{"id":6151,"date":"2026-04-16T16:00:41","date_gmt":"2026-04-16T10:30:41","guid":{"rendered":"https:\/\/werindia.com\/blog\/?p=6151"},"modified":"2026-04-16T16:00:44","modified_gmt":"2026-04-16T10:30:44","slug":"immediate-vs-deferred-annuity-plan-which-one-should-you-choose","status":"publish","type":"post","link":"https:\/\/werindia.com\/blog\/immediate-vs-deferred-annuity-plan-which-one-should-you-choose\/","title":{"rendered":"Immediate vs Deferred Annuity Plan \u2013 Which One Should You Choose?"},"content":{"rendered":"\n

An annuity is a financial agreement entered into between an insurance company& a policyholder. It refers to an amount invested either in regular payments or in a lump sum. In exchange, the insurance provider provides a regular flow of income to the annuitant. Under this plan, the payment will either start immediately (immediate annuity) or after a certain period (deferred annuity).The Annuity Plans in India<\/mark><\/strong><\/a> have become so popular for those individuals who are looking for a regular income post retirement, hence providing financial stability.Annuity plans offer a secure & stress-free retirement period, ensuring a guaranteed, regular source of income. An annuity plan can be chosen depending on the requirements of the family & investment horizon.<\/p>\n\n\n\n

What is an Immediate Annuity Plan?<\/mark><\/strong><\/h2>\n\n\n\n

An immediate annuity plan is a contract entered into between an insurance company & an individual. Under this plan, an individual is required to make a payment towards the premium in a lump sum. & in exchange for which insurance company pays periodically for a certain time or for a lifetime. The payouts start immediately, i.e. within typically a month to within a year of making payment towards the premium amount.<\/p>\n\n\n\n

What is a Deferred Annuity Plan?<\/mark><\/strong><\/h2>\n\n\n\n

A deferred annuity plan is a contract that an individual is required to make premium payments either in a lump sum or in series, against which the insurance company promises to pay in the future. Under this plan, the funds are accumulated during the accumulation phase, & then the payouts start during the annuitisation phase, i.e., post-retirement.<\/p>\n\n\n\n

Differences between an Immediate Annuity Plan and a Deferred Annuity Plan<\/mark><\/strong><\/h2>\n\n\n\n

While selecting between the different options available, it is important to understand the differences between the two, once you have understood what is annuity plan<\/mark><\/strong><\/a>:<\/p>\n\n\n\n

Basis of Difference<\/strong><\/td>Immediate Annuity<\/strong><\/td>Deferred Annuity<\/strong><\/td><\/tr>
Meaning<\/strong><\/td>This includes receipt of payout immediately after the investment, which can be monthly or annually.<\/td>This includes payment of premium in monthly, annual or lump sum mode for a pre-decided tenure.<\/td><\/tr>
Objective<\/strong><\/td>To receive income immediately after the plan is bought.<\/td>To provide future income, i.e. long-term savings.  <\/td><\/tr>
Premium Payment<\/strong><\/td>One single payment is to be made, i.e. which is called the purchase price.<\/td>Single, regular, or limited payments are allowed.<\/td><\/tr>
Death benefit<\/strong><\/td>In case of the death of the annuitant, the death benefits would be received by their nominee.<\/td>In case of the death of the annuitant, the death benefits would be received by their nominee.<\/td><\/tr>
Tax Benefits<\/strong><\/td>Premiums paid are allowed as deductions under Section 80CCC.<\/td>The premiums paid are allowed as a tax deduction u\/s 80CCC. Partly commuted value of corpus funds is exempt from tax u\/s 10(10A).<\/td><\/tr>
Payout<\/strong><\/td>It starts immediately after the investment.<\/td>It starts once all the premium payments have been completed.<\/td><\/tr>
Best Suits<\/strong><\/td>Those near to their retirement<\/td>Those who have time left in retirement & want to do retirement planning.<\/td><\/tr>
Investment Growth<\/strong><\/td>Since payouts start immediately, no growth in investments.<\/td>Higher returns due to deferment in the period.<\/td><\/tr>
Withdrawals<\/strong><\/td>Partial withdrawals are not allowed<\/td>Allowed, but with penalties or leading to lower returns.<\/td><\/tr>
Affordability<\/strong><\/td>Expensive<\/td>Cost-effective<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Factors to be considered while Choosing between an Immediate & Deferred Annuity Plan<\/mark><\/strong><\/h2>\n\n\n\n

Provided are the factors that can be considered while choosing between an immediate & deferred annuity plan:<\/p>\n\n\n\n