5 The Cost of Insurance per $1,000 of Net Amount At Risk Charge varies according the Insured's sex classification (male, female or unisex), age, underwriting class, tobacco use, Substandard Ratings and the number of years from the Policy Date, or effective date of a Total Specified Amount increase. The Cost of Insurance per $1,000 of Net Amount At Risk for the base policy may be different than the Cost of Insurance per $1,000 of Net Amount At Risk for the Supplemental Insurance Rider. The maximum charge assumes: the Insured is male, Issue Age 75, standard tobacco, and policy year 36. Other sets of assumptions may also produce the maximum charge. The minimum charge assumes: the Insured is female, Issue Age 24, standard non-tobacco preferred, and policy year 1. Other sets of assumptions may also produce the minimum charge. The charges shown may not be representative of the charges that a particular policy owner may pay. For a detailed description of the Cost of Insurance per $1,000 of Net Amount At Risk Charge see the "Cost of Insurance Charge" sub-section of the "Policy and Rider Charges" section of this prospectus.
6 The Supplemental Insurance Rider Cost of Insurance per $1,000 of Net Amount At Risk Charge will only be assessed if you purchase this optional Rider. The Supplmental Insurance Rider Cost of Insurance per $1,000 of Net Amount At Risk varies according to the Insured's sex classification (male, female or unisex), age, underwriting class, tobacco use, Substandard Ratings, and the number of years from the Policy Date, or effective date of a Total Specified Amount increase. The maximum charge assumes: the Insured is male, Issue Age 75, standard tobacco, and policy year 42. Other sets of assumptions may also produce the maximum charge. The minimum charge assumes: the Insured is female, Issue Age 25, standard non-tobacco preferred, and policy year 1. Other sets of assumptions may also produce the minimum charge. The charges shown may not be representative of the charges that a particular policy owner may pay. For a detailed description of the Supplemental Insurance Rider Cost of Insurance per $1,000 of Net Amount At Risk Charge see the "Rider Charges" sub-section of the "Policy and Rider Charges" section of this prospectus.
7 The Flat Extra is a component in the calculation of the base policy Cost of Insurance per $1,000 of Net Amount At Risk Charge and any Supplemental Insurance Rider Cost of Insurance per $1,000 of Net Amount At Risk Charge. It is only applicable if certain factors result in an Insured having a Substandard Rating. For additional information, refer to the "Cost of Insurance" sub-section of the "Policy and Rider Charges" section of this prospectus.
8 The Per $1,000 of Specified Amount Charge is only assessed on the Base Specified Amount. A different charge will be applied for any Rider Specified Amount under the Supplemental Insurance Rider. The Per $1,000 of Specifed Amount Charge varies by policy based on the length of time the policy has been In Force. The maximum charge applies to all policy years. The representative charge applies to policy years 1 through 20. The minimum charge assumes: policy year 21 and beyond. The charges shown may not be representative of the charges that a particular policy owner may pay. For a more detailed description of the charge, including a complete schedule of charges, see the "Per $1,000 of Specified Amount" sub-section of the "Policy and Rider Charges" section of this prospectus. For policies purchased in the state of New York, the maximum charge is $0.085 Per $1,000 of Base Specified Amount.
9 The Supplemental Insurance Rider Per $1,000 of Specified Amount Charge is only assessed on the Rider Specified Amount. A different and separate charge will be applied for any Base Specified Amount under the policy. The Supplemental Insurance Rider Per $1,000 of Specified Amount Charge varies by policy based on the length of time the policy has been In Force and the Base Specified Amount. The maximum charge applies to all policy years. The representative charge applies to policy years 1 through 20. The minimum charge assumes: policy year 21 and beyond. The charges shown may not be representative of the charges that a particular policy owner may pay. For a more detailed description of the charge, including a complete schedule of charges and an example of how the Supplemental Rider Per $1,000 of Specified Amount Charge is blended with the base policy Per $1,000 of Specified Amount Charge, see the "Supplemental Insurance Rider Per $1,000 of Specified Amount Charge" in the "Rider Charges" sub-section of the "Policy and Rider Charges" section of this prospectus. For policies purchased in the state of New York, the maximum charge is $0.085 Per $1,000 of Rider Specified Amount.
10 The Variable Account Asset Charge varies by policy based on the amount of Cash Value allocated to the Sub-Accounts. The maximum Variable Account Asset Charge shown in the table reflects the maximum that may be charged in any policy month based on any dollar amount allocated to the Sub-Accounts.
11 For more information, see the "Net Effect of Policy Loans" sub-section of the "Policy Loans" section of this prospectus.
You designate how your Net Premium payments are allocated among the Sub-Accounts and/or the fixed investment option. Allocation instructions must be in whole percentages and the sum of the allocations must equal 100%.
Fixed Investment Option
There is currently one fixed investment option available under the policy: the fixed account. Net Premium that is allocated to the fixed investment option is held in the fixed account, which is part of our general account. Except as provided in the "Right of Conversion" sub-section of "The Policy" section, we reserve the right to limit allocations to the fixed account to no more than 25% of the policy's Cash Value.
The general account is not subject to the same laws as the separate account. The SEC has not reviewed the disclosures in this prospectus relating to the fixed account.
The general account contains all of our assets other than those in the separate account, and funds the fixed account. These assets are subject to our general liabilities from business operations and are used to support our insurance and annuity obligations. We bear the full investment risk for all amounts allocated to the fixed account. The amounts allocated to the fixed account will not share in the investment performance of our general account. Rather, the investment income earned on your allocation to the fixed account will be based on varying interest crediting rates that we set.
We guarantee that the amounts you allocate to the fixed account will be credited interest daily at a net effective annual interest rate of no less than 2%. Interest crediting rates are set at the beginning of each calendar quarter, but are subject to change at any time, in our sole discretion. We will credit any interest in excess of the guaranteed interest crediting rate at our sole discretion. You assume the risk that the actual interest crediting rate may not exceed the guaranteed interest crediting rate. Premiums applied to the policy at different times may receive different interest crediting rates. Interest that we credit to the fixed account may be insufficient to pay the policy's charges.
It is important to remember any guaranteed benefits or interest crediting associated with the fixed account is subject to our claims paying ability.
Variable Investment Options
The variable investment options available under the policy are Sub-Accounts that correspond to mutual funds that are registered with the SEC. The mutual funds' registration with the SEC does not involve the SEC's supervision of the management or investment practices or policies of the mutual funds. The mutual funds listed are designed primarily as investments for variable annuity contracts and variable life insurance policies issued by insurance companies.
We may offer additional underlying mutual funds, or a different set of underlying mutual funds, through specific distribution arrangements. Examples of these arrangements include, but are not limited to, distribution through broker-dealer firms or financial institutions. These distribution arrangements may be exclusive or non-exclusive.
Underlying mutual funds in the variable account are NOT publicly traded mutual funds. They are only available as investment options in variable life insurance policies or variable annuity contracts issued by life insurance companies, or in some cases, through participation in certain qualified pension or retirement plans.
The investment advisers of the underlying mutual funds may manage publicly traded mutual funds with similar names and investment objectives. However, the underlying mutual funds are NOT directly related to any publicly traded mutual fund. Policy owners should not compare the performance of a publicly traded fund with the performance of an underlying mutual fund participating in the separate account. The performance of the underlying mutual funds could differ substantially from that of any publicly traded funds.
The particular underlying mutual funds available under the policy may change from time to time. Specifically, underlying mutual funds or underlying mutual fund share classes that are currently available may be removed or closed off to future investment. New underlying mutual funds or new share classes of currently available underlying mutual funds managed by certain financial institutions, brokerage firms or their affiliates may be added to the separate account. These additional underlying mutual funds may be offered exclusively to purchasing customers of the particular financial institution or brokerage firm, or through other exclusive distribution arrangements. Policy owners will receive notice of any such changes that affect their policy investment options.
Additional underlying mutual funds
Each Sub-Account's assets are held separately from the assets of the other Sub-Accounts, and each Sub-Account portfolio has investment objectives and policies that are different from those of the other Sub-Accounts. The result is that each Sub-Account operates independently of the other Sub-Accounts so the income or losses of one Sub-Account will not affect the Investment Experience of any other Sub-Account.
The Sub-Accounts available through this policy invest in underlying mutual funds of the companies listed below. For a complete list of the available Sub-Accounts, see "Appendix A: Sub-Account Information." Appendix A also contains information about the underlying mutual fund a Sub-Account invests in, including its investment objective, adviser, and sub-adviser, if applicable. For more information on the underlying mutual funds, please refer to the prospectus for the mutual fund.
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AllianceBernstein Variable Products Series Fund, Inc.
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American Century Variable Portfolios, Inc.
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American Funds Insurance Series
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BlackRock Variable Series Funds, Inc.
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Davis Variable Account Fund, Inc.
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Dreyfus Investment Portfolios
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Dreyfus Variable Investment Fund
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Federated Insurance Series
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Fidelity Variable Insurance Products Fund
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Franklin Templeton Variable Insurance Products Trust
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Ivy Funds Variable Insurance Portfolios, Inc.
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Lazard Retirement Series, Inc.
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Legg Mason Partners Variable Equity Trust
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Lincoln Variable Insurance Products Trust
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MFS® Variable Insurance Trust
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MFS® Variable Insurance Trust II
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Nationwide Variable Insurance Trust
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Neuberger Berman Advisers Management Trust
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Oppenheimer Variable Account Funds
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PIMCO Variable Insurance Trust
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Pioneer Variable Contracts Trust
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T. Rowe Price Equity Series, Inc.
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The Universal Institutional Funds, Inc.
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Van Eck Variable Insurance Products Trust
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Wells Fargo Advantage Funds
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We account for the value of a policy owner's interest in the Sub-Accounts by using Accumulation Units. The value of each Accumulation Unit varies daily based on the Investment Experience of the underlying mutual fund in which the Sub-Account invests. We use each underlying mutual fund's Net Asset Value ("NAV") per share to calculate the daily Accumulation Unit value for the corresponding Sub-Account. Note, however, that the Accumulation Unit value will not equal the underlying mutual fund's NAV. This daily Accumulation Unit valuation process is referred to as "pricing" the Accumulation Units. See, the "How Sub-Account Investment Experience is Determined" sub-section below for a description of how the number of Accumulation Units representing a policy owner's interest is determined and how they are priced.
Accumulation Units are priced as of the New York Stock Exchange's ("NYSE") close of business, normally 4:00 p.m. Eastern Time, on each day that it is open for business. Any transaction submitted on a day when the NYSE is closed or after it has closed for the day, will be priced as of the next Valuation Period that the NYSE is open for business. Accordingly, we will not price Accumulation Units on these recognized holidays:
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●New Year's Day
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●Independence Day
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●Martin Luther King, Jr. Day
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●Labor Day
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●Presidents' Day
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●Thanksgiving Day
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●Good Friday
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●Christmas
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●Memorial Day
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In addition, we will not price Accumulation Units if:
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trading on the NYSE is restricted;
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(2)
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an emergency exists making disposal or valuation of securities held in the separate account impracticable; or
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(3)
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the SEC, by order, permits a suspension or postponement for the protection of security holders.
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SEC rules and regulations govern when the conditions described in items (2) and (3) exist.
How Sub-Account Investment Experience is Determined
A policy owner's variable account value is based on their allocations to the Sub-Accounts. Sub-Account allocations are accounted for in Accumulation Units. A policy owner's interest in the Sub-Accounts is represented by the number of Accumulation Units they own. The number of Accumulation Units associated with a given Sub-Account allocation is determined by dividing the dollar amount allocated to the Sub-Account by the Accumulation Unit value for the Sub-Account. The number of Accumulation Units you own in a Sub-Account will not change except when Accumulation Units are redeemed to process a requested surrender, transfer, loan, or to take policy charges, or when additional Accumulation Units are purchased with Premium and loan repayments.
Initially, we set the Accumulation Unit value at $10 for each Sub-Account. Thereafter, the daily value of Accumulation Units in a Sub-Account will vary depending on the Investment Experience of the underlying mutual fund in which the Sub-Account invests. We account for these performance fluctuations by using a "net investment factor" in our daily Sub-Account valuation calculations. Changes in the net investment factor may not be directly proportional to changes in the NAV of the mutual fund shares. We determine the net investment factor for each Sub-Account on each Valuation Period by dividing (a) by (b), where:
(a) is the sum of:
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the NAV per share of the mutual fund held in the Sub-Account as of the end of the current Valuation Period; and
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the per share amount of any dividend or income distributions made by the mutual fund (if the date of the dividend or income distribution occurs during the current Valuation Period); plus or minus
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a per share charge or credit for any taxes reserved for as a result of the Sub-Account's investment operations if changes to the law result in a modification to the tax treatment of the separate account; and
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(b)
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is the NAV per share of the mutual fund determined as of the end of the immediately preceding Valuation Period.
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At the end of each Valuation Period, we determine the Sub-Account's Accumulation Unit value. The Accumulation Unit value for any Valuation Period is determined by multiplying
the Accumulation Unit value as of the prior Valuation Period by the net investment factor for the Sub-Account for the current Valuation Period.
Sub-Account Transfers
Policy owners may request transfers to or from the Sub-Accounts once per Valuation Period, subject to the terms and conditions described in this prospectus and the prospectuses of the underlying mutual funds. Transfers will be implemented by redeeming Accumulation Units from the Sub-Account(s) indicated by the policy owner and using the redemption proceeds to purchase Accumulation Units in another Sub-Account(s) as directed by you. The net result is that your Cash Value will not change (except due to standard market fluctuations), but the number and allocation of Accumulation Units within the policy will change.
Neither the policies nor the mutual funds are designed to support active trading strategies that require frequent movement between or among Sub-Accounts (sometimes referred to as "market-timing" or "short-term trading"). If you intend to use an active trading strategy, you should consult your registered representative and request information on other Nationwide policies that offer mutual funds that are designed specifically to support active trading strategies.
We discourage, and will take action to deter, short-term trading in this policy because frequent movement between or among Sub-Accounts may negatively impact other investors in the policy. Short-term trading can result in:
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the dilution of the value of the investors' interests in the mutual fund;
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mutual fund managers taking actions that negatively impact performance (i.e., keeping a larger portion of the mutual fund assets in cash or liquidating investments prematurely in order to support redemption requests); and/or
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increased administrative costs due to frequent purchases and redemptions.
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To protect investors in this policy from the negative impact of these practices, we have implemented, or reserve the right to implement, several processes and/or restrictions aimed at eliminating the negative impact of active trading strategies. We cannot guarantee that our attempts to deter active trading strategies will be successful. If active trading strategies are not successfully deterred by our actions, the performance of Sub-Accounts that are actively traded will be adversely impacted. Policy owners remaining in the affected Sub-Account will bear any resulting increased costs.
U.S. Mail Restrictions. We monitor transfer activity in order to identify those who may be engaged in harmful trading practices. Our procedures include the review of policy transfer activity. If two or more transfer events are submitted within a thirty-day period, we may impose conditions on a policy owner's ability to submit transfers. These restrictions include revoking the privilege to make trades by any means other than written communication submitted via U.S. mail for a twelve-month period.
Other Restrictions. We reserve the right to refuse or limit transfer requests, or take any other action we deem necessary, in order to protect policy owners and Beneficiaries from the negative investment results that may result from short-term trading or other harmful investment practices employed by some policy owners (or third parties acting on their behalf). In particular, trading strategies designed to avoid or circumvent Nationwide's monitoring procedures (and other measures aimed at curbing harmful trading practices) may be restricted if they are determined by us to constitute harmful trading practices.
Any restrictions that we implement will be applied consistently and uniformly. In the event a restriction we impose results in a transfer request being rejected, we will notify you that your transfer request has been rejected.
Underlying Mutual Fund Restrictions and Prohibitions. Pursuant to regulations adopted by the SEC, we are required to enter into written agreements with the underlying mutual funds which allow the underlying mutual funds to:
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request the taxpayer identification number, international taxpayer identification number, or other government issued identifier of any of our policy owners;
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(2)
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request the amounts and dates of any purchase, redemption, transfer or exchange request ("transaction information"); and
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(3)
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instruct us to restrict or prohibit further purchases or exchanges by policy owners that violate policies established by the underlying mutual fund (whose policies may be more restrictive than our policies).
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We are required to provide such transaction information to the underlying mutual funds upon their request. In addition, we are required to restrict or prohibit further purchases or exchange requests upon instruction from the underlying mutual fund. We and any affected policy owner may not have advance notice of such instructions from an underlying mutual fund to restrict or prohibit further purchases or exchange requests. If an underlying mutual fund refuses to accept a purchase or exchange request submitted by us, we will keep any affected policy owner in their current underlying mutual fund allocation.
Fixed Account Transfers
Prior to the policy's Maturity Date, you may make transfers involving the fixed investment option (the fixed account). These transfers will be in dollars. We reserve the right to limit the frequency of transfers involving the fixed account.
Transfers to the Fixed Account. On transfers to the fixed account, we may prohibit you from transferring more than 25% of the Cash Value allocated to the Sub-Accounts as of the close of business on the prior Valuation Period. Additionally, we reserve the right to refuse any transfer to the fixed account if the Cash Value allocated to the fixed account comprises
more than 25% of the policy's Cash Value.
Transfers from the Fixed Account. On transfers from the fixed account, we reserve the right to limit the amount you can transfer from the fixed account to the Sub-Account(s) to the greater of: (a) 10% of that portion of the Cash Value attributable to the fixed account as of the end of the previous policy year; or (b) 120% of the amount transferred from the fixed account during the previous policy year. We may also limit you to one transfer from the fixed account to the Sub-Accounts during any ninety day period.
Any restrictions that we implement will be applied consistently and uniformly.
Submitting a Transfer Request
You can submit transfer requests in writing to our Home Office via first class U.S. Mail. We may also allow you to use other methods of communication that we deem acceptable, such as fax or computer data feed. Our contact information is on the first page of this prospectus. We will use reasonable procedures to confirm that transfer instructions are genuine and will not be liable for following instructions that we reasonably determine to be genuine.
In addition, any computer system can experience slowdowns or outages that could delay or prevent our ability to process your request. Although we have taken precautions to help our systems handle heavy usage, we cannot promise complete reliability under all circumstances. If you are experiencing problems, please make your transfer request in writing.
When we receive your transfer request, it will be processed at the end of the current Valuation Period. This is when the Accumulation Unit value will be determined. For more information regarding valuation of Accumulation Units, see the "Valuation of Accumulation Units" sub-section of the "Policy Investment Options" section of this prospectus.
Generally
The policy is a legal contract. It will comprise and be evidenced by: a written contract; any Riders; any endorsements; the Policy Data Pages; and the application, including any supplemental application. This prospectus discloses all material provisions of the policy. In addition to the terms and conditions of the policy, policy owner rights are governed by this prospectus and protected by federal securities laws and regulations. The benefits described in the policy and this prospectus, including any optional Riders or modifications in coverage, may be subject to our underwriting and approval. We will consider the statements you make in the application as representations, and we will rely on them as being true and complete. However, we will not void the policy or deny a claim unless a statement is a material misrepresentation. If you make an error or misstatement on the application, we will adjust the Death Benefit (including the Death Benefit of the Supplemental Insured Rider, if applicable) and Cash Value accordingly.
Operation of the policy, optional Riders, programs, benefits and features described in this prospectus may vary by the state where the policy is issued. In addition, some optional Riders, programs and features may not be available or approved for use in every state. For additional information regarding availability and provisions that vary by state, please see "Appendix E: State Variations" later in this prospectus.
Any modification or waiver of our rights or requirements under the policy must be in writing and signed by our president or corporate secretary. No agent may bind us by making any promise not contained in the policy.
We may modify the policy, our operations, or the separate account's operations to meet the requirements of any law or regulation issued by a government agency to which the policy, our company, or the separate account is subject. We may modify the policy to assure that it continues to qualify as a life insurance contract under the federal tax law. We will notify you of all modifications and we will make appropriate endorsements to the policy.
The policy is nonparticipating, meaning that we will not be contributing any operating profits or surplus earnings toward the policy Proceeds.
To the extent permitted by law, policy benefits are not subject to any legal process on the part of a third-party for the payment of any claim, and no right or benefit will be subject to the claims of creditors (except as may be provided by assignment).
It is important to remember the portion of any amounts allocated to our general account and any guaranteed benefits we may provide under the policy exceeding the value of amounts held in the separate account are subject to our claims paying ability.
In order to comply with the USA Patriot Act and rules promulgated thereunder, Nationwide has implemented procedures designed to prevent policies described in this prospectus from being used to facilitate money laundering or the financing of terrorist activities.
Use of the Policy
The policy provides policy owners, such as corporations or individuals, life insurance on an employee or other person upon whose life they have an insurable interest, including themselves. This policy may be used in connection with various types of executive and employee benefit plans. When purchased in connection with such benefit plans, this policy may qualify for non-medical underwriting. For more information regarding non-medical underwriting, see the "Cost of Insurance Charge" sub-section of the "Policy and Rider Charges" section of this prospectus.
Policy Owner and Beneficiaries
Policy Owner. The policy belongs to the owner named in the application. You, as policy owner, may exercise all policy rights and options while the policy is In Force. You may also change the policy, but only in accordance with its terms. You may name a contingent owner who will become the policy owner if the policy owner dies or ceases to be in existence
before the Proceeds become payable. If a contingent owner is not designated, ownership will pass to your estate, if you are not the Insured.
Policy Owner Rights. Subject to our approval, you may exercise all policy rights in accordance with policy terms while the policy is In Force. These rights include, but are not limited to, the following:
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changing the policy owner, contingent owner, and Beneficiary;
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assigning, exchanging and/or converting the policy;
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requesting transfers, policy loans, and partial surrenders or a complete surrender; and
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changing insurance coverage such as death benefit option changes, adding or removing riders, and/or increasing or decreasing the Total Specified Amount.
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These rights are explained in greater detail throughout this prospectus.
You may name different policy owners or contingent owners while the policy is In Force by submitting a written request satisfactory to us to our Home Office. Any such change request will become effective as of the date signed. However, it will not affect any payment made or action taken by us before the change was recorded by us. There may be adverse tax consequences to changing parties of the policy.
Beneficiaries. The principal right of a Beneficiary is to receive the Death Benefit Proceeds upon the Insured's death, if the Insured dies while the policy is In Force. You designate the Beneficiary(ies) in the application. As long as the policy is In Force, you may: name more than one Beneficiary, designate primary and contingent Beneficiaries, change or add Beneficiaries, and/or direct us to distribute the Proceeds other than as described below.
If a primary Beneficiary dies or ceases to be in existence before the Insured's death, we will pay the Death Benefit Proceeds to the remaining surviving primary Beneficiaries. Unless you specify otherwise, we will pay multiple primary Beneficiaries in equal shares. A contingent Beneficiary will become the primary Beneficiary if all primary Beneficiaries die or cease to be in existence before the Insured's death and before any Proceeds become payable. You may name more than one contingent Beneficiary. Unless you specify otherwise, we will pay multiple contingent Beneficiaries in equal shares. If no Beneficiary or contingent Beneficiary is alive or in existence upon the Insured's death, the Proceeds will be payable to the policy owner.
To change or add Beneficiaries, you must submit a written request satisfactory to us to our Home Office. A change request will be effective as of the date signed. However, it will not affect any payment made or action taken by us before the change was recorded by us. We may also require that you send us your policy for endorsement before we record the change.
Purchasing a Policy
The policy is available for Insureds between the age of 18 and Issue Age 85. To purchase the policy, you must submit to us a completed application and the required initial Premium payment as stated on the Policy Data Page.
We must receive evidence of insurability that satisfies our underwriting standards (this may require a medical examination) before we will issue a policy. We can provide you with the details of our underwriting standards upon request. Our contact information is on page 1 of this prospectus. We reserve the right to reject an application for any reason permitted by law and we reserve the right to modify our underwriting standards on a prospective basis for newly issued policies at any time.
The minimum initial Total Specified Amount is $50,000. We reserve the right to modify the minimum Total Specified Amount on a prospective basis for newly issued policies at any time.
Initial Premium Payment The initial Premium payment is due on the Policy Date. Any due and unpaid policy charges will be subtracted from the initial Premium payment. Insurance coverage will not be effective until the initial Premium is paid, even if the Policy Date precedes the date the initial Premium is paid. The initial Premium may be paid to our Home Office or to our authorized representative. The minimum initial Premium payment is shown on the Policy Data Page. The initial Premium payment will not be applied to the policy until the underwriting process is complete.
The amount of the required minimum initial Premium payment for a particular policy will depend on the following factors: the Total Specified Amount, Death Benefit option elected, any Riders elected, the Insured's age, health, and activities.
Depending on the right to examine law of the state or territory in which the policy was issued, initial Net Premium designated to be allocated to the Sub-Accounts may not be allocated immediately upon our receipt. Any initial Net Premium designated to be allocated to the fixed investment option will be allocated immediately upon receipt. If the policy is issued in a state that requires us to refund the initial Premium upon exercise of the free look provision, we will hold all of the initial Net Premium designated to be allocated to the Sub-Accounts in the available money market Sub-Account until the free look period expires. At the expiration of the free look period, we will transfer the variable account Cash Value to the Sub-Accounts based on the allocation instructions in effect at the time of the transfer. If the policy is issued in a state that allows us to refund the Cash Value upon the exercise of the free look provision, we will allocate all of the initial Net Premium, based upon the allocation instructions in effect at that time, to the designated Sub-Accounts at the end of the current Valuation Period.
Insurance Coverage Effective Date. Unless the policy is issued pursuant to an exchange under Section 1035 of the Code, issuance of full insurance coverage occurs on the latest of:
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the date we certify that the complete application materials have been submitted by you and the
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underwriting conditions have been satisfied;
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the date the initial Premium is received at our Home Office.
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If the policy is issued as a result of an exchange under Section 1035 of the Code, issuance of full insurance coverage occurs on the later of:
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the date the insurance carrier of the exchanged policy authorizes payment of such policy's proceeds to us; or
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the date we certify that the complete application materials have been submitted and the underwriting conditions have been satisfied, provided there is sufficient Premium to pay policy charges for at least three months.
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We have the right to reject any application for insurance. If an application is rejected, we will return the Premium to you within two business days of the date the decision to reject an application is made.
With respect to policy reinstatement, the effective date of coverage will be the monthly anniversary of the Policy Date on or next following the date we approve the reinstatement.
With respect to Base Specified Amount or Rider Specified Amount increases, an approved increase will have an effective date of the monthly anniversary of the Policy Date on or next following the date we approve the supplemental application unless you request and we approve a different date. With respect to any decrease in coverage, the effective date of coverage will be the monthly anniversary of the Policy Date that falls on or next following the date we receive your request.
Insurance coverage will end upon the occurrence of any of the following: you request in writing to terminate coverage, the Insured dies, we pay the Maturity Proceeds, the Grace Period ends, or you surrender the Policy in full.
Right to Cancel (Free Look Period)
For a limited time, commonly referred to as the "free look" period, you may cancel the policy and receive a refund. The free look period expires on the latest of: (i) ten days after you receive the policy (or longer if required by state law); (ii) forty-five days after the application for the policy is signed; or (iii) ten days after we deliver you a "Notice of Withdrawal Right". If you decide to cancel during the free look period, return the policy to the sales representative who sold it, or to us at our Home Office, along with your written cancellation request. Your written request must be received or post-marked by the last day of the free look period. When you cancel the policy during the free look period, the amount we refund will be the policy's Cash Value or in certain states, the greater of the policy's Cash Value or the initial Premium payment. If the policy is not cancelled during the free look period, then you will forfeit any right to cancel the policy free of charge. Within seven days of a cancellation request, we will refund the amount prescribed by law. If the policy is canceled, we will treat the policy as if it was never issued.
Premium Payments
This policy does not require a payment of a scheduled Premium amount to keep it In Force. It will remain In Force as long as the policy's Cash Value is sufficient to pay the monthly policy charges, including any Rider charges. If the Cash Value is not sufficient to pay the monthly charges, you must pay additional Premium to keep the policy In Force and prevent it from Lapsing. Before the policy Lapses, you will be afforded a sixty-one day Grace Period to make a Premium payment. At the beginning of the Grace Period, we will send a notice to you that will indicate the amount of Premium required to keep your policy In Force. All Premium payments must be sent to our Home Office. Each Premium payment must be at least $25. Upon request, we will furnish Premium payment receipts.
You may make additional Premium payments at any time while the policy is In Force and prior to the Maturity Date, subject to the following:
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we may require satisfactory evidence of insurability before accepting any additional Premium payment that results in an increase in the policy's Net Amount At Risk;
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we may require that policy Indebtedness be repaid before we accept any additional Premium payments;
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we will refund Premium payments that exceed the applicable premium limit established by the IRS to qualify the policy as a contract for life insurance; and
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we will monitor Premiums paid and will notify you when the policy is in jeopardy of becoming a modified endowment contract. For more information regarding modified endowment contracts, see "Periodic Withdrawals, Non-Periodic Withdrawals and Loans" sub-section of the "Taxes" section of this prospectus.
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Premium payments will be allocated according to the allocation instructions in effect at the time the Premium is received.
Cash Value
We will determine the Cash Value at least monthly. At the end of any given Valuation Period, the Cash Value is equal to the sum of:
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the value of the Accumulation Units allocated to the Sub-Accounts;
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amounts allocated to the fixed account, including credited interest; and
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amounts allocated to the policy loan account, including credited interest.
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The Cash Value will fluctuate daily and there is no guaranteed Cash Value. Accordingly, if the Cash Value is a factor in calculating a benefit associated with the policy, the value of that benefit will also fluctuate. The loan account is part of our
General Account and will not be affected by the Investment Experience of the Sub-Accounts. While they are both part of our General Account, the fixed account and the loan account may be credited interest at different rates. If the policy is surrendered, the Cash Value will be reduced by the amount of any Indebtedness.
Enhancement Benefit
An Enhancement Benefit is included in the policy. The Enhancement Benefit is a dollar amount that is added to the Cash Value when there is a complete surrender of the policy, unless the surrender is being made pursuant to a Section 1035 exchange. The Enhancement Benefit is not credited on amounts attributable to policy loans or partial surrenders. The Enhancement Benefit is essentially a partial return of policy charges assessed. In most instances, the Enhancement Benefit will not exceed the sum of all charges assessed on the policy.
The Enhancement Benefit is available for the first six policy years.
The Enhancement Benefit is calculated monthly and is equal to the product of (a) and the Cash Value, not to exceed the product of (b) and (c), where:
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(a)= the Enhancement Percentage;
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(b)= the Enhancement Cap Percentage; and
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(c)= Cumulative Percent of Premium Charge.
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The percentages used in the Enhancement Benefit calculation decline after the first policy year. The benefit decreases to zero at the end of the sixth policy year. See "Appendix C: Factors Used in Calculating the Enhancement Benefit" of this prospectus for a list of beginning and ending factors for each policy year the Enhancement Benefit is in effect.
The Enhancement Benefit is paid from our general account at the time the policy is completely surrendered. As a general account obligation, the Enhancement Benefit is not part of the variable account and is an obligation of Nationwide. This means the Enhancement Benefit, including your right to receive payment, is subject to our claims paying ability and any claim to payment of the Enhancement Benefit may be subordinate to other claims on our general account in the event we are insolvent. We reserve the right to postpone payment of the Enhancement Benefit for up to six months from the date of a surrender request.
Changing the Amount of Insurance Coverage
You may request to change the Base Specified Amount. However, no change will take effect unless the Cash Surrender Value would be sufficient to keep the policy In Force for at least three months. Changes to the Base Specified Amount will typically alter the Death Benefit. Changes to the Base Specified Amount will become effective on the next monthly policy anniversary after we approve the request unless you request and we approve a different date. We reserve the right to limit the number of Base Specified Amount changes to one increase and one decrease each policy year.
Increases. To increase the Base Specified Amount, you must submit a written request to our Home Office and provide us with evidence of insurability that satisfies our underwriting standards. The Insured must be Attained Age 85 or younger at the time of the request. Any request to increase the Base Specified Amount must be at least $10,000 and the Base Specified Amount after the increase may not exceed the Maximum Death Benefit. We apply requests to increase Base Specified Amount in proportion it bears to Total Specified Amount. This means if a policy has the Supplemental Insurance Rider, all increases will be done proportionally between the policy's Base Specified Amount and Rider Specified Amount. You may not elect how to allocate increases in Total Specified Amount after the Policy Date. An increase in the Base Specified Amount may cause an increase in the Net Amount At Risk. Because the Cost of Insurance Charge is based on the Net Amount At Risk, and because there will be a separate cost of insurance rate for the increase, this will usually cause the policy's Cost of Insurance Charge to increase. An increase in the Base Specified Amount may require you to make larger or additional Premium payments in order to avoid Lapsing the policy.
Decreases. To decrease the Base Specified Amount, you must submit a written request to our Home Office. You may request to decrease the Base Specified Amount any time after the first policy year. We apply Base Specified Amount decreases to the most recent Base Specified Amount increase, and continue applying the decrease backwards, ending with the original Base Specified Amount. Decreases to the Base Specified Amount may decrease policy charges calculated per $1,000 of Specified Amount or Net Amount At Risk (including any Rider charges), depending on the death benefit option elected and the amount of the Cash Value. We will deny any request to reduce the Base Specified Amount below the minimum Total Specified Amount shown on the Policy Data Page. We will also deny any request that would disqualify the policy as a contract for life insurance.
At any time, you may elect by written request to transfer 100% of the policy's Cash Value allocated to the variable Sub-Accounts into the fixed account without regard to any restrictions otherwise applicable to such transfers. For more information on fixed account restrictions, see the "Fixed Account Transfers" sub-section under the "Transfers Among and Between the Policy Investment Options" section. To invoke this right, you must submit a request to our Home Office on our specified forms. This election is irrevocable.