Annuity Plans - Regular Income after Retirement
An annuity plan is a life insurance contract that provides a regular income after retirement. Premiums or a lump sum are paid to the insurer, and the annuity is payable for a chosen term or for the annuitant's lifetime, according to the annuity option selected.
Guaranteed¹ Income for Life
Choice of Annuity Options
Flexible Payout Frequency
Tax Benefits^
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What an annuity plan is?
Start with the problem it addresses.
A retiree holding a corpus faces a question that cannot be answered in advance: how long does this need to last? Withdrawals set too high exhaust the capital. Withdrawals set too low produce a poorer retirement than the corpus allowed.
An annuity plan is a non-linked, non-participating life insurance contract under which the insurer accepts a lump sum or a series of premiums and, in return, pays a regular income to the annuitant. The income continues for a defined term, or for the annuitant's lifetime, according to the annuity option chosen at inception.
The annuity option cannot be changed after the policy is issued.
What an annuity plan is?
Why Consider an Annuity Plan
Three properties distinguish the contract from other retirement instruments. Each is a term of the policy rather than a benefit claim.
Income That Does Not Depend on Lifespan
Under a lifetime annuity option the insurer undertakes to pay the annuity for as long as the annuitant lives. The obligation has no maturity date. Conditions Apply; benefits are payable in accordance with the policy terms.
An Amount Fixed at Inception
Under fixed annuity options the annuity amount is determined when the policy is purchased and does not vary with market performance, subject to the terms and conditions of the policy. Conditions Apply.
A Payout Mode Selected by the Annuitant
Monthly, quarterly, half-yearly or yearly, selected at inception to suit the annuitant's circumstances.
Benefits of an Annuity Plan
The annuity is the benefit. What is payable, for how long, and to whom are all set by the annuity option selected at inception, and that selection cannot be changed afterwards.
Annuity is payable at the frequency selected at inception. Under a lifetime annuity option it continues for as long as the annuitant lives, subject to the terms and conditions of the policy.
- Payable monthly, quarterly, half-yearly or yearly
- Under fixed annuity options, the amount does not vary with market performance
- Under a joint life option, the annuity continues to the surviving spouse, per policy terms
- Credited to the registered bank account. No claim needs to be made
Conditions Apply. Benefits are payable in accordance with the terms and conditions of the policy.
Under an annuity, the death benefit is a variable rather than the principal benefit. Under some options it is nil. This is the term of the contract most often misread, and it is fixed at inception.
- What is payable on death depends entirely on the annuity option selected
- Under a life annuity option, the annuity ceases and no amount is payable to the nominee
- Under a return of purchase price option, the purchase price is payable to the nominee
- Under a joint life option, the annuity continues to the surviving spouse, per policy terms
Conditions Apply. Please refer to the policy document for the option under consideration.
Both the purchase price and the annuity income carry tax consequences, and both depend on the regime the policyholder has elected.
- Tax benefits on the purchase price are as per the Income-tax Act, as applicable to the policyholder
- Tax treatment of the annuity income is as per the Income-tax Act, and depends on the regime elected
- Tax laws are subject to change
^ Tax benefits are as per the Income-tax Act, 2025. Subject to change. Tax benefits and treatment may vary depending on individual circumstances. Shriram Life Insurance does not provide tax advice. Please consult a qualified tax advisor.
How Does an Annuity Plan Work?
Four steps run from purchase to first payout. The order matters, because the annuity option is selected before the purchase price is paid
Select the annuity option
This determines what is payable, to whom, and for how long. It is fixed at inception and cannot be altered afterwards. Each option carries a different annuity rate, because each places a different obligation on the insurer.
Pay the purchase price
A single premium, or premiums across an accumulation period for deferred plans. The annuity rate applicable is the rate in force on the date of purchase. That rate then attaches to the contract permanently.
Select the payout mode
Monthly, quarterly, half-yearly, or yearly. Selected at inception. Most annuitants replacing a salary select monthly. Whether the mode may be changed later is governed by the policy document.
Annuity becomes payable
Annuity is credited to the registered bank account, either from the first payout cycle after purchase or on completion of the deferment period. No claim needs to be made and no annual declaration is required.
Who an Annuity Plan Is For
Five circumstances in which an annuity contract is commonly considered. These describe situations rather than people who should buy.
Persons without an employer-provided pension
Self-employed individuals and business owners construct retirement income from personal savings alone. No employer contribution accumulates on their behalf during their working years.
Persons holding a lump sum at retirement
Provident fund withdrawals, gratuity, and superannuation proceeds arrive at the point when earned income ends. The timing creates a decision rather than a solution.
Persons with a financially dependent spouse
Joint life annuity options provide for the annuity to continue to a surviving spouse, in accordance with the policy terms. The continuation is a term of the contract rather than a discretionary payment.
Non-resident Indians relocating to India
Eligibility is subject to Know Your Customer requirements and the insurer's underwriting rules. Residency status at the date of purchase governs the documentation required.
Salaried employees
An annuity may be held alongside other retirement savings. It does not replace an employer pension or an NPS corpus.
What Determines Your Annuity Rate?
Four factors set the annuity rate, and all four are internal to the contract. A reader who understands these four understands why two people with identical corpuses receive different annuities.
Types of Annuity Plans
Three separate distinctions get compressed into the single word 'type'. Any given plan sits on all three at once, which is what makes most annuity comparisons confusing.
The first distinction turns on a single question: is the annuity payable now, or from a future vesting date?
| Type | How It Works | Applies To |
|---|---|---|
| Immediate Annuity | Annuity becomes payable from the first payout cycle after the purchase price is paid | Persons at or past retirement, holding a corpus |
| Deferred Annuity | Premiums are paid during an accumulation period; annuity becomes payable from the vesting date selected at inception | Persons some years from retirement |
The first distinction turns on a single question: is the annuity payable now, or from a future vesting date?
| Type | How It Works | Applies To |
|---|---|---|
| Immediate Annuity | Annuity becomes payable from the first payout cycle after the purchase price is paid | Persons at or past retirement, holding a corpus |
| Deferred Annuity | Premiums are paid during an accumulation period; annuity becomes payable from the vesting date selected at inception | Persons some years from retirement |
Shriram Life Annuity Plans
Four plans, each with a different structure. Two are conventional annuity contracts, one carries a market-linked accumulation phase, and one is the standard product prescribed by IRDAI.
Immediate Annuity Plus
For a purchaser holding a corpus today who needs the income to start now. A single premium buys the annuity outright, and the first payout follows the purchase rather than a deferment period.
- Multiple annuity options, including joint life and return of purchase price
- Payout mode selected at inception
- Annuity payable in accordance with the option selected
Deferred Annuity Plan
For a purchaser some years from retirement who wants the annuity rate fixed at purchase rather than at vesting. Premiums accumulate across a chosen period, and the annuity begins on the vesting date.
- Single pay or regular premium options
- Vesting date selected at inception
- Annuity rate applicable is the rate in force on the date of purchase
Pension Plus
The only plan of the four with a market-linked accumulation phase, and therefore the only one where the policyholder carries investment risk.
- Pension payable after vesting
- Investment risk borne by the policyholder
- Past performance is not indicative of future returns
Saral Pension
The standard immediate annuity product every Indian insurer is required to offer, on terms IRDAI sets rather than the insurer. Features are identical across companies by design.
- Two annuity options, as prescribed
- Terms standardised across insurers by IRDAI
- Structure prescribed by regulation, not by the insurer
Calculators
Annuity Calculator
Estimate the annuity payable against a purchase price, age at entry and annuity option.
Retirement Calculator
Project the corpus you'll need for a comfortable retirement and check if you're on track.
NPS Calculator
Estimate the NPS corpus at superannuation and the portion applied to an annuity.
Income tax calculator
Estimate your tax liability for FY 2026-27 across both regimes and plan your savings in minutes.
FAQs
What is an annuity plan?
A non-linked life insurance contract under which the insurer pays a regular income to the annuitant, for a defined term or for the annuitant's lifetime, in accordance with the annuity option selected. Conditions Apply.
How does an annuity plan differ from traditional life insurance?
Under traditional life insurance the principal benefit is a sum assured payable on death. Under an annuity plan the principal benefit is a regular income payable to the annuitant during their lifetime. Whether any amount is payable on death depends entirely on the annuity option selected at inception, and under some options no amount is payable.
What is the difference between an immediate and a deferred annuity plan?
Under an immediate annuity the annuity becomes payable from the first payout cycle after the purchase price is paid. Under a deferred annuity, premiums are paid during an accumulation period and the annuity becomes payable from the vesting date selected at inception.
Is the annuity amount guaranteed?
Under a fixed annuity option the annuity amount is determined at inception and does not vary with market performance, subject to the terms and conditions of the policy. Conditions Apply. Under a variable annuity option, and during the accumulation phase of a market-linked product, the benefit is NOT GUARANTEED and the policyholder bears the investment risk associated with market fluctuations.
Can the annuity option be changed after purchase?
No. The annuity option is fixed at inception.
What is the free-look period?
Thirty days from the date of receipt of the policy document, for policies with a term of one year or more, obtained through any mode. Refunds are subject to the deductions prescribed by regulation.
Can an annuity plan be surrendered?
Under most annuity options, no surrender value is available. Where surrender is permitted, the conditions are set out in the policy document. Please refer to the policy wording for the plan under consideration.
What happens on the death of the annuitant?
It depends on the annuity option selected at inception, and this cannot be changed afterwards. Under a life annuity, the annuity ceases and no amount is payable to the nominee. Under a joint life option, the annuity continues to the surviving spouse in accordance with the policy terms. Under a return of purchase price option, the purchase price is payable to the nominee. Please refer to the policy document for the option under consideration.
What determines the annuity amount payable?
The purchase price, the annuitant's age at entry, the annuity option selected, and the annuity rate in force on the date of purchase, in accordance with the rate basis applicable to the product.
Does the annuity amount increase over time?
Under a standard fixed annuity option, no. Certain products offer an escalating annuity under which the annuity increases at a stated rate, in exchange for a lower initial annuity. Please refer to the policy document.
Can annuity plans be purchased online?
Yes.
How is annuity income taxed?
Tax treatment is as per prevailing Income-tax laws and depends on the policyholder's circumstances and the tax regime elected. Tax laws are subject to change. Shriram Life Insurance does not provide tax advice. Please consult a qualified tax advisor.
Should I put my entire retirement corpus into an annuity?
Whether an annuity plan is suitable, and in what amount, depends on your financial circumstances, obligations, and objectives. This is a determination for a licensed insurance advisor. Shriram Life Insurance recommends consulting one before purchase.
