An annuity plan is an insurance contract between you (the annuitant) and an insurance company to provide you with a regular stream of 100% guaranteed pension for a lifetime after retirement. This helps you to secure your life goals and create a financial net for your family. The life insurance company invests your money and pays back the returns generated from it. You could think of it as a pension payment that is made to you. The annuitant has the option to choose how he/she wishes to receive a pension – monthly, quarterly, half-yearly, or yearly. Annuity plans come with flexible investment options as well as payout options to ensure that you can accumulate your retirement funds at your convenience and receive the payouts for fulfilling your financial goals. You can claim a deduction of up to Rs. 1.5 lakhs on the premiums paid for an annuity plan u/Sec 80CCC of the IT Act, 1961. Taxation on Income Received. The income earned as annuity is taxable as per your income tax slabs under the chosen old vs. new income tax regime for FY 2023-24. Individuals, who intend guaranteed returns post-retirement, along with a financial safety net for their family, will opt for annuity plans. Various options like a single annuity, joint annuity, and an annuity with returns of purchase price are available to suit individual preferences. Flexibility to pay a regular premium or a single premium is also offered.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet; and is subject to changes. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a purchase.
