What Will We Cover in this Annuity Review?In this review, we will be going over the following information regarding the Transamerica I-Share variable annuity:
- Product type
- Current rates
- Realistic long-term expectations
- How it is used
- How it is most poorly used
Annuities can be complex. That’s where having an Annuity Investigator who loves math comes in. We make the complex, simple.If you’ve been considering the purchase of an annuity because you want the opportunity for market-linked growth and tax-deferred build-up of your savings, and you are seeking a secure income in the future, then the Transamerica I-Share variable annuity may be something for you to consider. However, before you move forward with the purchase of this annuity, it is essential to understand that not all annuities are alike. In fact, not even all variable annuities are alike. So, it is important that you know what to anticipate with this particular financial vehicle, as well as why you may be choosing it over many other potential annuity alternatives. Over the past ten years or so, many investors who are inching their way towards retirement have been a bit skeptical about putting their money into equities. One of the biggest reasons for this has to do with the 2008 U.S. recession and the fact that billions of dollars literally evaporated into thin air. If you are an investor who was affected by this, then the sting of substantial market losses may make you want to turn and run the other way when it comes to equities and equity-related financial products. However, this type of financial vehicle can oftentimes provide you with the best method of ensuring that your money keeps pace with rising inflation – which in turn, can help you to pay for the goods and services that you need in retirement. In other words, you may be stuck between a rock and a hard place in terms of your need for equities. In any case, you need to know what you’re getting into before making a commitment – and one that could be costly to get out of.
Annuity and Retirement Income Planning Information That You Can TrustIf you’ve been in the process of looking for annuity information online, you have likely become aware that there is no shortage of annuity review websites. Many of these websites, however, are much more interested in giving you only the basics, in return for getting your contact information. In fact, many of these websites will make some bold claims for the sole purpose of luring you in, such as:
- Highest Income Payouts
- Lowest Fees
- High Rates / Return
Transamerica I-Share Variable Annuity at a Glance
|Type of Product||Variable Annuity|
|Phone Number||(800) 797-2643|
Opening Thoughts on the Transamerica I-Share Variable AnnuityTransamerica 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. Transamerica Life Insurance Company, which is headquartered in Cedar Rapids, Iowa, is Transamerica’s insurance arm and is a strong contender in the insurance and annuity arena. As of year-end 2016, this company held in excess of $1,05 billion of insurance in force, and nearly $131,800 million of total assets. Due to its stable financial footing, and its timely payment of policyholder claims, the company has also earned high ratings from the insurer rating agencies, including an:
- A+ from A.M. Best Company
- A+ from Fitch Ratings
- A1 from Moody’s
- AA- from S&P
Before we get into the gritty details, there are some required legal disclosures here…This is an independent annuity product review. It is not a recommendation to purchase or to sell an annuity. Transamerica 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. The Truth About Variable Annuities – 2017 Consumer Guide Reveals…Download Your Free Guide.
How Transamerica Describes the I-Share Variable AnnuityTransamerica describes the I-Share variable annuity as a financial vehicle that is built for today’s fee-based account needs. This product offers a comprehensive lineup of investment options from some of the most recognized money managers in the industry. With its automatic asset rebalancing feature, you are able to maintain the asset allocation balance that you’ve selected by having the annuity automatically transfer money between investment options on a regular basis, without generating a taxable event. There are a few bells and whistles that can be added to the I-Share variable annuity. These include living and death benefits. (There is a standard death benefit that is included). For example, the Additional Death Distribution+ (ADD+) option pays you a percentage of your rider earnings, which could help to increase the legacy that you leave to your beneficiaries. There is also the Return of Premium and an Annual Step-Up option. With the Return of Premium option, the minimum death benefit option will pay your beneficiaries the total of all premiums that were paid into the annuity (minus any withdrawals). With the Annual Step-Up, there is a guaranteed minimum death benefit guaranteed at an amount that is equal to the highest policy value on either the issue date or any policy anniversary, plus premiums (minus any withdrawals that occur after the anniversary with the highest value). As far as living benefit options, there are a few. These include the following:
- Retirement Income Choice 1.6 – With this Transamerica signature living benefit, you can obtain both growth and protection of income – regardless of what occurs in the market, or even in the economy overall.
- Transamerica Income Edge – The Income Edge benefit adds more investment flexibility with a broad lineup of options, along with a lifetime income stream.
- Retirement Income Max – With a higher withdrawal rate, the Retirement Income Max benefit is designed for those who need to maximize their retirement income now as versus waiting until later.
- Guaranteed Principal Solution – The Guaranteed Principal Solution comes with three guarantees so that you can be assured that principal is protected and that you have a steady stream of lifetime income in retirement.
How an Insurance or Financial Advisor Might “Pitch” this AnnuityIf you have been presented the Transamerica I-Shares variable annuity by an insurance or financial advisor, it is likely that he or she has highlighted several key points about this annuity, such as its ability to provide you with market-linked returns, while at the same time allowing your money to grow tax-deferred. They may also have stated that this annuity can give you a reliable stream of income in retirement and that there are ways that you can structure this annuity to more closely fit your specific needs. Yet, while there are many ways that you can customize the Transamerica I-Share variable annuity, it is important to keep in mind that the living benefits, as well as the enhanced death benefits, do not come free. Therefore, given the additional premium cost of these items (if you opt to add them) can have a negative impact on your return – even if an upward moving market. In addition, because the I-Shares annuity is a variable annuity, there is the issue of risk. If you or someone you know lost money in the market downturn of 2008, then you may still vividly recall how bad that felt. You may also be painfully aware that, even though the market has come up, there is no guarantee that it won’t go back down again. And if it does so just prior to your retirement, it could have a major effect on how your financial situation – and your overall lifestyle in retirement – pans out. In addition, while there are no surrender charges on this annuity, don’t let this fool you into believing that you’ll get away with no fees at all. In fact, far from it. So, while you may have to endure some sleepless nights hoping that the market does not correct itself, you will also be incurring fees with this product.
What About Fees on the Transamerica I-Shares Variable AnnuityAnnuities – and in particular, variable annuities – are known for their fees. And rightly so, as they oftentimes live up to their reputation. With regard to the Transamerica I-Shares variable annuity, there are several fees to be mindful of. These include the following:
- Annual Mortality and Expense Fee and Administrative Charge (M&E&A):
- Mortality and Expense Risk Fee – 0.05%
- Administrative Charge – 0.15%
- Annual Fund Facilitation Fee – Up to 0.60% annualized fee assessed daily as a percentage of the value of certain sub-accounts
- Annual Service Charge of $50 (but no more than 2% of the policy value)
- Death Benefit:
- 0.20% – Policy Value Death Benefit
- 0.10% – Return of Premium Death Benefit
- 0.40% – Annual Step-Up Death Benefit
- Optional Death Benefit Riders:
- 0.25% – Additional Death Distribution (annual charge based on policy value)
- 0.55% – Additional Death Distribution + (annual charge based on policy value)
- Guaranteed Principal Solution – Optional Guaranteed Lifetime Withdrawal Benefit Rider – 1.25%
- Living Benefits:
- 2.50% – Retirement Income Max (annual charge – % of withdrawal base)
- 2.50% – Transamerica Income Edge (annual charge – % of withdrawal base)
- Retirement Income Choice 1.6 (annual charge – % of withdrawal base)
- Base Benefit Designated Allocation Group A – 2.50%
- Base Benefit Designated Allocation Group B – 2.50%
- Base Benefit Designated Allocation Group C – 2.50%
- Additional Benefits Available with Retirement Income Choice 1.6 rider:
- Death Benefit – Single Life Option – 0.55%
- Death Benefit – Joint Life Option – 0.50%
- Income Enhancement – Single Life Option – 0.45%
- Income Enhancement – Joint Life Option – 0.65%
The Annuity Gator’s End Take on the Transamerica I-Shares Variable AnnuityWhere this annuity works the best: This annuity could be a viable option for those who are seeking the following benefits:
- Market-related growth
- Diversity of underlying investments
- Lifetime income, regardless of how long it is needed
- For investors with a low-risk tolerance
- For those who do not want or plan to use the lifetime income feature