contract 40. In general, the strategy option works like this: The equity indexed component is the equity indexed allocation, multiplied by the performance of the underlying index 41. The declared rate component reflects interest earned on the declared rate allocation, based on an interest rate (the declared rate) established by Nationwide. These two are combined and the total amount in excess of the strategy spread component is used to determine the strategy earnings, if any, at the end of the strategy term, on free withdrawals and upon death. Partial strategy earnings may be credited on withdrawals in excess of the available free withdrawal amount. If the strategy spread component is greater than the result of the other two components combined, no earnings would be credited. Strategy earnings will never be less than zero. For more information regarding the Balanced Allocation Strategy, please refer to the Nationwide New Heights client brochure. There are multiple strategy options to choose from to help you meet your longterm goals and objectives. Only one strategy option may be selected for each strategy term. The equity indexed allocation, the declared rate allocation, the declared rate, and the strategy spread are set at the start of each strategy term and cannot be changed during a strategy term. 40 While the crediting factors cannot change during a strategy term, crediting factors for each subsequent strategy term may vary. 41 Neither an Index nor any marketindexed annuity is comparable to a direct investment in the financial markets. Clients who purchase indexed annuities are not directly investing in a stock market index. FAM0345AO.2 Page of 14

10 Definitions Age The owner s age, unless the owner is a trust or corporation, then the annuitant s age is used. Annuitant The person upon whose life any lifecontingent annuity payments depend and the person whose death triggers payment of the death benefit. If a coannuitant is named, the annuitant is also the person who will receive the benefit associated with the joint option for death benefit on the death of the coannuitant. Annuitization The period during which annuity payments are received by the annuitant. Annuity Commencement Date The date on which annuity payments are scheduled to begin if this contract is then in force. The annuity commencement date is the first term end date on or after the date the older annuitant reaches age 100. For contracts issued in Florida, the contract owner may change their annuity commencement date to any date after the first contract anniversary but before the default annuity commencement date. CoAnnuitant The person designated by the contract owner to receive the benefit associated with the joint option for death benefit on the death of the annuitant. Contract The terms, conditions, features and rights of the annuity described in this document, as well as any documents describing elected options, endorsements or attached application form. Contract Owner The person possessing all rights under the contract prior to the annuity commencement date, unless there is a joint owner. Contract Value The contract value is your purchase payment, purchase payment bonus amount if applicable, credited strategy earnings minus rider charges and withdrawals. Balanced Allocation Strategy The formula used to determine the amount of strategy earnings that will be credited to the contract value. The Balanced Allocation Strategy may offer several strategy options to choose from. Only one strategy option can be elected per strategy term. Balanced Allocation Value (BAV) The BAV is calculated daily and is the greater of (1) the contract value, plus any unrealized strategy earnings (strategy earnings that have not yet been credited to the contract), or (2) the Return of Purchase Payment Guarantee Amount. Please note the Return of Purchase Payment Guarantee Amount is only available if the Return of Purchase Payment Guarantee criteria are met. FAM0345AO.2 Page 10 of 14

11 Definitions Contract Year The twelvemonth period starting on each contract anniversary. Death Benefit The benefit payable on the death of the annuitant and the death of the coannuitant, if any, provided such death occurs before the annuity commencement date while the contract is in force, and there is no contingent annuitant. Declared Rate The declared rate is the interest rate that will be used to calculate interest applicable to the declared rate allocation. Declared Rate Allocation The declared rate allocation is a percentage that represents the proportion of the strategy option that is tied to the declared rate. Equity Indexed Allocation The equity indexed allocation is a percentage that represents the proportion of the strategy option that is tied to the performance of the index. Free Withdrawal During your CDSC period, a free withdrawal is the amount that you can withdraw from your contract each contract year without incurring a CDSC (or MVA or recoupment of unvested bonus, if applicable). In addition, throughout the life of the contract, this is the amount each year that will receive full interim strategy earnings when withdrawn. Index The index selected by Nationwide to determine strategy earnings for a particular strategy option. Index Value On a business day, the closing value of the index published for that day. On a day other than a business day, the index value on the previous business day. The initial index value for each strategy option is shown on the contract specifications pages. Joint Owner The person designated as a second person (in addition to the contract owner) to possess an undivided interest in the contract. If there is a joint owner, references to contract owner and joint owner will apply to both of them, or either of them, unless the context requires otherwise. Market Value Adjustment In select states, an MVA may adjust the withdrawal amount payable, up or down, depending upon the interest rate conditions at the time of distribution as compared to interest conditions at the time your contract was issued. Purchase Payment Money deposited into the contract by the contract owner. Return of Purchase Payment Guarantee (RPPG) You will receive 100% of your purchase payment less sum of gross withdrawals if you surrender your contract after the 10th contract anniversary, when the death benefit is payable, or on a full surrender on or after a longterm care event or terminal illness or injury event. Rider An option you can add to your annuity at an additional cost that gives you extra features or guarantees to fit your personal situation. Strategy Spread The strategy spread is an annual percentage rate that is deducted when calculating strategy earnings. Strategy Term The strategy term is a length of time, expressed in years. Surrender Upon a full surrender of the contract, the contract owner will receive the surrender value, less any applicable taxes withheld. FAM0345AO.2 Page 11 of 14

12 Definitions Surrender Value The amount available for full surrender of the contract net any MVA, if applicable, is the greatest of: 1) the Minimum Guaranteed Contract Value; 2) the Modified Contract Value less any applicable CDSC (less any applicable unvested purchase payment bonus if the purchase payment bonus is elected); and 3) the Return of Purchase Payment Guarantee Amount. FAM0345AO.2 Page 12 of 14

13 Disclosure Illustration Only This is an illustration only and designed to help you better understand how the annuity contract you are considering works and might look in the future under various conditions. This illustration is not intended to indicate actual performance nor predict future results. The hypothetical, nonguaranteed values shown are calculated based on the historical performance of the index as indicated. This illustration assumes current strategy option crediting factors and other nonguaranteed rates as of the assumed issue date. These rates are subject to change. It is likely that the index will, in fact, not repeat historical performance and that nonguaranteed elements will change over time. This means that actual nonguaranteed values may be higher or lower than those shown in this illustration. See the Nationwide New Heights Fixed Indexed Annuity Disclosure Summary provided by Nationwide or your insurance or investment professional for details, definitions, limitations and charges. Not a Stock Market Investment Fixed indexed annuities are not stock market investments and do not directly participate in any stock or equity investments. The MOZAIC does not include dividends paid on the underlying stocks, and therefore do not reflect the total return of the underlying stocks; neither a market index nor any fixed indexed annuity is comparable to a direct investment in the equity markets. Fixed indexed annuities do not directly participate in any stock or equity investments. When you purchase New Heights you are not directly investing in a market index. Not FDIC Insured Subject to the terms, conditions and limitations of New Heights. Guarantees provided by annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC. All guarantees and protections are subject to the claimspaying ability of Nationwide Life and Annuity Insurance Company. General Tax Information Under current tax law, annuities provide the benefit of tax deferred accumulation. This means that as your contract value grows, you do not have to pay ordinary income tax on the interest credited to the contract until it is withdrawn or paid out as a death benefit. Please note that the effect of ordinary income taxes and any applicable tax penalties, is not reflected in the values shown in this hypothetical illustration. Any applicable taxes or penalties would reduce the net amount that you actually receive. When you surrender your contract or take a withdrawal from your contract you may be subject to federal and state income taxes on the amount you received. Generally, the tax treatment of your annuity contract will depend on a variety of factors, including whether your contract is purchased with nonqualified or qualified funds. A death benefit paid under the contract is generally subject to income taxes in the same way that a withdrawal or surrender would be subject to income taxes during your life. Please consult your tax advisor regarding the applicability of these rules to your specific situation. The information discussed in this section and the next section is general in nature and should not be construed in any way as tax advice. Neither Nationwide nor its agents or employees are authorized to provide tax advice. NonQualified vs. Qualified Contracts NonQualified Contract For nonqualified contracts, withdrawals are generally subject to ordinary income tax to the extent of gain in the contract at the time of the withdrawal. This means that to the extent that interest has been credited to your contract, and not previously withdrawn, that portion of any distribution from your contract may be subject to ordinary income tax. In addition, if you have not attained the age of 5½ at the time of the withdrawal, a 10% early withdrawal federal tax penalty is applied to the taxable portion of that withdrawal. However, if you convert your annuity contract to a stream of payments on the annuity commencement date, each payment generally will receive exclusion ratio tax treatment meaning that a portion of each payment will be taxed to the extent it represents gain in your contract, and a portion will be treated as a nontaxable recovery of your cost basis (generally the purchase payment for new contracts, but could vary based on previous contracts that were transferred into this contract) in your contract. FAM0345AO.2 Page 13 of 14

14 Disclosure Qualified Contract A qualified contract means that you are purchasing the annuity within a retirement account or plan, such as a traditional IRA or an employer sponsored retirement plan. Generally, the funds in this type of contract have been established with pretax dollars (money which has not been subjected to income taxes), although there may be a combination of pretax and aftertax dollars in such accounts. For qualified contracts, the entire amount of any withdrawal or death benefit will be subject to income taxes. In addition, if you have not attained the age of 5½ at the time of a withdrawal, a 10% early withdrawal federal tax penalty may be applied to the taxable portion of that withdrawal. Purchasing an annuity within an IRA or other qualified plan provides no additional tax benefit, therefore your purchase should be based on the annuity s features other than tax deferral. J.P. Morgan MOZAIC SM Index (USD) The J.P. Morgan MOZAIC SM Index (USD) ( Index ) has been licensed to Nationwide Life and Annuity Insurance Company (the Licensee ) for the Licensee s benefit. Neither the Licensee nor Nationwide New Heights Fixed Indexed Annuity (the Product ) is sponsored, operated, endorsed, recommended, sold or promoted by J.P. Morgan Securities LLC ( JPMS ) or any of its affiliates (together and individually, JPMorgan ). JPMorgan makes no representation and gives no warranty, express or implied, to contract owners taking exposure to the Product. Such persons should seek appropriate professional advice before making any investment. The Index has been designed and is compiled, calculated, maintained and sponsored by JPMS without regard to the Licensee, the Product or any contract owner. JPMorgan is under no obligation to continue compiling, calculating, maintaining or sponsoring the Index. JPMorgan may independently issue or sponsor other indices or products that are similar to and may compete with the Index and the Product. JPMorgan may also transact in assets referenced in the Index (or in financial instruments such as derivatives that reference those assets). These activities could have a positive or negative effect on the value of the Index and the Product. Annuities have limitations. They are longterm vehicles designed for retirement purposes. They are not intended to replace emergency funds, to be used as income for daytoday expenses or to fund shortterm savings goals. Please read the contract for complete details. Guarantees and protections are subject to the claimspaying ability of Nationwide Life and Annuity Insurance Company. Nationwide New Heights is a single premium fixed indexed deferred annuity issued by Nationwide Life Insurance Company, Columbus, Ohio. Please note, the contract does not directly participate in any stock or equity investments. Nationwide, the Nationwide N and Eagle, Nationwide is on your side, Nationwide New Heights, New Heights and Nationwide High Point are service marks of Nationwide Mutual Insurance Company Nationwide FAM0345AO.2 (06/15) FAM0345AO.2 Page 14 of 14