What will you learn about in this review?
In this review, we will be going over information regarding the Transamerica Income Edge 1.2 Living Benefits Rider for Variable Annuities, such as:
- Product type
- How it works
- Charges and fees
- Where it may fit in a retirement plan
- When it should not be used
Annuities can be complex. That’s where having an Annuity Investigator who loves math comes in.
We make the complex, simple.
If you’re looking for a way to supplement your income in retirement because there may be a “gap” between your living expenses and the amount that you bring in from sources like Social Security and/or an employer-sponsored pension plan, then an annuity with a living benefits rider like the Transamerica Income Edge 1.2 for variable annuities could be a good fit.
However, before you move forward with committing to this – or any – financial vehicle, it is essential that you have a good understanding of how it works, as well as what you may (or may not) be able to anticipate in terms of its performance.
Annuities and their related products can oftentimes come with a lot of “moving parts.” Unlike CDs or bonds – which are pretty straight forward in terms of how they work – an annuity is more complicated. So, while you can certainly receive some nice benefits, there are also some “tradeoffs” that you might have to make in order to receive them.
This is where Annuity Gator comes in!
Annuity and Retirement Income Planning Information You Can Trust
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Who exactly are we?
At Annuity Gator, we are a team of experienced retirement income and annuity professionals who focus on providing in-depth, and unbiased, annuity reviews online. We’ve been at this for quite a while now – far longer than our competitors have – even though there are now a number of “copycat” websites that keep popping up. (Imitation is a form of flattery, isn’t it?!)
Our primary mission is to provide in-depth information and reviews about annuities and related financial vehicles to consumers – as well as to financial professionals – so that they know exactly what they may (or may not!) be getting into.
Because these types of financial products can be highly complex, it helps to have a guide with you who is adept in how they work, and who can also pare down the massive amount of “fine print” into something that is more easily understood.
With that being said, if you’re ready to learn more about the Transamerica Income Edge 1.2 Living Benefits Rider, let’s dive in!
The Transamerica Income Edge 1.2 Living Benefits Rider for Variable Annuities
|Product Name||Income Edge 1.2|
|Type of Product||Living Benefits Rider|
|A.M. Best Rating||A|
|Phone Number||(800) 851-7555|
Opening Thoughts on the Transamerica Income Edge 1.2 Living Benefits Rider
Transamerica has been in the business of helping its clients to grow and protect wealth since 1904. Founded in San Francisco, the company grew and expanded quickly – even in the early years of financial turmoil in the United States.
In 1999, Transamerica was acquired by the Aegon Group, one of the world’s leading providers of life insurance, pensions, and asset management. Today, the company provides investment, retirement, and insurance solutions to over 11 million customers throughout the United States.
Transamerica Life Insurance Company is considered to be strong and stable, and the company has a good reputation for paying out its claims to policyholders. The ratings for the company include a(n):
- A from A.M. Best
- A+ from Fitch
- A1 from Moody’s Investor Services
- A+ from S&P Global
Although variable annuities have taken somewhat of a back seat to other, safer, alternatives like fixed and fixed indexed annuities over the past decade, there is a definite niche for these products – particularly with those who are seeking the opportunity for a higher rate of return, as well as the tax-deferred growth of assets.
Before we get into the gritty details, here are some necessary legal disclosures…
This is an independent annuity product review. It is not a recommendation to purchase or to sell an annuity. Neither Transamerica nor Aegon has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This annuity review is meant solely to be an independent review at the request of our readers so that they may see our perspective when breaking down the positives and the negatives of this particular annuity. Prior to committing to the purchase of any type of insurance and/or investment vehicle, it is critical that you do your own due diligence, and that you also talk with a properly licensed professional if you have any questions that relate to your specific situation. All of the names, materials, and marks that have been used in compiling this annuity review are the property of their respective owners.
For additional information on how to compare variable annuities so that you can decide which may be the best one for you, click here in order to obtain our free truth about variable annuities report.
How Transamerica Describes the Income Edge 1.2
The Transamerica Income Edge 1.2 living benefits rider is an optional feature that is available for Transamerica variable annuities. This rider gives you the flexibility to still capitalize on up markets via a variable annuity, while at the same time giving you confidence that you will have an income for life that will never be reduced – even if the policy’s value goes to zero.
This can be at least somewhat comforting, as one of the biggest fears on the minds of retirees today (as well as those who are approaching retirement) is running out of money while it is still needed.
Transamerica’s Income Edge 1.2 rider offers the opportunity for a 6.00% single life withdrawal rate at age 65, and a joint life withdrawal rate of 5.50% at age 65, if no withdrawals are made prior to the 10th living benefit anniversary, or if a step-up occurs on or after the 10th living benefit anniversary.
To see the actual product brochure for the Transamerica Income Edge 1.2 rider, go here.
How a Financial Advisor Might Pitch the Income Edge 1.2 from Transamerica
There are actually several different types of annuity income riders. These can include riders that provide you with guaranteed lifetime income benefits, and/or with guaranteed withdrawal benefits from an annuity.
If you’re purchasing a variable annuity from Transamerica and you’re considering adding the Income Edge 1.2 rider, it is likely that the financial advisor who is offering it to you will key in on the lifetime income benefit, as well as the flexibility that this added option can offer you.
But before you raise your hand and say yes, there are some other items that you need to consider. For instance, while the living benefit is effective, quarterly rebalancing of the portfolio is required – which takes place at the end of each living benefit quarter.
When this happens, Transamerica will automatically transfer amounts among investment options, according to the most recent rebalancing instructions on file that comply with the required allocations for rebalancing.
Also, because this rider is associated with variable annuities, the policy value, death benefit, and other values will fluctuate, based on the performance of the underlying investment options. Therefore, the account value could be worth less than the total amount of money that you have contributed.
As with most other types of annuities, variable products will typically include surrender charges if you cancel the annuity – or even if you withdraw more than a maximum amount – during the early years.
You could also incur taxes and/or an IRS “early withdrawal penalty” of 10% if you are under the age of 59 ½ when you access these funds. In addition, there is a fee required for adding the rider to your variable annuity contract.
To check out more details about the Transamerica Income Edge 1.2 living benefits rider – and to view a video about this product – go here.
Are There Any Fees Associated with this Rider?
The Transamerica Income Edge 1.2 living benefit is available with a Transamerica variable annuity for an additional cost. An annual fee of 1.45% for single life, and 1.55% for joint life of your annuity’s withdrawal base will be deducted on a pro-rata basis at the end of each living benefit quarter.
In addition, the living benefit percentage could increase upon automatic step-up. However, the maximum living benefit fee is 2.50%. Because the living benefit fee is a percentage of the withdrawal base, the amount of the fee will fluctuate as the withdrawal base increases or decreases.
In the event that the policy value decreases significantly, the fee amount could end up being a much higher percentage of the policy’s value. So, it is important to understand this, as well as to read the prospectus for any variable annuity that you are considering.
The Annuity Gator’s End Take on the Transamerica Income Edge 1.2 Living Benefit Rider
The Transamerica Income Edge 1.2 Living Benefit Rider is only available with Transamerica variable annuities – so if you own an annuity that is fixed or fixed indexed and/or if the annuity was purchased through a different insurance company, then this product will not be applicable to you. However, if you are considering the purchase of a certain variable annuity from Transamerica, it is possible that this rider could be a good fit.
Where the Income Edge 1.2 rider could be of benefit:
This rider could be beneficial if you are looking for:
- The opportunity to generate higher returns through investments with a variable annuity
- Tax-deferred growth in a variable annuity
- The ability for higher withdrawal percentages
- Lifetime income that cannot be reduced
Situations where the Income Edge 1.2 income rider would not be a good fit:
On the other hand, the Income Edge 1.2 income rider might not be a very good fit if you:
- Have a low-risk tolerance (because there is the possibility of loss with a variable annuity)
- Are concerned that the fees for this rider will reduce your return too much
- Do not plan to use the annuity for income-generation purposes
While there are many factors that need to be taken into consideration when you are buying an annuity and any associated financial vehicles, one of the biggest concerns is making sure that the products are truly right for what you want – and need – them to do.
In any case, no matter how many benefits a particular financial product or strategy has, it must fit in with your specific short- or long-term needs. Otherwise, you could find yourself losing money if you opt to cancel it.
With regard to the Transamerica Income Edge 1.2 annuity rider, it is possible that it could offer you the “best of both worlds” by offering the opportunity to obtain a market-linked return, while also ensuring you that you’ll have a steady stream of income in the future.
But keep in mind that these benefits come at the cost of an added fee each year for including this rider. Plus, if the underlying investments do not perform well, you could end up losing some or all of your contributions.
Do You Have Any Additional Questions? Did You Happen to Notice Any Mistakes on this Review?
We realize that this review of the Transamerica Income Edge 1.2 living benefits rider may have run a bit long. But quite frankly, we would much rather that you have “too much” information than to not have enough.
With that in mind, if you found this information to be beneficial, please feel free to pass it on and to share it with other people who could also find value in it. (And, if you found it to be confusing, please also let us know that, too.)
In addition, we are aware that information regarding annuities can, and often does, change. So, if you happened to notice anything in this review that should be updated or revised, let us know and we will be happy to make the necessary edits.
Are there any other annuities or riders that you would like to learn more about?
If so, just give us a shout and let us know, and our team will get to working on them right away.
The Annuity Gator
P.S. If you would like to read more of our Transamerica annuity reviews here are some links to check out:
- Independent Review of the Transamerica Axiom ll Variable Annuity.
- Independent Review of the Transamerica Variable Annuity Series O-Share.
- Independent Review of the Transamerica Variable Annuity Series C-Share.
- Independent Review of the Transamerica Variable Annuity Series B-Share.
- Independent Review of the Retirement Income Plus Variable Annuity by Transamerica.
- Independent Review of the Transamerica Variable Annuity Series X-Share.
- Independent Review of the PrincipiumSM III Variable Annuity by Transamerica.
- Independent Review of the Transamerica Vanguard Variable Annuity.
- Independent Review of the Retirement Income Plus Variable Annuity by Transamerica.
- Independent Review of the Transamerica Variable Annuity Series L-Share.
- Independent Review of the Transamerica Advisor EliteSM II Variable Annuity.
- Independent Review of the Transamerica I-Share Variable Annuity.