What the Vanguard Variable Annuity offers
Choose from diversified investment portfolios for tax-deferred growth potential now. Decide later if you want to convert to guaranteed income.
What's the Vanguard Variable Annuity?
The Vanguard Variable Annuity is a deferred variable annuity, which means you can defer taking income—and paying taxes on that income—for as long as you choose.
It's a long-term investment with growth potential in its underlying portfolios. Most of these portfolios have exposure to stocks and bonds, which creates the risk of market fluctuation—both up and down.
What makes the Vanguard Variable Annuity unique?
Some variable annuities have fees so high they may cancel the benefits of tax deferral. Because the Vanguard Variable Annuity is sold directly to investors, the costs are lower, which means you get to keep more of your money.
- No commissions. You can count on exceptional support from Vanguard's unbiased annuity specialists without any sales pressure.
- No surrender charges. If you're over 59½, you'll never be penalized if you choose to "cash in" your Vanguard Variable Annuity.*
- 0.48%. That's the average cost for the Vanguard Variable Annuity—and it's 70% less than the industry average of 2.24%. This difference can save you an average of $1,700 a year in fees for every $100,000 you invest.§
Because annuity products can vary widely, you should carefully compare costs, which are outlined in the prospectuses.
Broad range of portfolio choices
Then, if your investment strategy or financial goals change over time, you can exchange assets among portfolios without paying a fee or triggering a taxable event.
Highly rated insurers
Since annuity product guarantees are subject to the claims-paying ability of the insurance company that issues the contract, it's important to consider the financial strength of the issuer.
- The Vanguard Variable Annuity is issued and guaranteed by Transamerica Premier Life Insurance Company and, in New York State only, by Transamerica Financial Life Insurance Company.
- Both companies have high ratings for financial strength from the leading independent rating agencies and stand behind the guarantee of payments for life.**
- Transamerica Premier Life Insurance Company and Transamerica Financial Life Insurance Company received the A+ (Superior) rating for operating performance and financial stability, according to A.M. Best Company. This is the second highest of 16 ratings.**
Our highly trained, licensed, noncomissioned annuity specialists thoroughly analyze your situation. They're available to guide you and help you feel confident you're making the best decision.
Ready to find out if the Vanguard Variable Annuity is right for you? Take the free annuity "checkup" by calling 800-853-7107 to speak with a Vanguard annuity specialist.
Who should consider the Vanguard Variable Annuity?
A variable annuity may provide you with the tax advantages, savings, and income options that are a good fit if you're:
- Seeking additional tax-deferred savings because you're already contributing the maximum to an IRA, 401(k) plan, or other retirement plan at work.
- In a high tax bracket.
- Committed to investing over the long term—at least 10 years—because it may take that long or more for the tax-deferred benefits to offset the associated costs.
- Able to make a minimum investment of at least $5,000.
- Willing to accept investment risk.
Tax-deferred investments can help your savings grow even faster
Go in-depth ... Read our brochure to learn more about your options.
What income options are available with the Vanguard Variable Annuity?
You can use the Vanguard Variable Annuity to create a source of income in retirement that you can't outlive.†
With the Vanguard Variable Annuity, you can choose from 2 income options:
- Secure Income™, the optional Guaranteed Lifetime Withdrawal Benefit rider that's available for an additional fee of 1.20%. Your income is guaranteed never to drop below a certain level.
- Annuitization. Convert the value of your Vanguard Variable Annuity into steady income payments.
Can I pass the Vanguard Variable Annuity to my heirs?
Yes, the Vanguard Variable Annuity gives you the flexibility to choose from 2 death benefit options—each with its own costs and death benefit.
Accumulated Value death benefit
This death benefit is included in the Vanguard Variable Annuity at no additional cost. It gives your beneficiaries the annuity's accumulated value at your death. A market downturn, however, might mean your beneficiaries could receive less than the amount you contributed to the annuity.
The costs of administering the Accumulated Value death benefit are included in the annual mortality and expense risk charge.
Return of Premium death benefit
This optional death benefit is available at a higher cost. Your beneficiaries will receive whichever is greater: the sum of your contributions, less any applicable adjustments, or the annuity's accumulated value at your death.
The Return of Premium death benefit is available only if you (and a joint annuitant, if applicable) are age 75 or younger when you buy the annuity. An annualized fee of 0.20% of the accumulated value of the contract is applied quarterly. The annual 0.17% mortality and expense charge also applies and is assessed daily on the value of the contract.
How annuities work at Vanguard
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INVEST IN THE VANGUARD VARIABLE ANNUITY
Choose from a diverse lineup of stock, bond, and money market portfolios.
An investment option—offered by an annuity—that holds a range of underlying investments.
Usually refers to common stock, which is an investment that represents part ownership in a corporation. Each share of stock is a proportional stake in the corporation's assets and profits.
A loan to a corporation, government, or government agency in exchange for regular interest payments. The bond issuer agrees to pay back the loan by a specific date. Bonds can be traded on the secondary market.
A legal document filed with the Securities and Exchange Commission that includes details about an investment. It must be given to potential investors before they can open an account.
A mutual fund that seeks income and liquidity by investing in very-short-term investments. Money market funds are suitable for the cash reserves portion of a portfolio or for holding funds that are needed soon.
A type of investment that pools shareholder money and invests it in a variety of securities. Each investor owns shares of the fund and can buy or sell these shares at any time. Mutual funds are typically more diversified, low-cost, and convenient than investing in individual securities, and they're professionally managed.
Transamerica started in 1904 as the Bank of Italy in San Francisco with the goal of making financial services available to everyone. Through mergers and acquisitions in the 1900s, Transamerica owned interests in banking, life insurance, and financial services, as well as the entertainment industry.
In 1999, Transamerica became part of Aegon N.V., one of the world's leading international financial organizations. Today, through a range of services that include life insurance, annuities, and retirement plans, Transamerica and its parent company operate in more than 20 markets worldwide, continuing to help clients secure their financial futures.
The Transamerica Pyramid, though no longer Transamerica Corporation headquarters, is an iconic symbol in the heart of San Francisco and is still depicted in the company's logo.
A type of account created by the IRS that offers tax benefits when you use it to save for retirement.
A type of employer-sponsored retirement savings plan that allows employees to contribute pre-tax dollars by deferring salary. Many plans offer a variety of investment options, and employers often match a percentage of employee contributions.
This chart shows how a tax-deferred investment can help your savings grow faster when compared with to a taxable investment. A tax-deferred investment allows you to delay paying taxes until you take withdrawals from the account. This hypothetical example shows that if you started with an initial investment of $75,000 in a taxable account over a 30-year time-frame, it would grow to $266,740, assuming a 6% rate of return. Meanwhile, that same investment in a tax-deferred account with the same conditions would grow to $430,762. If you withdrew that amount in a lump sum at the end of 30 years and paid taxes at that time, you'd receive $331,149—still significantly more than the $266,740 in the taxable account.
A person or organization designated to receive the proceeds of an annuity contract after the owner dies.
An amount equal to the initial purchase amount plus any additional premium payments received—less applicable fees, partial withdrawals, and premium taxes. The value also takes into account any changes in the value of the selected investments.
A fee included in some annuity contracts that compensates the insurer for the risks it assumes in issuing the contract, such as the cost of death benefits, expenses of other insured income guarantees, and administrative costs.
A fee charged by a broker for buying and selling securities.
Usually refers to investment risk, which is a measure of how likely it is that you could lose money in an investment. However, there are other types of risk when it comes to investing.
Generally, the person who receives income payments from the annuity. The annuitant's age is used to calculate the maximum annual withdrawal amount.
The example, which illustrates a long-term average return on a balanced investment of stocks and bonds, assumes a single, after-tax investment of $75,000 with a gross annual return of 6%, taxed at 28% a year for taxable account assets and upon withdrawal for tax-deferred annuity assets.
For tax-deferred accumulation, taxes are due upon withdrawal. If withdrawn in a lump sum at the end of 30 years, the pre-tax amount from the tax-deferred accumulation would be $430,762 and $331,149 after taxes were paid. This amount compares with a value of $266,740 in the taxable account.
This example doesn’t reflect the 10% federal penalty tax on earnings for withdrawals before age 59½ or the fees and charges that would reduce the investment performance shown.
Lower tax rates on dividends and capital gains may make the taxable investment more favorable and the difference between taxable and tax-deferred ending balances less. Any future changes in the tax treatment of investment earnings or a rate of return that is lower than the assumed rate of return may further impact the comparison.
Investors should consider their time horizon and current and expected future tax rates before making an investment decision. Changes in tax rates and tax treatment of investment earnings may alter the results of this comparison.
Market returns aren't constant and will fluctuate annually. Actual rates of return will vary. Except where noted, amounts shown are net of taxes.
To access your annuity online, log on to your account or register for online access if you haven't done so already.
Once you've registered, you can make exchanges between annuity portfolios online.
You can also log on to check the following:
- Your contract balances.
- The status of pending and processed transactions.
- Information on death benefit and Guaranteed Lifetime Withdrawal Benefit riders.*
- Statements and confirmations.
If you have any questions about your annuity, call one of our licensed specialists at 800-357-4720 Monday through Friday from 8 a.m. to 8 p.m., Eastern time. We're always happy to help.
footnote*Product guarantees are subject to the claims-paying ability of the issuing insurance company.
A contract issued by an insurance company, which agrees to make payments to you based on the contract's value. The value varies based on the annuity's underlying investments.