Annuity planning empowers you to build a reliable and lasting income stream, ensuring you can enjoy your retirement years with confidence and financial independence. By securing your own future, you avoid depending on your children during your golden years, allowing them to focus on their own lives while you live with freedom and peace of mind. This page will guide you through the essentials of annuity planning, exploring the different types of annuities, their benefits, and how they can fit into your overall retirement plan.
What is annuity?
An annuity plan is a financial contract between an individual and an insurance company that provides a regular income during your retirement.
Before retirement, you will make a lump-sum payment or pay a set of premiums to the insurance company, and after retirement, the insurance company provides a regular annuity to the you.
How do annuity plans work?
Annuity plans are designed to provide a steady income stream, typically during retirement.
Here’s a step-by-step explanation of how they work:
Step 1
You invest the amount you have saved for your retirement with an annuity plan from a life insurance company
Step 2
You decide when you want your income to start, immediately or at a later date
Step 3
Until the annuity income starts, the money invested accumulates interest. This period, during which your money grows, is called the accrual or deferment period
Step 4
Your money is paid back to you regularly during your retirement years at a frequency chosen by you
Here’s an illustration of how an annuity plan works
Meet Rajesh,
50 year old
Rajesh, a 50-year-old IT professional, wants to secure his post-retirement life with a regular annual income
He decides to invest 
₹15 lakh in the ICICI Pru Guaranteed Pension Plan.
1
Year 50
5
Year 55
10
Year 60
Post-retirement
He will get
₹1.62 lakh*
every year as regular income for life.
* The purchase price in the above illustration is exclusive of taxes for Deferred Single Life with the return of purchase price annuity option.
What are the benefits of annuity plans?
Lifetime income
Guaranteed1 and secure
No Investment Cap
Add-on Benefits
Tax* Benefits
Lifetime income
Retiring from work does not mean you retire from life. You may want to maintain the same quality of life even after retirement, start new hobbies or fulfil your travel dreams.
Annuity plans can help you by providing regular income for as long as you live
Guaranteed1 and secure
Annuity plans are a safe option for retirement planning. These plans are free from risks and market-linked volatility2. They also help your money grow by fixing higher rates when you buy the plan. These annuity rates are locked for life
No Investment Cap
Annuity plans come with no upper limit on the amount you can invest. This flexibility allows you to maximise your retirement savings based on your goals and financial capacity. With an annuity plan, you can create a substantial income stream for a comfortable and secure retirement. Many individuals prefer to explore and buy annuity online for a seamless and hassle-free experience
Add-on Benefits
Some annuity plans also give you additional benefits like loyalty boosters, extra returns, and more
Tax* Benefits
While annuity plans primarily focus on providing financial security during retirement, certain tax* benefits may also apply, depending on the plan you choose. For instance, premiums paid towards an annuity plan is eligible for deductions under Section 80CCC* of the Income Tax Act, 1961, subject to conditions mentioned in the Act
What are the features of annuity plans?
Below are some features of annuity plans:
Low-risk Investment option
Annuity plans are ideal for individuals seeking a low-risk investment option to secure their retirement. These plans provide guaranteed2 payouts, ensuring a stable and predictable income stream.
By choosing an annuity plan, you can safeguard your savings from market fluctuations while focusing on long-term financial stability.
Many prefer exploring and buying annuity online for added convenience, making it easier to secure their future with minimal risk.
Regular Income Stream
Annuity plans are designed to provide a reliable and regular income stream, making them an excellent choice for retirement planning. These plans help you continue to receive steady payouts, helping you cover essential expenses and maintain your lifestyle. By selecting the right annuity plan, you can enjoy financial stability during your retirement years.
Flexible Payments
Annuity plans offer flexibility in payment options to suit your financial preferences. You can choose to make a one-time lump-sum payment or pay premiums over time, depending on your budget and goals. This adaptability makes annuity plans suitable for a wide range of investors.
Joint lives
Some annuity plans provide a joint life option where your spouse will continue to receive the regular income in your absence. This helps ensure that your spouse is financially secured even in case of an unfortunate event.
Deferment period
Annuity plans typically provide an option to defer the time when you start receiving regular income. This is the deferment period. During this period, your retirement corpus keeps growing. With this option, you have the flexibility to gradually build up your savings and ensure you have sufficient income when you retire.
Surrender value
The surrender value of annuities refers to the cash value available if you decide to terminate the plan prematurely. It depends on factors such as the length of the annuity term and any associated fees or penalties for surrendering prematurely.
Surrendering an annuity may result in a reduced payout compared to holding it until maturity. However, having a surrender value ensures that you have access to your funds during emergencies.
Leaving a legacy
Some annuity plans offer a death benefit. With this, your loved ones get a one-time lump sum amount or a regular income in your absence. This helps you leave a legacy for your family and ensure their financial security in the case of an unfortunate event.
COMP/DOC/May/2024/305/6245
What are the types of annuity plans?
Annuity plans come in various types, each catering to different financial needs.
Understanding these options helps you choose the right one for a secure retirement.
Immediate Annuity
Deferred Annuity
Fixed Annuity
Variable Annuity
Increasing Annuity
Lifetime Annuity
Immediate Annuity
An immediate annuity plan provides payouts right after the initial investment, generating a steady income stream from day one.
Deferred Annuity
A deferred annuity plan starts payouts at a future date (1 to 10 years later), allowing your investment to grow before you begin receiving income.
Fixed Annuity
A fixed annuity plan guarantees regular, fixed payouts, offering stability and predictability for your retirement.
Variable Annuity
A variable annuity plan allows for payouts based on investment performance, offering the potential for higher returns with increased risk.
Increasing Annuity
An increasing annuity plan provides payouts that grow over time, helping you stay ahead of inflation and increasing living costs.
Lifetime Annuity
A lifetime annuity plan generates payments for your entire life, offering financial security no matter how long you live.
List of factors to consider before buying annuity plans in india
When buying an annuity plan, it is important to consider various factors to ensure it fits your retirement needs.
Annuity rate
Annuity rate will determine the annuity payout you will receive. You can compare various annuity rates offered by the plans of different insurers and shortlist the plans meeting your expectations.
Financial Goals
When buying an annuity plan, make sure it aligns with your financial and retirement goals. The right annuity plan will provide the necessary income to support your lifestyle, healthcare, and other post-retirement needs. Choose a plan that suits your long-term goals and meets your expected financial requirements.
Annuity Payout Frequency
The frequency of payouts is crucial when buying an annuity plan. You can select a plan with monthly, quarterly, or annual payouts based on your financial goals. Determine whether you want payouts for a fixed term or for your lifetime so that they fit your retirement income needs.
Vesting Age
Vesting age refers to the age when you start receiving payments from your annuity plan. Check if the vesting age matches your retirement timeline. The right age to begin payouts can significantly impact your financial planning, ensuring you have a steady income as you transition into retirement.
Personal Financial status
Before purchasing an annuity plan, evaluate your current financial status and budget. Make sure you can comfortably commit to the premiums or lump-sum payment required for the plan. It is important that the annuity plan fits within your financial capacity while providing you with the security you need in retirement.
Tax* Implications
Tax* implications are an important factor when selecting an annuity plan. Know the tax treatment of your premiums and the payouts you will receive. While certain annuity plans may offer tax benefits, it is important to consider how they impact your overall financial strategy, especially with regards to your retirement savings.
Annuity plans by ICICI Prudential Life Insurance
Stay future-ready with ICICI Pru Guaranteed Pension Plan
You can secure your retirement with guaranteed1, lifelong income. With the ICICI Pru Guaranteed Pension plan, you can choose when you wish to retire and get guaranteed1 lifelong income. It gives you access to regular income so you can maintain your preferred lifestyle, even after retirement. You have the option to choose whether to receive the income every month, quarter, six months or year.
You can also decide when you want the annuity income to start by either choosing the Immediate Annuity or Deferred Annuity plan options.
Get guaranteed1 lifelong income
Your plan, your way
100% safe & secure
Get your money back4
Enjoy added benefits
Why choose ICICI Prudential Life Insurance?
Trusted brand. The reason we exist
Trust is our foundation and our cornerstone. Over the last two decades, millions of people have trusted us for the financial security of their loved ones.
- One of the top life insurers5 in India, thanks to our customers
- Voted as one of the most valuable brands in India 7 times in a row by over 32 lakh customers6
- ICICI Pru Guaranteed Pension Plan has been voted as the ‘Product of the Year’ under the Retirement and Pension Plans category77 in 2021
- Received FICCI Award for excellence in claims and service in 2020, a validation of our commitment towards serving our customers8
300,000 crore+
Assets Under Management as on
March 31, 2025^^
99.3%!j
Claim settlement ratio
1.2 Days7
Avg. time to settle claims
Frequently asked questions - investment strategy
What is the best age to start Investing?
The sooner you start investing, the better. There is no perfect age to invest and you should start as early as possible. Even children can begin investing if they have earnings or if parents invest on their behalf.
How can youngsters benefit from investing early?
Investing early extends your investment horizon. It gives your money more time to grow through the power of compounding. It also helps you weather market ups and downs more easily over time.
What is the difference between immediate and deferred annuity?
When you invest in an annuity plan, you can choose when you want your regular income to start.
You can choose to get your regular income as early as one month after you invest. Plans, where your regular income starts immediately after you invest, are called immediate annuity plans. It is better to choose an immediate annuity plan if you are closer to retirement.
You can also choose to invest today but start your regular income at a later date anytime within 10 years of purchasing the plan. You are essentially ‘deferring’ your regular income. This is why such plans are called deferred annuity plans. The annuity rates are locked in at the time of purchasing the plan. Then, on a date of your choice, you will start getting regular income every month, quarter, six months or year.
Who should opt for annuity plans?
Annuity plans can help you fulfil your retirement goals and maintain your standard of living with a guaranteed1, lifelong income. If you are looking for a steady source of guaranteed1 income after retirement, you can consider an annuity plan. With annuity plans, you can choose to receive regular income every month, quarter, six months or year.
You can also consider annuity plans if you want to safeguard your retirement savings. Annuity plans are free from any market-linked volatility2.
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What factors should I look for in annuity plans?
Before you invest in an annuity plan, you must consider the following factors:
• You must understand your post-retirement needs and aspirations. The right annuity plan provides you and your family with a guaranteed1 regular income to fulfil your post-retirement dreams
• You must select the right annuity plan based on when you would need your regular income to start. With an immediate annuity plan, your regular income can start immediately. On the other hand, deferred annuity plans would be apt if you have a few years to retire
• You can also opt for a plan that secures your loved ones by choosing a 'Joint Life' option offered by some annuity plans. With this option, they will continue to receive regular income even in case of an unfortunate event
• Some plans also provide an option to get your investment back in case of a medical emergency or when you reach a certain age or in case of an unfortunate event. Such options can help you secure your financial independence even during financial emergencies
• You must also check out additional benefits offered by the annuity plan. For example, ICICI Pru Guaranteed Pension Plan provides you with 1% additional annuity if you are an existing customer or purchase the plan online*
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*Customers can opt for only one of either Online Booster or Loyalty Booster or NPS Benefit
How does the annuity calculator work?
With an annuity plan, you invest once and get lifelong regular income. Decide how much you want to invest and when you want your income to start. Lastly, you can choose whether you want a monthly, quarterly, half-yearly or annual income.
Typically, this can be a complicated calculation. With our annuity calculator, you can input these details and find out how much income you can get in a matter of seconds.
You can use our annuity calculator to find out your regular income.
When can you withdraw money from an annuity?
You can withdraw your money with the ‘Return of Purchase Price’ option provided by some annuity plans. Under this option, the initial investment can be withdrawn in case of diagnosis of specified critical illnesses or disability or death. You can even choose a plan option where you get back your investment when you reach 80 years of age. The plan also comes with an option where you can receive your initial investment in parts from the age of 76.
Is there an age limit for annuities?
Different annuity plan options may have different eligibility criteria. In the case of the ICICI Pru Guaranteed Pension Plan, the minimum age at which you can purchase the plan is 30 years. The maximum age for buying some options of the plan is 100^ years.
^ The maximum age at entry depends on the annuity option selected
Are annuities good for senior citizens?
Yes, with an immediate annuity plan, senior citizens can be financially independent, post-retirement. Annuities allow senior citizens to live their life on their own terms. With a one-time investment, they are guaranteed1 a regular source of income for life. This can help fulfil all of their post-retirement goals.
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What happens to my annuity if I die?
In some plan options, the annuity income stops in case an unfortunate event occurs. However, you can choose to secure your spouse or child with the ‘Joint Life’ option, where they will continue to receive the regular income for their lifetime as well. Where 'Return of Purchase Price' option is chosen, the initial amount invested is returned as per the option selected.
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