Annuity Calculator
Calculate your regular pension payouts based on your retirement corpus, annuity rate, and payout preferences.
Annuity Details
Current annuity rates generally range from 5.5% to 7%.
Used to calculate total returns over your expected lifespan.
Monthly Payout
₹54,167
Guaranteed payout for life.
Total Payout Received
₹1,30,00,000
Over 20 years
Maturity / Death Benefit
₹1,00,00,000
Returned to nominee
Total Value Breakdown (Over 20 Years)
Total Value Received (Payouts + Maturity): ₹2,30,00,000
Understanding Annuities
An annuity is a contract between you and an insurance company. You make a lump-sum payment (the purchase price), and in return, the insurer promises to make regular payments to you immediately or at some point in the future.
With Return of Purchase Price (ROPP)
This is the most popular option in India. You receive a regular pension for life, and upon your death, the original lump sum you invested is returned to your nominee. Because the principal is preserved, the regular payouts are lower.
Without Return of Purchase Price
In this option, you receive significantly higher regular payouts because the insurer pays you back both the interest and a portion of your principal. However, upon your death, the payouts stop, and nothing is returned to your nominee.
Tax Implications
The regular annuity payouts you receive are treated as "Income from Other Sources" or "Salary" and are fully taxable according to your applicable income tax slab. If you are in a higher tax bracket, annuities can be tax-inefficient compared to other withdrawal strategies like SWP (Systematic Withdrawal Plan) from Mutual Funds.
Frequently Asked Questions
What is an Annuity?
An annuity is a financial product, typically offered by insurance companies, designed to provide a steady stream of income during retirement. You invest a lump sum (the purchase price), and in return, the insurer guarantees regular payouts.
What is 'Return of Purchase Price' (ROPP)?
Annuities with ROPP pay you a regular income for life, and upon your death, the original lump sum invested (purchase price) is returned to your nominee. Because the principal is preserved, the regular payout amount is lower compared to annuities without ROPP.
What happens in an annuity 'Without ROPP'?
In an annuity without ROPP, the regular payouts are higher because the insurer amortizes (uses up) your principal along with the interest. However, upon your death, the payouts stop, and nothing is returned to your nominee.
Are annuity payouts taxable?
Yes, the regular annuity payouts you receive are treated as 'Income from Other Sources' or 'Salary' and are fully taxable according to your applicable income tax slab.
Can I surrender an annuity policy?
Surrendering an annuity policy is generally very difficult and often comes with strict conditions and hefty surrender charges. It is designed to be a lifelong commitment to ensure you don't outlive your savings.