Annuity Calculator

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.

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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:

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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.

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.

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

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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.