GONZALES, Precious Jannele B.

Quantitative Techniques in Business

31-BSA-01 8:00 AM 9:30 AM (TTh)

Annuities

An annuity is a contractual financial product sold by financial institutions that is designed to accept and
grow funds from an individual and then, upon annuitization, pay out a stream of payments to the
individual at a later point in time. The period of time when an annuity is being funded and
before payouts begin is referred to as the accumulation phase. Once payments commence, the contract is
in the annuitization phase.

How do annuities work?

Nationwide's annuities are flexible so you can choose one that enables you to:

Invest a lump sum or invest over a period of time

Start receiving payments immediately or at some later date
Select a fixed, variable or indexed rate of return
Investing involves risk and may lose value. All guarantees and protections are subject to the claims
paying ability of the issuing company, but the guarantees do not apply to any variable accounts
which involve investment risk and possible loss of principal.

Types of Annuities

Whether your needs are immediate or long-term, you can choose the type of annuity whose features work
for your situation:

Variable With a variable annuity, you choose investments and earn returns based on how those
investments perform. You can choose investments that offer different levels of risk and potential growth,
depending on your investment goals and tolerance for risk.

Immediate An immediate annuity is usually purchased with a lump-sum and guaranteed income starts
almost immediately. Your investment converts into a guaranteed stream of income that is irrevocable
once payments begin. In some situations, funds can be accessed, but some restrictions apply.

Fixed With fixed annuities, the principal investment and earnings are both guaranteed and fixed
payments are made for the term of the contract.

Fixed Indexed This special class of annuities yields returns on contributions based on a specified equity-
based index, such as the S&P 500.