Annuity Calculator

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.

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Annuity Calculator

Your Age

18 Years 59 Years
Enter Your Age

Monthly Investment

₹500 ₹10L
Enter Investment Per Month

Expected Return on Investment

5% 15%
Expected Return on Investment

Percentage of Corpus Allocated for Pension

40% 100%
Enter Corpus Percentage

Expected Return from Pension

5% 15%
Enter Annuity Return
₹0
Your Monthly Pension
₹0
Your Monthly Pension
Your Pension Calculation
Your Pension Calculation
Total Investment
Returns Earned
Maturity Amount
Maturity Amount split (Lumpsum & Pension)
60%
Lumpsum Amount
At the age of 60 Yrs
40%
Pension Wealth
At the age of 60 Yrs

What is an Annuity Calculator?

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

  • Interest Rates

  • 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.

People also read: HDFC Life Annuity Rates For NRI

What is an Annuity?

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. 

Features of Annuity Plans:

  • 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

What are the Types of Annuities in India?

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
Immediate Annuity
  • Provides regular income immediately after the lump sum premium payment
  •  It is usually purchased at the time of retirement
Deferred Annuity
  • Allows the policyholder to accumulate funds over a specific period
  • The policyholder receives annuity payments later during the pre-decided annuity payout phase 
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.
Decreasing Annuity
  • Provides annuity payments that decrease over time
  • This is suitable for individuals with reduced needs
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.

People also read: SBI Annuity Deposit Scheme Calculator 2023

Taxation of Annuity in India for NRI

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.

investment plans for nrisinvestment plans for nris

Benefits of Annuity Calculator for an NRI

An annuity calculator provides the following benefits for an NRI who is considering investing in an annuity plan in India:

  1. Financial Planning:

    An annuity calculator helps NRIs plan their financial goals effectively by calculating the investment amount needed to achieve their desired income stream in future.

  2. Comparison Tool:

    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.

  3. Future Value Estimation:

    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.

  4. Retirement Planning:

    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.

  5. Currency Conversion Flexibility:

    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.

  6. Quick and Convenient:

    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.

  7. Decision Making:

    An annuity calculator provide NRIs with valuable insights to make informed decisions about annuity investments based on their preferences, financial goals, and estimated outcomes.

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How to Use an Annuity Calculator from Policybazaar?

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

  • Interest Earned

  • 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

pension-ki-no-tensionpension-ki-no-tension

People also read: Pros and Cons of the NPS For NRI

Wrapping It Up

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.

FAQ's

  • What does a $500,000 annuity pay per month?

    Additional information is required to determine the monthly payment from a $500,000 annuity plan, like the type of annuity, the insurance company, the age of the annuitant, and the interest rate.

    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.

  • How much does a $100 000 annuity pay per month?

    The monthly payment from a $100,000 annuity depends on various factors such as:
    • Interest rate

    • Annuity term

    • 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.

  • What is the annuity for Rs. 1 crore?

    Here are some examples of how much an annuity with a corpus of Rs. 1 crore might pay per month:
    • 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.

  • Are annuities tax-free in India?

    Annuities are not entirely tax-free in India. The tax treatment of annuities for NRIs depends on the following:
    • 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

  • How do you calculate what an annuity will pay?

    To calculate what an annuity will pay, you can use an online annuity calculator or follow these general steps:

    Step 1: Gather the necessary information, such as-

    • Principal amount (initial investment)

    • Interest rate

    • 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

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