Destination Freedom C-Share review

It depends. This is a good annuity for someone who wants tax-deferred investing inside a variable wrapper, values being able to exit without a surrender penalty, and will use the death benefit. It is a poor fit for someone shopping for guaranteed lifetime income, since no living benefit rider is offered, and it is hard to justify for a buyer who could get similar tax deferral at lower cost or who does not need the insurance features at all.

The rational reason to buy this version is liquidity without commitment. Most variable annuities lock you into a multi-year surrender schedule, and the B-share version of this same product does exactly that with a 7/7/6/5/3/0% charge over five years. The C-share removes the surrender period entirely, so you can access your full contract value at any time subject only to ordinary taxes and any IRS early-withdrawal rules. For someone who wants tax deferral but is unwilling to tie up money, that flexibility is the whole point.

I think this is best for a buyer who has already maxed out other tax-advantaged accounts, wants additional tax deferral on investment growth, and places real value on being able to surrender at any time. It tends to make the most sense for non-qualified money, where the tax deferral is doing actual work, rather than inside an IRA that is already tax-advantaged. It is less appealing for anyone who wants guaranteed income, anyone fee-sensitive enough that the C-share charge changes the math, or anyone who would be just as well served by a low-cost taxable brokerage account.

You are buying a tax-deferred container for mutual-fund-style investing, wrapped in an insurance contract. Your money goes into variable sub-accounts that rise and fall with the markets, so there is no principal protection here at all, unlike a fixed or indexed annuity. The insurance elements are the tax deferral, the death benefit, and the option to convert to lifetime income later through annuitization. The C-share label simply means this version has no surrender charges in exchange for a higher ongoing fee, so what you are really paying for is freedom of exit plus a death benefit, not any kind of market protection.

The core of this product is its sub-account menu. Nationwide lists roughly 125 variable sub-accounts from managers including BlackRock, Fidelity, PIMCO, T. Rowe Price, and American Funds, with net fund expense ratios that the materials put in the 0.24% to 2.38% range. You allocate your premium across those funds, and your contract value moves with their performance. There is no fixed account crediting option listed in the available materials, so this is a fully market-based contract with no guaranteed-rate sleeve to fall back on. Because returns are entirely market-driven, the fund expenses you choose matter a great deal: a portfolio built from the cheapest index sub-accounts will behave very differently from one loaded with the priciest active funds once you add the contract-level fees on top.

The death benefit is the most meaningful secondary feature. The standard benefit returns the full contract value, but two optional upgrades change the picture. The Return of Premium Enhanced Death Benefit pays the greater of account value or premiums paid (adjusted for withdrawals) for 0.20% per year, and the Highest Anniversary Enhanced Death Benefit locks in the greatest of premiums, account value, or the highest anniversary value before annuitant age 80 for 0.30% per year. Both are available at issue ages 0-75. There is also a Spousal Protection Death Benefit Feature included at no cost. For a legacy-minded buyer, the highest-anniversary option in particular is a way to ratchet up the guaranteed payout to heirs even if the market later falls, which is the kind of feature that can justify the wrapper for the right person. Note that death benefits stop once the contract is annuitized.

Liquidity is this product's headline. There is no surrender charge on the C-share class, so there is no schedule to wait out. You can take up to 10% of total purchase payments each year through the standard free-withdrawal provision, and because there is no CDSC, larger withdrawals are not penalized by the contract either. RMDs are penalty-free, systematic withdrawals are available, and advisory or management fee withdrawals of up to 2% of contract value do not count against the 10% provision, which is a sensible accommodation for fee-based advisory accounts. The one thing liquidity does not erase is taxes: withdrawals of gains are taxed as ordinary income, and pre-59½ withdrawals can trigger the IRS 10% penalty. So this is liquid from the contract's standpoint, but it is still a tax-deferred annuity, not a checking account.

This is where the trade is named clearly. The base contract runs 1.00% per year (0.85% mortality and expense plus 0.15% administrative), and the C-share adds 0.35% on top for a total contract-level charge of 1.35% before fund expenses. Layer on net sub-account expenses of 0.24% to 2.38%, and an optional death benefit rider at 0.20% or 0.30%, and the all-in cost can climb well past 2% depending on how you build it. There is also a $50 annual maintenance charge that is waived once contract value reaches $50,000, and the 0.15% administrative charge is waived at $1 million or more. The honest framing is this: the 0.35% C-share fee is the price of never paying a surrender charge. If you would have held the contract through a normal surrender period anyway, that recurring fee can quietly cost you more than the surrender schedule on the B-share would have. The liquidity is real, but it is not free.

Legal Entity: Nationwide Life Insurance Company

Parent: Nationwide Mutual Insurance Company

AM Best Rating: A+