An annuity is a long–term financial vehicle designed for retirement. It’s a contract between you and an insurance company: you pay the insurance company a sum of money called a premium – either in a lump sum or over a period of time – in return for guaranteed payments later, typically at retirement. Annuities may impose a surrender charge for cashing out your policy or making withdrawals within a certain number of years, so you should probably only consider an annuity if you don't plan on needing access to the funds in the foreseeable future.

Annuities come in three basic forms:

Fixed Annuities: Fixed rate annuities offer a fixed interest rate guaranteed by the claims-paying ability of an insurance company for a specified period of time – fixed annuities provide a guaranteed minimum interest rate, no matter what happens in the financial markets. This makes a fixed annuity less volatile than most stocks or other equity investments. Transamerica Life Insurance Company (Transamerica) has a variety of fixed annuities to offer policyholders with a variety of premium, interest crediting, living benefit and distribution options.

Indexed Annuities: Indexed annuities offer an interest rate that is linked to a market index. The market index is one factor, that together with any cap, determines the "excess" interest, if any, to be credited under the annuity. Indexed annuities do not invest in the stock market or any stock index fund. Their return varies more than a fixed annuity, but not as much as a variable annuity. Generally, indexed annuities offer greater protection of principal than variable annuities, due to the ability to "lock in" periodic interest credits. Indexed annuities with interest crediting formulas tied to the stock market have the potential to earn higher interest rates than traditional fixed annuities when the stock market is rising. Depending on the performance of the index, indexed annuities may not earn any interest in a given policy year or years, but policy values will not decrease solely due to poor market performance.

Variable Annuities: Variable annuities offer a fluctuating rate of return, based on the performance of sub-accounts which are selected by the annuity owner. Variable annuities are subject to market fluctuations, investment risk and possible loss of principal due to fluctuating market conditions and at the time of distribution, your annuity may be worth more or less than the total of all premiums paid. Variable annuity costs generally include a mortality and expense risk fee, administrative charge, annual contract fee, and sub-account charge.

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