Transamerica Financial Choice IUL II Review (2026)

How Financial Choice IUL II works

Transamerica Financial Choice IUL II is indexed universal life insurance. It pays a death benefit when the insured dies. While the insured is alive, part of each premium builds a cash value that can earn interest tied to stock indexes. Transamerica designed it for people who want to put in more than the target premium and later take income from the policy. It is issued by Transamerica Life Insurance Company, which AM Best rates A (Excellent). For the company's full record, including its history of rate increases on older policies, see our Transamerica company review.

Here is the money flow in plain terms:

1. You pay a premium. Transamerica takes a premium expense charge off the top.
2. The rest, the net premium, goes where you direct it: a Basic Interest Account, which works like a fixed account, and up to six index accounts.
3. Every month, Transamerica deducts the policy's charges from your cash value: a policy fee, a per-unit charge, the cost of insurance, any rider costs, and index account charges on the accounts that have them.
4. At the end of each segment period, each index account earns a credit based on how its index moved, limited by its cap or shaped by its participation rate. The credit is never below 0.25%.
5. Later, you can borrow against or withdraw from the cash value, often to supplement retirement income.

The key point: the 0.25% floor protects the index credit, not your cash value. In a year the index falls, the monthly charges still come out, and the cash value can shrink. Transamerica's own brochure is blunt about the early years: if you stop paying premiums, you will lose substantial money, and a policy generally takes years to build meaningful cash value.

This is life insurance, not an investment account. If you are weighing it against one, read is IUL a good investment first.

Index accounts and current rates

Financial Choice IUL II offers six index accounts. The rates below come from Transamerica's consumer brochure dated May 2026. They are current rates, not guarantees. Transamerica can change caps and participation rates for new segments, but not below the minimums stated in the policy. Ask for the rates in effect on the date of your illustration.

Rates as of May 2026, from Transamerica's Financial Choice IUL II consumer brochure. None of these indexes include dividends.

What each account tracks

• S&P 500 and S&P 500 Plus: the S&P 500's change over the segment period, compared with the cap.
• Global and Global Plus: a blend. Transamerica takes 50% of the better of the S&P 500 and Europe's EURO STOXX 50, 30% of the worse of the two, and 20% of Japan's Nikkei 225. The blended change is compared with the cap.
• Fidelity Small-Mid Multifactor: the Fidelity Small-Mid Multifactor Index 5% ER, times 225%, with no cap. The brochure describes it as a volatility-controlled index that mixes small and mid-size U.S. stocks with U.S. Treasuries, so its mix changes as markets move. "ER" stands for excess return: the index's returns are netted against a benchmark short-term interest rate. That is part of why the participation rate is so high, and the brochure warns that the design may limit returns when stock returns are high. See volatility-controlled indexes.
• Balanced Uncapped: 34% of the S&P 500's change plus 33% each of the Fidelity index and the Nikkei 225, times 110%, with no cap.

What the terms mean

• Cap: the most the account can credit in a segment period.
• Participation rate: the share of the index gain that counts. At 225%, a 3% gain counts as 6.75%.
• Account charge: a yearly charge on the Plus and Balanced accounts. It comes out whether or not the index gains.

Hypothetical crediting examples

These examples use the S&P 500 and S&P 500 Plus rates as of May 2026, applied to made-up index changes. They are hypothetical, not a forecast, and the net figures are approximate because the charge is taken during the year.

Notice the pattern. The Plus account only pulls ahead when the index rises more than about 10.25%. In a flat or down year it trails, and its net result can fall below zero. Many owners split money across accounts because no single account wins every year. Our guide to IUL index crediting methods goes deeper.

The Basic Interest Account

The Basic Interest Account credits a rate Transamerica declares, guaranteed never to be below 1% a year. The consumer brochure does not state the current rate; it appears on your illustration.

Your first statement will look low

Index credits are paid only at the end of each segment period. Transamerica's brochure warns that on your first annual statement, only money in the first segment may have earned an index credit. The rest will show only the 0.25% minimum until later segments mature in year two. And if you surrender, no index credit is paid for a partial segment period.

Charges

Transamerica's consumer brochure for this policy names its charges but, apart from the index account charges, does not state their amounts. Ask for each one, current and guaranteed maximum, on a signed illustration before you apply.

For comparison only, Transamerica's brochure for its sister policy, Financial Foundation IUL II, publishes a premium expense charge of 4% current and 6% maximum and a $10 monthly policy fee, $12 maximum. The Financial Choice IUL II brochure does not publish its own figures, so do not assume they match.

Transamerica's brochure for Financial Foundation IUL II says the company can change current charges and cost of insurance rates, but not above the guaranteed maximums, and this policy's brochure warns you may need to pay higher premiums in later years to keep it from lapsing. It has raised monthly deduction rates on older universal life policies three times since 2015, as our company review details. Compare total charges in the illustration, not just the cap. See IUL fees and charges.

Loans and withdrawals

Financial Choice IUL II offers two conventional loan types and an index loan.

A standard loan currently costs a net 0.75% a year, and a preferred loan currently costs nothing net, with a worst case of 0.25%. That is one of the policy's real strengths for owners who plan to take income after year 10.

An index loan is a bet. You pay a loan rate and hope the index credits more. In a year the accounts credit only the 0.25% minimum, a loan rate above that means the loan grows faster than the value backing it. Transamerica also reserves the right to discontinue index loans at any time. Ask for the current and maximum index loan rate in writing. See IUL policy loans and loans vs withdrawals.

Withdrawals reduce your cash value and the face amount. There is no current charge for a withdrawal, but during the surrender charge period, a withdrawal that reduces the face amount carries a partial surrender charge.

Taxes. If the policy is not a MEC, withdrawals up to your basis (generally premiums paid, less earlier withdrawals) are not taxed. Loans are not taxed while the policy stays in force and is not a modified endowment contract (MEC). A policy that takes too much premium too fast in its first seven years becomes a MEC, and then loans and withdrawals are taxed as gain first, with a 10% extra tax before age 59 and a half, with certain exceptions. That matters here, because this policy is built for overfunding. The biggest risk is a lapse: if the policy ends with a loan outstanding, the amount by which the loan and other distributions exceed your basis becomes taxable income that year. See IUL taxes.

Riders and built-in benefits

• Chronic, critical and terminal illness accelerated death benefit riders. Optional, at extra cost. After a qualifying diagnosis, the owner can take part of the death benefit early. Transamerica says the payout is discounted, so you receive less than the death benefit you give up, the amount depends on the severity of the condition and the insured's remaining life expectancy, and an administrative fee applies to each request. See IUL chronic illness riders.
• Coverage for family members. The brochure says additional coverage for you and other family members can be added to one policy, at extra cost. Transamerica's product page lists a Base Insured Rider, a Children's Benefit Rider and an Accidental Death Benefit rider for this policy, plus a Guaranteed Insurability Benefit Rider, disability waivers and an Income Protection Option for beneficiaries.
• No-lapse premium. The brochure says the risk of lapse rises if you do not regularly pay at least the current minimum monthly no-lapse premium, but it does not describe a no-lapse guarantee period for this policy. Ask in writing whether one applies and for how long. Paying only the minimum builds little cash value.
• Overloan protection. Transamerica's product page lists an Overloan Protection Rider for this policy, but the Financial Choice IUL II brochure does not describe its terms. On the sister policy, electing it is irrevocable, ends other riders and carries a one-time charge. If you plan to borrow heavily, ask for this policy's terms in writing. See overloan protection.

How the illustration is built

You will decide on this policy by reading an illustration, a year-by-year projection of premiums, cash values and death benefits. Two columns matter. The guaranteed column assumes maximum charges and minimum crediting. The non-guaranteed column assumes today's charges and an illustrated interest rate held level for decades.

The NAIC's AG 49-A limits how high that illustrated rate can be, and it limits how much benefit an illustration can show from index loans. Transamerica does not publish this policy's maximum illustrated rate in its consumer materials, so ask for it on your illustration. Our own rule for hypotheticals is to stay at or below the AG 49-A limit and never above 6.5%. We also suggest running a second illustration 1 to 2 points lower, because real crediting varies year to year and the order of good and bad years matters once loans begin.

Projections built on index loans usually look better than those built on standard or preferred loans. Ask to see both. Our guide on how to read an IUL illustration walks through each column.

Who Financial Choice IUL II fits

• You need permanent life insurance and have used cheaper tax-advantaged options first, such as a 401(k) match and an IRA. See IUL vs 401(k).
• You can pay well above the target premium for many years, up to the tax limits. That is what max-funded IUL means.
• You want coverage of at least $250,000.
• You plan to draw income after year 10, when preferred loans are cheapest.
• You like having uncapped and higher-cap accounts to choose from, and you understand that the high-cap accounts carry a yearly charge.
• You live outside New York. In California, confirm it is available first, because Transamerica's own pages disagree.

Who should look elsewhere

• You may need the money in the early years. Surrender charges apply, premium charges come off every payment, and Transamerica's own brochure warns of substantial losses if you stop paying early.
• You want a smaller policy or a steady monthly budget. Transamerica's Financial Foundation IUL II starts at $25,000 for some risk classes and has a no-lapse guarantee of up to 20 years.
• You mainly want a death benefit at the lowest cost. Term insurance or guaranteed universal life is built for that.
• You cannot commit to steady premiums. Underfunded accumulation IULs are the ones that lapse. See IUL lapse risk.
• You want the charge amounts in writing before you talk to anyone. The consumer brochure does not size most of them.
• You put heavy weight on how a carrier treats older policies. Read the rate-increase history in our Transamerica company review first.

To see how this policy stacks up against other accumulation designs, compare it in our IUL comparison tool or see the best IUL for cash accumulation.