NU Online News Service, Feb. 24, 2005, 12:20 p.m. EST

A Columbus, Ohio, company is introducing a new option for variable annuity buyers.[@@]

The company, Nationwide Financial Services Inc., says its new Capital Preservation Plus Lifetime Income rider combines capital protection with income protection.

During an initial “capital preservation phase,” which can last for 5, 7 or 10 years, Nationwide will guarantee return of principal.

At the end of the capital preservation phase, investors can start a new capital preservation phase, or they can enter a “lifetime withdrawals” phase. During the lifetime withdrawals phase, an annuity holder can withdraw “between 4% and 7% of an amount guaranteed for life (based on age at first withdrawal),” Nationwide says.

Holders who use the lifetime withdrawal option can keep making withdrawals even after their full principal has been returned and if their contract value is 0, Nationwide says.

Annuity holders also can decide to annuitize at the end of the capital preservation phase or to drop the rider entirely.

Withdrawals will reduce the contract value and death benefit, and the rider carries a 0.60% charge, Nationwide says.

Nationwide will issue the rider and the underlying annuities through its Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company units. The life insurers are responsible for backing the product guarantees.

Nationwide plans to sell the rider through financial institutions, stockbrokers and independent broker-dealers as well as through its own agents.