Fixed Annuity

Looking for a predictable way to earn steady income in your later years—without worrying about market ups and downs? A fixed annuity, when bundled within a life insurance plan, gives you just that. You can enjoy guaranteed payouts for 5 years, 10 years, or even for a lifetime, while your loved ones stay protected under a life cover.

This blend of security, returns, and insurance is designed for those who prefer planning over guessing. Curious how this works? Let’s dive in.

What is a fixed annuity?

A fixed annuity is a financial product offered under life insurance that guarantees you a specific amount of income for a pre-defined period or for life. It’s ideal for individuals who want a no-surprise income stream after retirement, while enjoying the added protection of life insurance.

Your insurer invests your premium and pays you back through regular payouts, typically monthly or annually. The interest rate is fixed at the time of purchase—so your returns remain unaffected by market volatility.

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A fixed annuity plan comes with multiple advantages, especially when tied with life insurance. It helps you lock your income, avoid market risks, and still create a safety net for your family.

Let’s look at why these plans are increasingly chosen by individuals planning early or near-retirement:

• Guaranteed income:

Your payout amount and frequency are fixed at the beginning, which means you know exactly how much you’ll receive and when.

• Zero market dependency:

Fixed annuities offer peace of mind by ensuring your income is not tied to market ups and downs. Great for risk-averse savers.

• Life insurance protection:

Many annuity plans are backed by life insurance, meaning your nominee receives a death benefit in case of your passing during the annuity phase.

• Predictable savings tool:

A fixed annuity is perfect if you prefer predictability in returns, especially in your non-working years.

• Option to add return of purchase price:

Some plans offer to return your invested premium to your nominee after your demise, adding legacy value to your retirement planning.

Compare life-insurance-backed annuity plans with built-in calculators and get premium quotes!

Difference between immediate vs. deferred fixed annuity

Both immediate and deferred annuities are popular fixed annuity options, but they differ in when they start paying you. Here's how to tell which one fits your life stage better:

Flexibility is another key feature of fixed annuity plans. You can choose how often you receive your income and how long you want it to last. Let’s break it down:

• Monthly payouts:

Perfect for those looking to replace salary-like income post-retirement. Helps manage routine expenses efficiently.

• Quarterly payouts:

If you prefer receiving income every three months, quarterly options work well for budgeting larger periodic costs.

• Yearly payouts:

Ideal for people who want to reinvest or allocate their yearly sum to specific expenses like premiums or travel.

• Lifetime payout:

You receive income for as long as you live. It’s the ultimate peace-of-mind plan, especially when coupled with life insurance.

• Fixed term payout (e.g. 5, 10, 20 years):

Choose a term that suits your financial goals—from 5-year guarantees to 20-year structured income.

Explore life-insurance-backed fixed annuities tailored to your goals, set your payout preferences and get personalised quotes instantly!

Tax benefits under sections 80C/80CCC/other relevant sections on fixed annuity

Fixed annuities under life insurance come with tax-saving advantages. Depending on how your plan is structured, you could be eligible for deductions and exemptions.

• Section 80CCC:

Premiums paid towards an annuity plan (up to Rs. 1.5 lakh) may qualify for tax deduction under Section 80CCC.

• Section 10(10D):

If your fixed annuity is clubbed with a life insurance component, the death cover may be tax-free.

• Deferred taxation:

The growth on your annuity corpus is tax-deferred until withdrawal, meaning your investment grows faster.

• Return of purchase price:

This is generally exempt from taxation when received by your nominee.

While fixed annuities are known for stability, they also come with clear guidelines for surrender and liquidity. If you need access to your funds early, here’s what you should know:

• Surrender value:

If you surrender your policy early, the insurer pays a pre-calculated amount called the surrender value. It varies based on tenure and payout phase.

• Liquidity before annuity begins:

In deferred annuity plans, you may be able to withdraw or partially surrender before the payout phase begins.

• Loan against annuity:

Some insurers allow you to borrow against your annuity corpus in emergencies, giving you access without breaking the plan.

• Early withdrawal penalties:

Withdrawals before maturity may attract charges or tax, so it’s wise to plan well.

Conclusion

A fixed annuity, especially when structured under a life insurance plan, is a powerful way to earn steady income and secure your family's future. From predictable payouts to life-long benefits and tax savings—it's a plan built for those who value peace of mind.

Want to get started? Check your eligibility, compare life insurance-backed annuity options, and lock your rate now → Get Quote!