An annuity calculator is a specialized financial tool designed for an NRI to evaluate and understand their annuity investments and post-retirement income in India. This calculator has a user-friendly interface and advanced algorithms, which empowers you to make informed decisions. Whether you are planning for retirement, looking for a reliable income stream, or seeking to diversify your investment portfolio, an annuity calculator is an invaluable tool. In this article, let us learn about the details and benefits of an NRI from an Annuity Calculator.
Invest ₹20k monthly & Get yearly pension of ₹4.2 Lacs for Life
Guaranteed Return For Life
Multiple Annuity Options
Expected Return on Investment
Percentage of Corpus Allocated for Pension
Expected Return from Pension
The Annuity Calculator is a powerful online tool that helps you evaluate your investments in Annuity Plans in India as an NRI. It provides you with accurate projections of potential returns after retirement from your annuity plan.
The annuity payout/ income from your plan is based on the following factors:
Initial Investment Amount
Premium Payment Frequency
Annuity Payout Frequency
Interest Compounding Periods
With the results of the Annuity Calculator, you can gain insights into the following:
Your Future Income Stream
Amount Needed to Invest for Desired Annuity Amount
Expected Rate of Returns
Help Decide the Best Investment Option for Your Financial Planning
An annuity calculator eliminates the need for complex calculations. It also provides users with a clear understanding of the financial benefits and risks associated with annuities.
Before learning how to use an annuity calculator, let us learn in brief about what is an annuity.
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An annuity is a financial product offered by insurance companies in India that provides an NRI with a steady stream of income over a specified period during their golden years.
An annuity plan is commonly bought by NRIs for guaranteed income stream and financial planning during retirement
In India, the most common type of annuity are pension plans
These plans function as a contract between you and the insurance company
Annuities offer flexible payout options with regular income payments for a fixed period, your entire lifetime, or a combination of both.
In your absence, the annuity plans provide a pre-determined death benefit to your beneficiaries
Annuities provide the advantage of tax-deferred growth in India
You can also avail of early withdrawal options in case of unforeseen circumstances, with the payment of penalty fees
You get the flexibility to choose between fixed or variable annuities, select the payout frequency, and even add additional features like protection against inflation or market fluctuations
The annuity plan ensures regular payouts for you and your family to maintain their lifestyle even after your retirement
Before learning the use of annuities calculator, let us have a quick glance at the different types of annuities in India that are available to an NRI from the table mentioned below:
|Annuity Plan Type||Description|
|Life Annuity||Pays regular income throughout the lifetime of the annuitant.|
|Joint Life Annuity||Provides regular income to two annuitants, usually spouses, until both are alive.|
|Guaranteed Period Annuity||Ensures the annuity payment for a specific period, typically 5, 10, 15, or 20 years, even after death.|
|Increasing Annuity||Offers annuity payments that increase at a fixed rate annually to counteract inflation.|
|Annuity Certain||Pays annuity for a pre-determined period, irrespective of whether the annuitant is alive or not.|
|Return of Purchase||Returns the purchase price of the annuity to the nominee or legal heirs in case of the annuitant's death.|
|Annuity with Riders||Additional options can be added to enhance the annuity plan, such as critical illness or disability riders.|
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Following are the various terms and conditions of tax treatment for an NRI in annuity plans in India:
Tax deductions on the total premium paid for the annuity plan u/ Section 80CCC of the Income Tax Act, 1961
The deduction limit under Section 80CCC is ₹1.5 lakh
The investment returns from an annuity plan grow tax-deferred until you start receiving payments
When you start receiving payments from an annuity plan in India, the payments will be taxed as income as per the IT Act, 1961
The insurance company issuing the annuity plan is required to deduct Tax Deducted at Source (TDS) on the annuity payments made to NRIs, as per the prevailing tax rates
NRIs can benefit from the provisions of Double Taxation Avoidance Agreements (DTAA) between India and their country of residence
**An NRI can avail of these tax benefits only if the annuity plan is purchased from an insurance company in India that is registered with the IRDAI.
An annuity calculator provides the following benefits for an NRI who is considering investing in an annuity plan in India:
An annuity calculator helps NRIs plan their financial goals effectively by calculating the investment amount needed to achieve their desired income stream in future.
NRIs can use an annuity calculator to compare different annuity options available in the market, considering factors such as interest rates, payout frequencies, and terms.
NRIs can estimate the future value of their annuity investments with a monthly annuity calculator, by inputting the principal amount, interest rate, and investment duration, helping them evaluate potential growth.
Annuity payout calculators assist NRIs in planning for retirement by determining the regular annuity payments they can expect based on their retirement savings, interest rates, and retirement duration.
Many annuity payout calculators allow NRIs to input and calculate values in different currencies, facilitating a better understanding and comparison of annuity options in different countries.
Online annuity calculator provide NRIs with quick and easy access to calculate their annuity values, saving time and effort compared to manual calculations or consulting financial advisors.
An annuity calculator provide NRIs with valuable insights to make informed decisions about annuity investments based on their preferences, financial goals, and estimated outcomes.
Follow the steps mentioned below to learn how to use the Policybazaar Annuity Plan Calculator:
Step 1: Identify the type of annuity you're considering, such as:
Immediate Annuity Plan
Deferred Annuity Plan
Step 2: Enter the required details into the annuity calculator-
Initial Lump Sum/ Instalment Amount (the amount you plan to invest)
Expected Interest Rate
Deferral Period of Annuity (in case of Deferred Annuity Plan)
Duration of Annuity Payouts
Frequency of Annuity Payments (in case of Regular Annuity Plan)
Step 3: The annuity payout calculators will automatically display the following results-
Estimated Payout Amount
Total Investment Required
Expected Rate of Interest for Desired Annuity Amount
Step 4: Vary the input details to compare various annuity options offered by insurance providers and determine the best annuity plan as per your financial planning
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An annuity calculator is a valuable tool for NRIs who wants to buy an annuity plan in India. It helps them plan their finances, compare annuity options, estimate future values, and make informed decisions about their investments. With the flexibility of currency conversion and quick accessibility, NRIs can use annuity calculators to tailor their financial strategies and enhance their understanding of annuity products.
Here are some examples of how much a $500,000 annuity might pay per month:
Immediate Annuity Plan: An immediate annuity starts paying out immediately after the purchase. A $500,000 immediate annuity might pay around $2,200 per month for life to a 65-year-old male.
Deferred Annuity Plan: A deferred annuity does not start paying out until a later date, such as retirement. A $500,000 deferred annuity might pay around $2,800 per month for life to a 65-year-old male who purchased the annuity at age 45.
Type of annuity plan
Age of the annuitant
Other factors that may affect the calculation
Annuity payments are based on these factors and can vary significantly depending on the specific terms of the annuity contract.
Here are some examples of how much a $100,000 annuity might pay per month:
Immediate annuity: An immediate annuity starts paying out immediately after the purchase. A $100,000 immediate annuity might pay around $448 per month for life to a 65-year-old male.
Deferred annuity: A deferred annuity does not start paying out until a later date, such as retirement. A $100,000 deferred annuity might pay around $561 per month for life to a 65-year-old male who purchased the annuity at age 45.
Immediate annuity: An immediate annuity starts paying out immediately after the purchase. Rs. 1 crore immediate annuity might pay around Rs. 40,000 per month for life to a 65-year-old male.
Deferred annuity: A deferred annuity does not start paying out until a later date, such as retirement. A Rs. 1 crore deferred annuity might pay around Rs. 50,000 per month for life to a 65-year-old male who purchased the annuity at age 45.
Tax benefits on payments made to the annuity plan in India u/ Sec 80CCC of the IT Act, 1961
The income received from immediate annuities is taxable as income from other sources u/ the IT Act, 1961
Income received from deferred annuities is tax-free until the annuitant starts receiving payments
If the NRI is resident in a country with which India has a DTAA, the tax liability may be reduced or eliminated
Step 1: Gather the necessary information, such as-
Principal amount (initial investment)
Annuity term (number of years or months)
Payout frequency (monthly, annually, semi-annually)
Step 2: Select the calculation method depending on the type of annuity and payout structure-
Present Value of an Annuity (PVA) formula for calculating the periodic payment amount
Future Value of an Annuity (FVA) formula for determining the total value of the annuity over time
Step 3: Use a financial calculator, spreadsheet software, or an online annuity calculator to perform the calculation based on the selected formula and variables
*All savings are provided by the insurer as per the IRDAI approved
insurance plan. Standard T&C Apply
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