Destination Future review

Depends. It is a reasonable variable annuity for someone who genuinely wants market exposure inside a tax-deferred shell and values the optional living-benefit rider. It is not a good fit for someone seeking principal protection, a simple product, or the lowest possible all-in cost, since fund-level expenses and rider fees can push the total well past 2% once everything is layered on.

The main reason to buy Destination Future is tax-deferred growth with real market participation and the option to later guarantee a lifetime income stream. Someone who has maxed out other tax-advantaged accounts and wants to keep investing on a tax-deferred basis is the natural buyer. The optional Lifetime Income Rider adds an 8% simple roll-up on the income base, which appeals to a buyer who wants future income certainty while still investing in the market. The death-benefit riders give a second reason: locking in account-value highs or premium return for heirs.

I think this is best for a Merrill Lynch client in the accumulation phase, roughly mid-50s to mid-60s, who has a moderate-to-higher risk tolerance and wants tax deferral beyond what IRAs and 401(k)s allow. It works for a non-qualified buyer specifically, since the tax deferral is most valuable outside a retirement account that is already tax-advantaged. It is less attractive for a conservative buyer who cannot stomach principal loss, for someone who wants a low-cost product, or for anyone outside the Merrill Lynch channel, who simply cannot purchase it.

You are not buying a principal-protected annuity. You are buying a tax-deferred investment account with optional insurance guarantees layered on top. Your money goes into variable subaccounts that behave like mutual funds, so the account value rises and falls with the markets and can lose value. The insurance company is not protecting your principal in the base contract. What the insurance wrapper buys you is tax deferral, access to optional guarantees you can pay for, and a death benefit. The standard death benefit is just your account value at death, which is to say no enhancement at all unless you elect a rider.

The core of Destination Future is the investment platform. You allocate premium across 115 variable subaccounts spanning stock, bond, and balanced strategies, plus a one-year fixed account and dollar-cost-averaging options. The fixed account credited 1.60% and the DCA program offered 6.00% on the six-month option and 3.00% on the twelve-month option as of the brochure date; those are introductory DCA rates designed to move money gradually into subaccounts, not standing yields. Returns in the subaccounts are whatever the underlying funds earn, minus expenses. Net subaccount expenses run from 0.47% to 2.38% depending on the fund, and that is on top of the base contract charge. In plain terms, this part of the contract is a brokerage-style investment menu inside a tax-deferred shell.

The most meaningful optional feature is the Nationwide Lifetime Income Rider Plus Core XI (Future). It is not included automatically. When elected, it builds a separate benefit base that grows at 8% simple interest per year for up to 10 years, and that base determines your guaranteed lifetime withdrawal amount regardless of how the subaccounts perform. This matters because it converts a market-risk investment into a future income guarantee. The tradeoff is the fee: 1.45% annually on the benefit base (up to 1.50%), or 1.60% for the joint version (up to 1.90%). That fee is charged whether or not the markets cooperate, so the rider earns its keep mainly for a buyer who intends to actually turn income on and live long enough to outlast the account value.

This is a 7-year commitment with a declining surrender charge. You can withdraw up to 10% of your remaining total purchase payments each year without penalty, and surrender charges are also waived for required minimum distributions, nursing-home confinement, terminal illness, and systematic age-based withdrawals. There is no market value adjustment, which is a point in its favor, your surrender cost does not swing with interest rates. The schedule starts at 7% and holds at 7% in year two before declining to zero after year seven. Because the account value itself fluctuates with the market, a surrender during a downturn means taking a loss on top of any remaining surrender charge. The 10% free-withdrawal allowance is calculated on premiums, not account value, which is the standard variable-annuity approach.

The base contract costs 0.95% annually, made up of a 0.85% mortality and expense charge plus a 0.10% administrative charge. That is competitive for a variable annuity. But the base fee is only the starting point. Each variable subaccount carries its own fund expense, ranging from 0.47% to 2.38%, so a typical all-in cost lands well above 1.5% before any riders. Add the income rider at 1.45% and a buyer who elects both income and an enhanced death benefit can be paying north of 2.5% per year. There is also a $30 annual contract fee, waived once the contract value reaches $50,000. Death-benefit riders run 0.10% to 0.50% depending on which one you elect. The trade to name plainly: the riders buy real guarantees, but stacking all of them turns an otherwise reasonably priced contract into an expensive one.

Legal Entity: Nationwide Life Insurance Company

Parent: Nationwide Mutual Insurance Company

AM Best Rating: A+