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Transamerica Annuities Review

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The Transamerica Life Insurance Company is well over 100 years old, and besides annuities, it offers insurance policies, mutual funds and other retirement solutions. Transamerica originally opened in San Francisco, and it remains there to this day.

Annuity Fees Annuity Type Minimum Initial Premium More Information
Advisor’s Edge® Variable Annuity Find an Advisor

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  • Up to $30 annual service charge
  • 0.4% mortality and expense risk fee
  • 0.15% administrative charge
  • Various optional benefit fees
Flexible-premium variable annuity $10,000

Annuity Type

Flexible-premium variable annuity

Minimum Initial Premium

$10,000
Transamerica Inspire Variable Annuity Find an Advisor

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  • Up to $50 annual service charge
  • 1.15% - 1.25% mortality and expense risk fee
  • 0.15% administrative charge
  • Various optional benefit fees
Variable annuity $5,000

Annuity Type

Variable annuity

Minimum Initial Premium

$5,000
Transamerica Variable Annuity Series B-Share Find an Advisor

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  • Up to $50 annual service charge
  • 1% mortality and expense risk fee
  • 0.15% administrative charge
  • Various optional benefit fees
Variable annuity $5,000

Annuity Type

Variable annuity

Minimum Initial Premium

$5,000
Transamerica Variable Annuity Series C-Share Find an Advisor

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  • Up to $50 annual service charge
  • 1.4% mortality and expense risk fee
  • 0.15% administrative charge
  • Various optional benefit fees
Variable annuity $5,000

Annuity Type

Variable annuity

Minimum Initial Premium

$5,000
Transamerica Variable Annuity I-Share Find an Advisor

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  • Up to $50 annual service charge
  • 0.05% mortality and expense risk fee
  • 0.15% administrative charge
  • Various optional benefit fees
Variable annuity $5,000

Annuity Type

Variable annuity

Minimum Initial Premium

$5,000

The U.S. customer base at Transamerica is around 13 million strong, and it boasts great financial rankings from the industry’s leading firms that indicate its ability to support that clientele. As a matter of fact, each of these ratings fall within the top 25% of the A.M. Best, Moody’s, S&P Global and Fitch scoring structures, lending a certain level of trust to prospective annuitants.

Advisor's Edge® Variable Annuity

The Advisor’s Edge® Variable Annuity combines the ability to invest in underlying mutual funds with the comfort of a fixed account. The investment options available for this annuity are essentially portfolio strategies that are built by Transamerica and its affiliates. The return on these investments is earned on a tax-deferred basis, allowing you to grow your money as much as possible prior to retirement. This annuity carries a maximum issue age of 85.

The fixed account feature of this policy enables customers to earn interest at a prespecified percentage through Transamerica. This rate is subject to change annually. If any point you want to get your money out of the market investment you’ve made, the company will allow you to transfer your assets to the fixed account.

There are hardly any withdrawal restrictions placed on the payments annuitants receive in retirement. In fact, you can set them to be either variable or fixed and to last for life or for just a certain period of time.

Fees

One of the major perks of the Advisor’s Edge® Variable Annuity is that it has much lower fees than most of the other contracts at Transamerica. This is not only evident in the $30 annual policy fee, but also the 0.40% M&E fee and the 0.15% administrative charge. If your policy is worth more than $50,000 or the sum of your premiums is higher than $50,000, you can waive that $30 fee.

Another massive benefit that many account holders can take advantage of is the ability to withdraw as much of your assets as you want prior to beginning regular distributions. These withdrawals must be made in amounts $500 or larger, and if the money came from a tax-deferred account, there may be some regulations to follow.

Anyone who starts receiving payments from an annuity before age 59.5 leaves themselves up to the mercy of the IRS’ 10% income tax hike. In other words, wait as long as you can before taking out your funds.

Realistic Return Expectations

The return possibilities of this annuity appear to be pretty lofty, with some investment options reporting as high as a 30% adjusted historical average annual return. Over a 10-year period, though, these tend to top-out around 10%, with ETFs, equities, indexes and Vanguard® portfolios performing the best.

Transamerica Inspire Variable Annuity

The Transamerica Inspire annuity is a variable annuity that enables annuitants to take advantage of investment options for retirement that are not available to the general public. Transamerica has partnered with many different financial advisor firms to bring these opportunities to their customer base. Some of the typical options include insurance funds and bonds funds, as well as portfolios built around varying levels of risk tolerance or desired returns. There is a max issue age of 80 years old.

Paired with this annuity are multiple death and living benefits that make it customizable. For living riders, you can choose from the following: the Guaranteed Principal Solution benefit, the Retirement Income Max® benefit, the Transamerica Income Edge benefit and the Retirement Income Choice® 1.6 benefit. This quartet of riders provides differing protections of your minimum lifetime withdrawals and accumulation benefits, and only one can be active at a time.

If you’re interested in giving your beneficiaries more than what your base death benefit will, you can purchase the Additional Death Distribution or Additional Death Distribution+ upgrades. The former qualifies your contract for a larger death payout based on what you earn from other riders, while the latter offers the most upside with a bonus centered around your benefit base.

Fees

Most importantly, there is a $50 annual service charge associated with this annuity, although you can lower this rate under the right circumstances. In fact, you can get it as low as $15 if your premiums or overall policy value exceeds $50,000, or a full waiver is available for any with a contract worth more than $250,000. Be aware that there’s also up to a 0.30% annual fund facilitation fee for the various investment options that this variable annuity offers.

Annuitants that choose to add on benefit riders open themselves up to extra charges, the most expensive of which is attributed to the death benefit. For this, you’ll need to pay a 1.15% mortality and expense risk (M&E) fee and a 0.15% administrative charge. However, once you begin receiving payments, the M&E fee will jump to 1.25%. There are other similar fees for living benefits and the liquidity rider as well.

To deter annuitants from withdrawing substantial money from their account ahead of time, Transamerica institutes a seven-year early withdrawal fee schedule. These rates get lower every year, and go as follows: 8%, 8%, 7%, 6%, 5%, 4% and 3%. You can make some withdrawals, as up to 10% of your premiums can be withdrawn annually at a minimum amount of $500.

For most annuitants, income taxes are expected to be taken from your distributions. The IRS does reserve the right to impose a 10% tax hike for anyone who starts receiving money before they are 59.5 years old.

Realistic Return Expectations

It appears that many of the investment options that customers can get with the Transamerica Inspire Variable Annuity are actually fairly profitable. These consist of mostly portfolio models and various styles of asset allocation, but also exchange-traded funds (ETFs), bonds, equities and more. On a five-year scale, most of these investments hold a 1% to 14% positive return, though there are some that have lost money.

Transamerica Variable Annuity Series B-Share

Like all of the annuities at Transamerica, the Variable Annuity Series B-Share provides an opportunity for tax-deferred growth. This is one of the biggest factors that determine how viable a retirement account can be, as it allows your money to snowball without the effects of Uncle Sam. 89 years old is the maximum issue age for this annuity.

Riders are again the centerpiece of this policy. It includes four living riders (Guaranteed Principal Solution, Retirement Income Max®, Transamerica Income Edge and Retirement Income Choice® 1.6) and two death riders (Additional Death Distribution and Additional Death Distribution+), although there is a base death benefit for annuitants who pass away during the accumulation phase. You have complete free rein to decide which, if any, you want to add to your contract, but remember that they don’t come free.

Variable annuities are based around informed investments with your retirement assets in the general market or indexes. But selecting a rider could limit the advantage of these investments, as Transamerica will designate which options you can invest in and which you cannot.

Fees

The Variable Annuity Series B-Share has a fairly standard fee schedule, as it most notably features an up to $50 annual service charge, a 1% M&E fee and a 0.15% administrative charge. The firm realizes that $50 annually can eat away at some of your returns, so it does offer a waiver system. If a customer has a policy worth $50,000 or has spent at least that amount on premiums, you’ll get up to $35 off. Anyone who can bump that number up to $250,000 will skip the fee entirely.

Like most annuities at Transamerica, an annual fund facilitation fee is determined by which investment options you select. This can be as high as 0.30%, and there are no waivers available.

Transamerica has instituted a seven-year withdrawal charge system for this annuity that decreases every year that you remain an account holder. During year one and two, this will be 8%, with rates subsequently falling to 7%, 6%, 5%, 4% and 3% every year following that time frame. However, you are allowed to make up 10% annual withdrawals during this time, so long as they are at least $500 in size.

For the majority of annuitants, the money that’s received as payments is subject to the federal income tax. Although this is essentially an unchangeable fact, you can avoid the 10% tax hike by waiting until age 59.5 to begin taking out money.

Realistic Return Expectations

There are over 60 investment options that Series B-Share customers can choose from when fleshing out their portfolios. So as you can likely imagine, the levels of potential return are equally as varied. As an extremely general statement though, most of the available investments reside somewhere in the neighborhood of 1% to 14% return over the last five years.

Transamerica Variable Annuity Series C-Share

Transamerica Variable Annuity Series C-Share is a tax-deferred variable annuity with a max issue age of 89. It offers customers the chance to invest in almost 100 investment funds, portfolios and other strategies. Most of these are proprietary options, although some are from Fidelity® and JPMorgan. It would be best to speak to a financial advisor to decipher which investments are best for your plans, as they’re built around government funds, exchange-traded funds (ETFs), various risk levels and more.

What’s remarkable about this annuity is that account holders can make unlimited withdrawals, so long as each is larger than $500. Being that most of the other annuities at this firm typically run early withdrawal charges of between 3% and 8%, this is a particularly surprising revelation.

Once you’re ready to begin taking regular withdrawals, you can choose to have them paid monthly, quarterly, semi-annually or annually. There are some conditional withdrawals too, though. For example, if you find yourself terminated or laid off from your job, you can take extra withdrawals. The same policy applies if you or your spouse have been living in a hospital or nursing home for 30 or more days in a row.

Fees

Being that there are no withdrawal charges for Series C-Share annuitants, it should come as no surprise that the policy’s benefit fees are on the higher end of the spectrum. For example, your M&E and administrative fees for the death benefits start at 1.55% and go all the way up to 1.90%. This could be extremely restrictive for many customers, although the simultaneous lack of withdrawal fees could be infinitely beneficial for customers that think they’ll need to take out cash along the way.

The IRS employs stringent policies in regard to when individuals can begin taking distributions from their retirement accounts. In this case, anyone younger than 59 years old that does this could encounter an extra 10% in income tax.

Realistic Return Expectations

You should always consult a financial advisor when selecting a portfolio model or set of investments for your variable annuity. But what helps make the Series C-Share annuity so enticing for even a novice is that just about every one of its investment options has posted returns north of 4% over the last five years. Some even stretch up to 14%, which represents massive growth for anyone’s retirement funds.

Fees obviously play a role in the level of return you are likely to receive from an annuity. In the case of this one, there are some very high charges associated with riders and other benefits. There are no withdrawal fees, though, making it an extremely liquid contract.

Transamerica Variable Annuity I-Share

The nearly nonexistent fees of the Transamerica Variable Annuity I-Share is undoubtedly the strongest point of this annuity policy, but its set of investment options is also very favorable. There are some crossovers from other annuities, but its inclusion of Vanguard and even more proprietary portfolios gives it a leg up. This annuity holds a max issue age of 90.

Like the Series C-Share variable annuity above, this account is devoid of all withdrawal charges. That means you can make as many withdrawals over $500 as you want, although this time around it doesn’t include medical- or job-based reasons on top of that.

Fees

If you solely look at the fee structure of the I-Share annuity, you might be surprised at how favorable some of its associated costs are. The combined M&E/administrative fee can be anywhere from 0.20% to 0.60%, though the latter is still rather low.

However, the up to 0.60% annual fund facilitation fee for investments is nearly double that of the other annuities on this list. The annual service charge is still the traditional $50, and it adheres to the same waiver standards (up to $35 for policies higher than $50,000 or up to $50 for policies higher than $250,000).

The federal income tax is already a thorn in the side of retirees, so tacking on surcharges would likely be at the bottom of everyone’s list. As long as you wait until you reach 59.5 years old, you will avoid the 10% surtax from the IRS.

Realistic Return Expectations

As their name makes clear, variable annuities often have many conditions that make it hard to read what your returns could look like. But in the case of the I-Share annuity, the low fees appear to give annuitants a solid shot at making good money. This is especially evident in the 1% to 12% five-year fee-adjusted average annual returns that the majority of its investment options have historically provided.

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