What is an ANNUITY?
An annuity is a contract from an insurance company that offers to pay income to…
Why buy the ELM INCOME ANNUITY?
This contract, issued by Principal Life Insurance Company, is for your consideration…
Why buy the ELM INDEX ANNUITY?
This contract is for your consideration if you are not yet ready to turn your assets into regular income payments, and desire both protection against market loss and opportunity for growth.
Questions & Answers
- » What are the potential advantages of the ELMsm Index Annuity?
- » Does ELM receive any compensation related to sales of the ELM Index Annuity?
- » What charges, if any, are deducted from my premium (or my account balance)?
- » How long is the term of the ELM Index Annuity?
- » For how long is the participation rate guaranteed?
- » Is averaging of the S&P 500 Composite Stock Index performance used to determine interest credits in the ELM Index Annuity?
- » Is credited interest compounded during the contract term?
- » What are the current rates?
- » For how long is the cap rate guaranteed?
- » What is the guaranteed minimum interest rate?
- » Is there a minimum cap rate and minimum participation rate?
- » Which interest crediting method is used?
- » Which interest crediting method is right for you?
- » What are the early withdrawal fees if I chose to end my contract early and take out all of my money?
- » Can I make a partial withdrawal without paying charges?
- » When is the best time to make partial withdrawals (up to 10%)?
- » What is the death benefit?
What are the potential advantages of the ELMsm Index Annuity?
It will give you a guaranteed minimum accumulation, a guarantee that your account value will not decrease on account of negative market experience plus you may benefit from interest credits related to the performance of the S&P 500 Composite Stock Index, without dividends and distributed capital gains. You can protect your principal plus interest and still enjoy the opportunity to gain interest credits when the market performs favorably. These features may be are especially important as you get near retirement, or are already retired, because you are protected from market declines but still have the opportunity for some growth when the index moves up.
Does ELM receive any compensation related to sales of the ELM Index Annuity?
ELM receives an 0.08% services and licensing fee each year on the total account value of all ELM Index Annuities sold. For example, if the total account value of all ELM Index Annuities sold is $1,000,000 in a particular year, ELM would receive $800 in fees in that year.
What charges, if any, are deducted from my premium (or my account balance)?
All interest rates are net of all charges, except for early withdrawal fees, if applicable and state premium taxes in a few states (California, Ohio, Iowa, Maine, Nevada, Puerto Rico, South Dakota, West Virginia, and Wyoming). See early withdrawal fees for the details. An ELM Index Annuity expert at Nationwide can explain if a premium tax would apply to your purchase; call 1-800-963-1749.
How long is the term of the ELM Index Annuity?
Annuities are long-term vehicles designed for retirement. The contract lasts until the owner makes a complete withdrawal of the account value. Withdrawal rights become unrestricted after seven years. Before that time, early withdrawal fees may apply.
For how long is the participation rate guaranteed?
The rate is guaranteed for the first year of the contract, or the first interest crediting date if later, and is then reset annually by Nationwide. This rate is declared on the index interest crediting date, which is the end of the calendar month immediately following your contract anniversary.
Is averaging of the S&P 500 Composite Stock Index performance used to determine interest credits in the ELM Index Annuity?
No. Averaging of the S&P 500 Composite Stock Index is not used in the ELM Index Annuity because the ELM Index Annuity is intended to track the exact performance of that index.
Is credited interest compounded during the contract term?
Yes, credited interest is compounded so that previous interest credits also earn interest.
What are the current rates?
For current rate information, please visit www.nationwide-elm.com or call 1-800-963-1749.
For how long is the cap rate guaranteed?
Like the participation rate, the cap rate is guaranteed for the first year of the contract, or the first interest crediting date if later, and is then reset annually by Nationwide.
What is the guaranteed minimum interest rate?
It’s 1.50% per year for amounts held in the fixed account for seven years.
Is there a minimum cap rate and minimum participation rate?
Yes. These minimum rates are set at issue. Please visit www.nationwide-elm.com or call 1-800-963-1749 for more details.
Which interest crediting method is used?
You have a choice of three methods. The three are: cap method, participation (or percentage) method, and fixed rate method. You can change your choices on a yearly basis. You have a full 30 days prior to the index crediting date to request a change to your account option. This change will take effect on the index interest crediting date, which is the end of the calendar month immediately following your contract anniversary. Please see the ELM Index Annuity tab for a complete explanation, see www.nationwide-elm.com for current rate quotes and more information, or call the ELM Index Annuity expert at 1-800-963-1749 with your questions.
Which interest crediting method is right for you?
Since that depends on what happens to the S&P 500 index in the future, it’s impossible to say which of the three interest crediting methods may be right for you. If the annual change in the index is negative, or if it’s very low, then the fixed rate method may provide the most credited interest. If the index return is very high, the participation method may produce the best results. In other cases, the cap method may produce the best results. Please see the ELM Index Annuity tab for a complete explanation, see www.nationwide-elm.com for current rate quotes and more information, or call the ELM Index Annuity expert at 1-800-963-1749.
What are the early withdrawal fees if I chose to end my contract early and take out all of my money?
Charges apply during the first seven contract years. The chart below contains the early withdrawal fee schedule.
| Year 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 & Later |
| 7% | 6% | 6% | 5% | 5% | 4% | 3% | 0% |
Can I make a partial withdrawal without paying charges?
Yes. It is possible after the first year. But, you will have to limit your annual withdrawals to 10% of the account balance in years two through seven. Thereafter there is no early withdrawal fee charged. If you are not yet 59½, you may also have to pay an additional 10% tax penalty on top of ordinary income taxes.
When is the best time to make partial withdrawals (up to 10%)?
The best time may be on a contract anniversary date, just after the index interest has been credited to an index account. Keep in mind that only the amount in the contract when the interest is credited will be accounted for when depositing the index interest credit for that year. So, for example, making withdrawals just prior to the index crediting date would lead to forfeiting interest credits on the amount withdrawn that year.
Interest is credited daily in the Fixed Account Option, so the “timing” of partial withdrawals is less important.
If you take your money out early, you may face early withdrawal fees. If you’re not yet 59½, you may also have to pay an additional 10% tax penalty on top of ordinary income taxes. Naturally, if you do take an early withdrawal, your death benefit and cash value will be reduced. Also, withdrawals or surrenders made prior to the expiration of an index period will result in no index participation for such amounts for that period.
Federal tax laws are complex and subject to change. The information in this website is based on current interpretation of the law. Neither the company nor its representatives give legal or tax advice. Please consult your attorney or tax advisor for answers to your tax questions.
What is the death benefit?
The death benefit is the greater of the contract value, or the minimum guaranteed value (assuming you die before annuitizing your contract or withdraw your entire account value).
