The retirement period can be one of the most joyful times of our lives. This is when you are less stressed, have time to do things that you love, and enjoy quality time with family. However, during this time regular income stops but expenses don’t. An immediate annuity plan could be the solution for post-retirement income. Pay-outs start as soon as it is purchased, unlike the traditional annuities which take months or even years.


An immediate annuity is a risk management tool designed to offer a stable source of monthly or annual income for the rest of your life. Before getting your hands on the best annuity plans in India from the top insurance company, know what an annuity is and its benefits. This will help you make an informed choice.

1. Immediate Annuity Benefits

The first and the foremost benefit is a stable income for as long as you live. This way, you do not have to worry about financial independence after retirement. Since the payout begins almost immediately, it helps to cater to emergencies. Further, the best annuity plan is a tax-sheltered way of planning for retirement. Lastly, pick a joint-life annuity plan to let your spouse be financial protected in the event of your death.

2. Annuity Pay-Out Modes

You can receive monthly, quarterly, half-yearly or annual payments for a lifetime. You can also pick a set number of years according to your financial preferences. Further, know that there are no withdrawal penalties since immediate annuity ensures immediate payments.

3. How Immediate Annuity Works

The annuitant, which is you, can transfer the risk to the insurance company. Now, all you have to do is pay the premiums on time. Since it is an immediate annuity, you are required to pay a lump sum amount up-front. Know that this cannot be accessed once you have handed it over. The payment will mainly depend upon your age, interest rates, and gender.

4. Features of Immediate Annuity

  • The purchase price is the only premium you will pay. 
  • There are multiple payment options to choose from.           
  • The annuity will stop right after the death of the policyholder.
  • Your husband/wife is eligible to be the secondary annuitant.
  • It can increase each year at a compound rate of interest.

5. Tax Concerns of Immediate Annuity Plans

The payments of the annuity policy are seen as in-hand income. So, they are added to your income source, and then the final amount is taxed as per existing tax slab rates in India. But, the premium paid is deductible under Section 80CCC with a maximum limit of ₹1.5 lakhs during a year. This would be on expenses required to buy a new policy or to continue a plan that offers annuity at intervals.

The deductions are open to non-resident Indians too who contribute to a pension pot. However, before investing, do read about the tax provisions since they are subjected to change.

If you wish to receive guaranteed income for the rest of your life, consider an immediate annuity plan. Read the terms and conditions carefully and talk to a financial advisor for the right decision.

Categories:Investment
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