Calculate the monthly payout from a fixed annuity based on your principal, interest rate, and payout period.
This calculator computes the monthly payout from a fixed annuity — a financial product where you invest a lump sum and receive regular periodic payments over a defined period. It tells you how much you will receive each month, the total amount paid over the entire payout period, and the total interest earned on your principal. Annuities are used in India primarily as post-retirement income tools, where retirees invest a corpus from EPF, PPF, or NPS withdrawals into immediate or deferred annuity products offered by life insurance companies.
This calculator uses the standard amortisation formula to compute a level monthly payment that fully exhausts the invested principal over the selected payout period, earning the specified interest rate on the outstanding balance.
Formula: Monthly Payout = [P × R × (1 + R)N] ÷ [(1 + R)N − 1], where P = principal, R = monthly rate (annual rate ÷ 12), N = total months (years × 12). Total Paid = Monthly Payout × N. Interest Earned = Total Paid − Principal.
Example: ₹10,00,000 invested at 6% per annum (example rate — enter your actual rate) for 20 years: Monthly payout ≈ ₹7,164.31. Total amount received ≈ ₹17,19,434.54. Interest earned ≈ ₹7,19,434.54. (Note: actual annuity products may have different payout structures including inflation-linked payouts, return of purchase price options, or joint-life payouts — consult the insurer\'s product documentation.)
Annuity products in India are regulated by the Insurance Regulatory and Development Authority of India (IRDAI) and are offered exclusively by life insurance companies. They are broadly classified into immediate annuities (where payouts start immediately after the lump sum investment) and deferred annuities (where the corpus accumulates during a deferral period before payouts begin). Common annuity variants available from insurers like LIC, SBI Life, HDFC Life, ICICI Prudential Life, and others include: Life annuity (payouts for life only — ceases on death); Life annuity with return of purchase price (payouts for life; nominee receives the principal on death); Joint life and survivor annuity (continues until the survivor\'s death for a married couple); and Annuity certain (payouts guaranteed for a fixed period regardless of survival). The National Pension System (NPS), which is a government-regulated retirement savings scheme, mandates that at least 40% of the corpus accumulated by the NPS subscriber must be used to purchase an annuity from an IRDAI-registered Annuity Service Provider (ASP) on retirement. The remaining 60% can be withdrawn tax-free as a lump sum. The Pradhan Mantri Vaya Vandana Yojana (PMVVY), offered through LIC, has provided guaranteed annuity rates for senior citizens in various iterations. Annuity income in India is taxable as income from other sources and must be declared in the tax return.
Yes — annuity income in India is taxable. Payouts received from an immediate or deferred annuity are classified as "income from other sources" and are subject to income tax at the applicable slab rate. TDS (Tax Deducted at Source) may also be applicable on annuity payouts if the annual payout exceeds the threshold. This is different from the tax treatment of some other fixed-income instruments like tax-free bonds. When comparing annuity returns with other instruments, always consider the post-tax income, especially if you are in the 30% tax bracket.
An immediate annuity starts paying out within one month of the lump sum investment — you invest a corpus today and receive your first payment next month. This is the most common form used by retirees converting their provident fund or pension corpus into a regular income stream. A deferred annuity has two phases: an accumulation phase (where your premium grows over years) and a payout phase (when regular payments begin). Deferred annuities are more suitable for those still in their working years who want to build a corpus while also securing future income.
Annuity rates offered by Indian insurance companies typically range from 5% to 8% per annum depending on the insurer, the annuitant's age (older annuitants receive higher rates due to shorter expected payout period), and the annuity option selected (e.g., return of purchase price options have lower rates). LIC's Jeevan Akshay and Saral Pension Plan are popular benchmarks — check current rates directly with insurers as rates change periodically based on interest rate environments. For planning purposes, a conservative assumption of 5.5-6% per annum is reasonable for current-day products; however, rates may be higher for older annuitants.
Under the National Pension System (NPS), upon reaching the age of 60 (or superannuation), the subscriber must mandatorily use at least 40% of the accumulated corpus to purchase an annuity from an IRDAI-registered Annuity Service Provider (ASP). The remaining 60% can be withdrawn as a lump sum tax-free (under Section 10(12A) of the Income Tax Act). The annuity purchased provides a regular monthly pension for life. Government employees under NPS Tier-I may have different drawdown rules. Use this calculator to estimate the monthly income from the annuity portion of your projected NPS corpus at different annuity rates.
PMVVY is a social security scheme for senior citizens (aged 60 and above) operated through the Life Insurance Corporation of India (LIC). It offers a guaranteed pension/annuity for a policy term of 10 years, with various payout modes (monthly, quarterly, half-yearly, or annually). The scheme has been offered in multiple tranches with different guaranteed payout rates; the most recent tranche offered 7.4% per annum for monthly payouts. Investment limits (typically ₹15 lakh per senior citizen) and scheme availability change periodically — check LIC's website or the Ministry of Finance for current terms, as the scheme is subject to government notification.
Generally, annuity products in India do not allow partial withdrawals once the payout phase has begun — they are designed as committed, irrevocable income streams. Some products may allow full surrender with a penalty, particularly in the early years. Deferred annuity products in the accumulation phase may allow partial withdrawals subject to the policy terms. Because of this illiquidity, it is important to size your annuity purchase appropriately, keeping some corpus liquid in instruments like SCSS, FDs, or debt mutual funds for unexpected expenses.
Disclaimer: The information, rates, and figures on this page are for educational and illustrative purposes only and do not constitute financial advice. Annuity rates, product features, and tax treatment are subject to change. Actual annuity payouts depend on the specific insurer, annuity product, annuitant's age, and payout option selected. Annuity income is generally taxable in India. Consult a SEBI-registered investment adviser or a certified financial planner for advice specific to your retirement planning needs.