What is a Annuity Calculator?
A Annuity Calculator is a free online tool that helps you calculate monthly pension income from any lump sum annuity investment at current annuity rates. FinCalc Pro offers India's most accurate Annuity Calculator with instant results, detailed charts, and step-by-step breakdowns — completely free with no login required.
Annuity Calculator Formula
An annuity converts a lump sum into regular periodic payments. Annuity rate (6-7% typically) determines monthly income. Types: immediate annuity (starts next month), deferred annuity (starts later). Life annuity pays until death.
How to Use Annuity Calculator
- Enter the lump sum amount to be invested in the annuity
- Enter the annuity rate offered by the insurer (6-7% typically)
- Select annuity type (immediate vs deferred) and payout frequency
- Enter the payout period in years or select 'lifetime'
- Click Calculate to see monthly income and total payout over the period
Annuity Calculator — Example
Lump Sum: ₹50,00,000 | Annuity Rate: 6.5% | Immediate | Monthly → Monthly Pension: ₹37,500 | Annual: ₹4,50,000 | Return of purchase price option reduces payout by ~15%
Benefits of Using Annuity Calculator
- Guaranteed income for life — no market risk after purchase
- Plan retirement income with predictable monthly cash flows
- Compare annuity income with SWP from mutual funds
- Mandatory for 40% of NPS corpus — know what you'll get
Frequently Asked Questions — Annuity Calculator
What is an annuity and how does it work?
An annuity is an insurance product where you pay a lump sum to an insurance company (like LIC, HDFC Life, SBI Life) and receive guaranteed periodic payments (monthly, quarterly, or annual) for a fixed period or for life. It converts accumulated corpus into guaranteed retirement income.
Should I choose annuity or SWP for retirement income?
Annuity pros: guaranteed for life, no investment management needed, predictable income. Annuity cons: low returns (6-7%), no inflation protection, illiquid. SWP pros: higher returns (8-12%), flexible, corpus can be passed to heirs. SWP cons: market risk, requires active management. Ideally combine both.
What is the tax treatment of annuity income?
Annuity income (pension received from insurance company) is fully taxable as per your income tax slab. Unlike PPF or PF maturity, annuity provides no tax-free income. Factor in your expected tax rate in retirement when calculating net annuity income.