Annuity Payment Calculations: How much monthly, annually payouts you will get on Rs 10 lakh, Rs 15 lakh, Rs 20 lakh investments
Monthly Annuity Calculations: Annuity plans give the benefit of investing one time and taking the amount back along with interest in the form of monthly, quarterly, half-yearly, and yearly instalments. Senior citizens often use annuity plans to get a regular income in their retirement phase. How much monthly and annual annuity amounts you may get on investments of Rs 10 lakh, Rs 15 lakh, and Rs 20 lakh? Know here-
Annuity calculations, what is annuity?: During the retirement phase, a person needs a regular income to run their expenses. Even in youth, one may require a regular income to achieve their financial goals. For that, they need an investment tool where they can invest one time or in phases and get a return in the form of a regular income or market-linked returns. Annuity plans are such contracts between a person and the insurance company, where investors may invest one time (lump sum) or in phases (monthly premiums) and get a return in the form of interest and principal as a regular income. The regular income can be for 10 years, 20 years, or more, for the lifetime of the insurer, or for the lifetime of their spouse also. The payment can be monthly, quarterly, half-yearly, or yearly. Know about types of annuity plans, types of premiums, and what will be monthly and annual annuity payouts if one invests Rs 10 lakh, Rs 15 lakh, or Rs 20 lakh in immediate annuity plans that are providing an 8 per cent annual interest rate.
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(Disclaimer: These calculations are projections, Actual calculations may vary.)
How do annuity plans work?
You make a lump sum investment or monthly premiums; instruct the insurance company to provide you a fixed amount every month, quarter, half year, or year. You may ask the insurance firm to start payouts immediately or may defer it.
Do you get principal amount back on annuity plan maturity?
The concept of the annuity plans is that you get the interest and principal back in phases. So, when you get the last payout, your maturity also becomes zero.
Are annuity payments fixed?
It depends on whether you invest in a non-market-linked annuity plan or a market-linked plan. In a market-linked plan, you know the annuity payout amount from the beginning till the end. However, in a market-linked plan, the payout may depend on the performance of the assets your money is invested in.
Types of annuity plans?
In India, 3 annuity plan categories are popular.
Investors in the retirement phase or near retirement often opt for immediate annuity plans. Here, investors pay a lump sum amount as premium and the payouts start immediately. Since the duration between the premium payment and payout is not much, investors may get less annuity payout compared to what they may get in deferred annuity plans, where the accumulation phase is longer.
Deferred annuity plans
In this type of annuity plans, an investor makes a one time, or monthly premiums for some years and lets the amount grow. The payout phase starts after some years. Because of the growth accumulated over the years, the investor can get a higher payout if they start early compared to a person who starts late. This type of annuity plan is popular among people who are in their 30s or 40s. They often use these plans to get regular payouts at retirement. A large accumulation phase can help them get higher payouts with the same investment compared to a person with the same investment and shorter accumulation phase. These plans are of 2 types-
Fixed annuity plans
This provides fixed income throughout the policy period. At the time of buying the annuity plan, you will receive the payout. These are non-linked, so your payout doesn't change throughout the policy tenure.
Variable annuity plans
These are market-linked plans, where your maturity can change based on the market performance. These plans have 2 phases—the accumulation phase and the vesting phase. During the accumulation phase, your investment grows, and during the vesting period, you get payouts.
Calculations for story
We will calculate the monthly and annual annuity amounts for 20 years for a person who invests Rs 10 lakh, Rs 15 lakh, and Rs 20 lakh in a policy promising a fixed 8 per cent annual return.
Monthly annuity payout for 20 years on Rs 10 lakh investment
Monthly annuity payout- Rs 8,309.01
Total of 240 payments: Rs 2,026,788.73
Total of interest return: Rs 1,026,788.73
Yearly annuity payout for 20 years on Rs 10 lakh investment
Yearly annuity payout- Rs 94,307.60
Monthly annuity payout for 20 years on Rs 15 lakh investment
Monthly annuity payout- Rs 12,463.51
Total of 240 payments: Rs 3,040,183.10
Total of interest return: Rs 1,540,183.10
Yearly annuity payout for 20 years on Rs 15 lakh investment
Yearly annuity payout- Rs 141,461.40
Monthly annuity payout for 20 years on Rs 20 lakh investment
Monthly annuity payout- Rs 16,618.02
Total of 240 payments: Rs 4,053,577.47
Total of interest return: Rs 2,053,577.47
Yearly annuity payout for 20 years on Rs 20 lakh investment
Yearly annuity payout- Rs 188,615.20