Destination Freedom B-Share review

It depends on what you want from it. As a tax-deferred accumulation vehicle with a short surrender period and a low base cost, it is competitive. As a retirement-income or principal-protection product, it is not — there is no living-benefit rider and no floor under your account value. I think the honest framing is that this is an investment account first and an annuity second, and you should judge it on that basis.

The rational reason to buy this is continued tax deferral after you have already filled up your 401(k) and IRA. You get the same kind of market exposure you would in a brokerage account, but gains compound without annual tax drag until you withdraw. The shorter 5-year surrender schedule means you are not locked in as long as a typical variable annuity buyer, and the advisory-fee carve-out (up to 2% of contract value annually withdrawn for fees without triggering surrender charges) makes it workable inside a fee-based advisory relationship.

This fits a non-qualified investor — someone funding it with after-tax dollars — who is comfortable with market risk, wants tax deferral, and does not need a guaranteed income stream. It works for a buyer who has a financial advisor managing the sub-account allocation and wants the optional enhanced death benefit for legacy purposes. It is a poor fit for anyone near or in retirement who wants predictable income, for conservative savers who cannot tolerate seeing their balance drop, or for someone who would be better served by a simpler, cheaper brokerage account if they have no use for the insurance features.

Strip away the annuity label and this is a basket of mutual-fund-like sub-accounts wrapped in an insurance contract. Your money goes into the variable sub-accounts you choose — there are 125 of them, spanning stock, bond, and balanced strategies — and your account value moves with those funds. The insurance wrapper buys you two things: tax-deferred growth and a death benefit. It does not buy you any guarantee on the investment itself. If the markets fall, your account value falls with them. The standard death benefit simply returns your contract value, so it only adds protection if you pay extra for one of the two enhanced versions.

The core feature is the variable sub-account platform. You allocate your premium across the available funds, and each carries its own net expense ratio ranging from 0.24% to 2.38% depending on what you pick. There are no indexed or structured (buffer/floor) accounts here — this is true variable participation, meaning you get the full upside and full downside of whatever funds you hold. On top of the fund expenses, the contract charges a 1.00% annual fee (0.85% mortality and expense risk charge plus a 0.15% administrative charge, with the administrative piece waived once contract value reaches $1,000,000). That base charge is on the lower end for a commission-based variable annuity, which is the most genuinely attractive thing about this contract.

The death-benefit options are the secondary story. The standard death benefit returns your contract value, which is no real protection. But you can elect one of two enhanced versions: a Return of Premium death benefit (the greater of full account value or premiums paid, adjusted for withdrawals) for 0.20% per year, or a Highest Anniversary death benefit (the greatest of premiums paid, account value, or the highest anniversary value before annuitant age 80 plus later premiums) for 0.30% per year, both available for annuitants age 0–75. The Highest Anniversary version is the one that matters in a down market, because it locks in your peak account value as the floor for what your heirs receive. There is also a Spousal Protection Death Benefit feature included at no extra cost. Electing one of the optional death benefits is also what unlocks the nursing-home and terminal-illness surrender-charge waivers — though those waivers are not available in California or New York.

You can withdraw up to 10% of total purchase payments each year without a surrender charge, but that 10% is noncumulative — unused amounts do not roll forward to later years. Withdrawals above that during the first five contract years are subject to the declining surrender charge below. Required minimum distributions are always free of surrender charges, which matters if you fund this with qualified money, and advisory or management fees of up to 2% of contract value annually can be withdrawn without triggering a charge and without counting against the 10% free-withdrawal allowance. The 5-year schedule is genuinely short for a variable annuity, and there is no market value adjustment, so you are not exposed to interest-rate-driven swings in your surrender value the way you would be with many fixed and indexed contracts.

The fee story has three layers. First, the 1.00% base contract charge, which is competitive for this category. Second, the sub-account expense ratios of 0.24% to 2.38% — your actual fund-level cost depends entirely on what you hold, and a portfolio of expensive active funds can easily double your all-in cost. Third, the optional death-benefit charge of 0.20% or 0.30% per year if you elect one. There is also a $50 annual maintenance charge, waived once contract value reaches $50,000. Stacked together, a buyer in pricier funds with the Highest Anniversary death benefit could be paying north of 2% per year, which is a meaningful drag on a product whose only structural advantage over a taxable brokerage account is tax deferral. The trade to weigh is whether the deferral and the death-benefit floor are worth that ongoing cost — and for a buyer with no estate-planning motive and a long enough horizon, they often are not.

Legal Entity: Nationwide Life Insurance Company

Parent: Nationwide Mutual Insurance Company

AM Best Rating: A+