Is Transamerica a Pyramid Scheme? (2023)

For years now, Transamerica has been selling or offering individuals several financial products like healthand life insurance. Through a company it owns called World Financial Group (WFG), it does this through a multi-level marketing (MLM) company. Given how WFG operates or works, many are questioning whether Transamerica is a legit company.

Furthermore, many wonder whether Transamerica is a pyramid scheme. If you’ve been asking yourself such questions, you will find this post extremely helpful as it gets to highlight Transamerica in detail. Most importantly, it’ll answer whether or not it’s a pyramid scheme or if it’s legit.


Is Transamerica a Pyramid Scheme

Yes, Transamerica is a pyramid scheme. While we might not recommend it, it is an ideal company for anyone who wants to sell insurance to other people.   

Transamerica's Brief History

Transamerica's Brief History


Founded back in 1991 by Hubert Humphrey, Transamerica is an American-based company that sells or specializes in two types of financial products: health and life insurance. Transamerica has several techniques and programs to achieve health goals regarding selling health and life insurance. One such program is the MLM. The company allows just about anyone to make money by selling Transamerica insurance programs or recruiting other people to sell their insurance products.

It hasn’t been all smooth sailing for Transmeria ever since it was founded. For instance, they’ve been fined for the type of marketing technique they use. Many associate it with unlawful marketing techniques, and as a result, they ended up rebranding or changing their name to World Marketing Alliance. Furthermore, it was sold by Hubert Humphrey (the founder) in 1999 to Aegon and is now a subsidiary of World Financial Group.

What Kind of Company Is Transamerica?

What Kind of Company Is Transamerica


Transamerica's information on their official website is an American holding company for many life and health insurance companies. It bases its operation primarily in the U.S. and offers many products and services, including retirement services, life and supplement health insurance, annuities, employee benefits, and investment insurance.

How Does Trasmerica Work?

How Does Trasmerica Work

Understanding how Transamerica works is fundamental as it helps answer whether or not it is a pyramid scheme. That said, Transamerica has a person-to-person selling strategy. This person-to-person strategy usually has a hierarchy that is composed of members who are superior and recruits. The superiors are the ones who do the recruit. They are tasked with bringing in new people. Like a pyramid, this strategy forms a minimal structure at the top and broad at the bottom.

Anyone recruited to join Transamerica is required to sell or market Transamerica's financial products, general health, and life insurance. They are also required or asked to recruit other members to join Transerica to grow their network. If a participating member performs any of these tasks very well, there is a promise of receiving hefty rewards, prices, commissions, and fees. Transamerica's person-to-person selling strategy removes the emphasis from selling health and life insurance that’s on offer to increasing Transamerica's MLM network. Even worse, it is a strategy destined to collapse as it requires too many recruits.

Is Transamerica A Pyramid Scheme?

Is Transamerica A Pyramid Scheme

With some understanding of how Transamerica works, we can confidently conclude that, yes, they are a pyramid scheme. This is something Transamerica has gone to great lengths to hide. If you were to visit a website of any of their independent agents, you’d notice a business opportunity that’s cleverly designed to conceal their pyramid-like structure. Some of these websites rearrange typical pyramid scheme schematics by having recruits on top to indicate that recruits can somehow make more than the person that recruited them to join Transamerica.   

Knowing what you know now (Transamerica is a pyramid scheme), there are a few questions I am sure many of you have. Below are answers to some of the common follow-up questions many have after learning all this about Transamerica.

Is Transamerica A Legit Insurance Company?

Is Transamerica A Legit Insurance Company

Despite having a pyramid-like person-to-person selling strategy, or simply put, Transamerica is indeed a legit insurance company despite it being a pyramid scheme. They do offer many types of insurance policies that are perfectly designed to meet the needs of just about any American. Worth noting is that they do offer Americans term life insurance that comes with more than $5 million in coverage.

Are Transamerica Financial Advisors/Agents Legitimate?

Are Transamerica Financial Advisors Agents Legitimate

Given that they have a person-to-person selling strategy, Transamerica has several financial advisors and agents. These are the people that will be selling you what Transamerica offers (health and life insurance). Those who’ve come into contact with them are always keen on knowing whether or not they are legitimate.

The answer to this question is yes. Transamerica's financial advisors and agents are legitimate. What they are selling is entirely accurate, and you can trust them. This, however, doesn’t mean that you follow them blindly. Always be very diligent when dealing with both Transamerica's financial advisors and agents.  

Can I Cash Out My Transamerica?

Can I Cash Out My Transamerica

Knowing what you know now (the fact that Transamerica is a pyramid scheme), many people who have insurance with Transamerica would like to know whether or not they can be able to cash out their Transamerica. And why not? Being a pyramid scheme, it is bound to collapse at some point. That said, the answer is yes, but in some instances, you might end up losing some of your money.

Let’s say you happen to have a retirement plan with Transamerica. You can be able to take it all out with no problem whatsoever. You’ll, unfortunately, end up losing a substantial amount of your savings when cashing out your retirement plan.

Do I Get Money Back If I Cancel My Term Life Insurance?

Do I Get Money Back If I Cancel My Term Life Insurance

If you have life term insurance with Transamerica and want to or abruptly cancel it, you’ll not receive your money back. You can, however, get your money back or refund any premium you’ve paid for if you cancel your life term insurance during the policy's free look period.

In some cases, you can end up receiving some money from your cash value in the event you cancel a whole life policy with Transamerica. This, however, will result in it being taxed as income.

Is Transamerica FDIC insured?

Is Transamerica FDIC insured

Unfortunately, Transamerica is not insured by the FDIC or any federal government agency. Why should this concern you? Well, given that it runs a pyramid-based selling strategy, it is bound to collapse at some point. When this happens (Transamerica collapses), FDIC will not compensate you because Transamerica isn’t FDIC insured.

They do, however, point out on their website that they do have a century of experience in the industry and that their reputation is built on solid management, consumer confidence, and sound decisions. In other words, they are trying to point out that they cannot fail.

Conclusion For "Is Transamerica a Pyramid Scheme"

Is Transamerica a Pyramid Scheme

Regardless of what Transamerica might say, what they’d like you to believe or what their agents say, it is a pyramid scheme. It has a pyramid-like marketing and selling strategy that involves recruits benefiting from one another more than the health and life insurance that Transamerica is offering.

With just about every pyramid scheme, time usually catches up with them, and the same will also be the case with Transamerica. With this, we recommend that you avoid it entirely if you are looking at getting any of the services or products they offer.  

Transamerica Details

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