Transamerica is an innovative insurance company with a storied history and one of the largest portfolios of in force life insurance in the U.S. In the following Transamerica review we will explore the company’s history, strong ratings, its exceptional services and numerous products, including its life insurance policies, and the additional features offered.
Review of Transamerica Life Insurance Company
When searching for the best cash value life insurance companies it helps to get acquainted with the different carriers available before you decide which company will be the right fit for you.
Our primary goal is to equip you with the knowledge and insight you need to make the right decision on who will be the right fit for your based on your specific needs, goals and objectives.
The first thing you see when you head to the company’s website under “who we are” is this statement: Helping people to be healthy and build wealth. And that is exactly what Transamerica has done over the company’s 113 year history.
Starting back in 1903, Transamerica was started in San Francisco about the time of the great earthquake. He offered loans to the people of San Francisco to help them rebuild, with nothing to secure the loan apart from a handshake.
Transamerica continued to flourish and in 1999 was bought by global financial leader and top 10 insurance company in the world, AEGON. This allowed AEGON to expand into the North American market under the Transamerica brand. Today, Transamerica Life Insurance Company ranks as one of the top 10 largest providers of annuities, universal life and term life in the U.S.
AS of December 2016, Transamerica Life Insurance Company has over $1 TRILLION life insurance in force, not including other subsidiaries such as Transamerica Financial Life Insurance Company, which has another $196 BILLION in force and Transamerica Premier Life Insurance Company which has $219 BILLION in force and Transamerica Advisors Life Insurance Company which has $4.6 BILLION in force.
Transamerica Life Insurance Company Ratings
Transamerica is a top rated life insurance company. The company currently has the following ratings:
- A.M. Best: A+ is 2nd highest of 16 ratings (as of July 20, 2017)
- Fitch: A+ is 5th highest of 19 ratings (as of March 24, 2017)
- Moody’s: A1 is 5th highest of 21 ratings (as of November 30, 2016)
- S&P Global: AA‐ is 4th highest of 21 ratings (as of May 26, 2017)
- Comdex Rating 90
Products Offered by Transamerica
Transamerica has an extensive product offering of life insurance, business and retirement solutions. The company’s products and services feature:
- Term life insurance
- Whole life insurance
- Universal life insurance
- Indexed universal life insurance
- Variable universal life insurance
- Long-term care
- Accidental death
- Final expense
- Medicare solutions
- Dental insurance
- Participant experience
- Sponsor services
- Rollover individual retirement accounts
Mutual Funds including
- Asset Allocation
- US Equity
- Global/International Equity
- Alternative Investments
- Hybrid Allocation
- Fixed Income
- Target Date
- Variable Annuities
- Fixed Annuities
Life Insurance Policies offered by Transamerica
Transamerica offers both term life and permanent life insurance. The company has a large offering of permanent cash value coverage including whole life, universal life, indexed universal life and variable universal life.
We believe there are benefits to all types of policies, and that there is no one size fits all product. But in our opinion there is a clear advantage of whole life insurance vs term life.
Benefits of Term Life Insurance
- Lower Initial Cost
- Income Protection
- Mortgage Protection
- Conversion Option
Benefits of Permanent Life Insurance
- Buy Sell Agreements
- Key Man Insurance
- Estate Planning
- Infinite Banking
- Executive Bonus (Section 162) Plans
- Non-Qualified Deferred Compensation Plans
- Split Dollar Life Insurance
Transamerica Life Insurance Policies [Plans and Features]
Trendsetter Super Term Life
Term life insurance offers an initially low premium, with fixed rates for the life of the term. Transamerica offers guaranteed level premiums for 1, 10, 15, 20, 25 and 30-year term lengths. Available for ages 18-80 depending on term length. Upon expiry of the initial term the policy can be renewed annually until age 105
Transamerica’s Trendsetter Super is convertible term life insurance. This offering allows you to convert all or a portion of the policy to permanent coverage. You must exercise the conversion option either by the end of the initial term period or by age 70 (75 if rated preferred plus).
One reason to consider choosing convertible term life is that you can get low cost coverage while your income is lower but you lock into a policy that can then be converted to permanent coverage once your finances improve. Further, because you are younger you will have a better chance of qualifying for the top rate class (preferred plus). When you convert, you retain the rate class you initially qualified for.
Non-medical underwriting available for ages 18-60 on face amounts up to $99.999 and up to $50,000 for ages 61-70. Non-medical underwriting includes the conversion option mentioned above.
Trendsetter Super Endorsements
Income Protection Option: Rather than the typical lump sum payout upon death, you can choose to pay your beneficiary the death benefit a monthly income stream. This option must be chosen at issue and can be advantageous if you are concerned with your beneficiary receiving a lump sum payment.
Permanent Life from Transamerica Life
Transamerica offers several permanent life insurance products, including
- Variable Universal Life
- Indexed Universal Life
- Whole Life
Indexed Universal Life vs Variable Universal Life
Both IUL and VUL policies offer coverage, pay a death benefit and accumulate cash value.
Both IUL and VUL policies provide flexibility. You can adjust your premium payments and your death benefit protection to accommodate lifestyle changes.
The primary difference between IUL and VUL is how your cash value is utilized within the policy.
With IUL policies, the cash value is applied to the policy’s fixed account, where it will earn interest based on what the company’s declared rate. From there, you can transfer all or a portion of your cash to different indexed accounts. The indexed accounts follow, in part, the performance of major equity indexes, such as the S&P 500. You are not directly investing in the stock market.
With variable life insurance, the cash value is also applied to the policy’s fixed account, which you then transfer to variable investment options, much like mutual funds. The VUL variable accounts are directly investing in the stock market.
With IUL policies, your cash value is protected due to a floor and a cap. The floor is a guaranteed rate, usually around 0-2% determined by the specific account your money is in. The cap is the maximum return your IUL can deliver, typically around 12-14%.
With VUL policies, there is no minimum floor and no maximum cap. Your cash value account will increase (or decrease) in step with the variable accounts you invest in.
For our Transamerica Life Insurance Company review we will focus on the company’s Financial Foundation IUL.
Financial Foundation IUL
The Financial Foundation IUL is an indexed universal life policy that builds cash value growth and provides death benefit protection. The policy is available for ages 0-85 (75 in FL).
Account options include
- Basic Interest Account (2% guaranteed floor)
- S&P 500 Index Account (.75% guaranteed floor)
- Global Index Account (.75% guaranteed floor)
- S&P 500 Index
- EURO STOXX 50 Index
- Hang Seng Index
- The cap on the different index accounts can fluctuate and is set at the beginning of each segment period, which lasts for a 12 month period.
No Lapse Period: The Financial Foundation IUL offers different no lapse periods based on your age at issue. For ages 0-45 the no lapse period is 20 years. Ages 46-60 have a no lapse period to age 65. For ages 61+ the no lapse period is 5 years.
2 Death benefit options:
- Option A: level death benefit
- Option B: increasing death benefit
Decreases in Face Amount: available after the third policy year.
Surrender Charge: the first 15 policy years and for 15 years from a face amount increase
Long Term Care: An additional LTC rider is available.
Additional Benefits of Cash Value Life Insurance
Tax free life insurance policy loans
Tax free life insurance loans are available from the carrier by using your cash value as collateral. You loan will be charged either a fixed or variable interest rate. Any unpaid interest due will be applied to your principle.
Tax deferred cash value growth
Based on IRC 7702, cash value in your policy grows tax deferred. In addition, tax free policy loans are available.
Tax free death benefit
Life insurance is not taxable regarding the proceeds paid to your beneficiary from the death benefit. However, one way a death benefit is taxed is if your estate exceeds the federal estate tax exemption limit. For large estates, it is recommended to put a plan in place to protect your assets, such as utilizing an irrevocable life insurance trust.
Transamerica Life Insurance Policy Riders
The following life insurance riders are not available on all types of policies.
Children’s Benefit Rider – you can add term life insurance for kids to your coverage at one set price no matter how many children you have.
Overloan Protection Rider – if you meet certain requirements your policy cannot lapse due to excessive policy loans. This rider is free unless you choose to use it.
Terminal Illness Accelerated Death Benefit Endorsement – allows access to 75% of your death benefit or $500,000 maximum if you have a life expectancy of 12 months or less due to illness or injury.
Disability Waiver of Monthly Deduction Rider – premium is waived if you become totally disabled before age 65.
Guaranteed Insurability Benefit Rider – guarantees the addition of more coverage at certain ages and life events with no evidence of insurability. You can choose to add more coverage on your 22nd, 25th, 28th, 31st, 34th, 37th, and 40th birthdays. Alternatively, you can add additional coverage for marriage, birth or adoption of a child, or college graduation.
Transamerica Review Conclusion
Transamerica is a top-rated company, offering some of the most popular and best life insurance policies. In many instances Transamerica will be a great fit. But the question remains…
Is Transamerica the right company for you?
But without speaking to you and discovering your goals, needs and objectives we cannot say which company will best suit your needs.
Do you have questions or would you like to see an illustration of Transamerica or any of the other top cash value life insurance companies we represent?
Give us a call today for a free life insurance consultation with an advanced markets professional.