Think of a guaranteed annuity as a reverse savings plan. You pay a lump sum today, and in return, your insurance provider pays you regular income over time—either for a fixed term or for life.
This is how it works, step by step:
How it works before annuity begins:
When you purchase a guaranteed annuity, you can choose to start receiving income immediately (immediate annuity) or at a future date (deferred annuity). You pay a single premium upfront.
Once annuity begins, you'll receive monthly, quarterly, or annual payouts based on your plan type and duration. The longer you wait to start, the higher your payouts can be.
Your payouts do not change with market conditions. Even during market lows, your income stays consistent—perfect for budgeting and managing lifestyle expenses post-retirement.
Annuity payouts are partially tax-free under Section 10(10D) in India, depending on the structure—adding to your net savings.
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Types of guaranteed annuities available for Indian investors
Choosing the right annuity depends on how and when you want to receive your income. Here are the most popular options in India that suit different retirement goals:
Immediate guaranteed annuity:
Ideal for retirees or those looking for instant income. Start receiving your annuity income right after you invest—usually within one year.
Deferred guaranteed annuity:
Defer your payouts to a later date (say 5–10 years). You lock in today's rates and enjoy higher future income. Great if you're planning for post-retirement but not retiring just yet.
Life annuity with return of purchase price:
You receive income for life, and after your demise, the purchase price is returned to your nominee. This is perfect for those who want to leave behind a safety net.
Fixed term annuity (e.g., annuity guaranteed for 5 years):
Get assured income for a set period. For instance, a 5-year guaranteed annuity ensures payouts even if you’re no longer around. Nominees continue to receive the amount for the remainder of the term.
Joint-life guaranteed annuity:
Ideal for couples. After your passing, your spouse continues to receive the annuity income. Financial security for two, in one plan.
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