What it does
Savings-type life policies (endowment, money-back, ULIP) mix life cover with a payout later, so the price is hard to judge. This tool takes what you pay and what the policy says it will pay back, and works out one number: the yearly return (IRR) you actually earn on your premiums.
It then compares with a common alternative: buy a plain term policy for the same cover and invest the premium you save. The numbers are examples until you replace them with yours. Sellers in India show benefit illustrations at 4% and 8%, so try both. To check any cash flows by hand use the NPV and IRR, and to see what a term quote should cost use fair price of a term life quote or how much life insurance do I need?.
How to use it
- Enter the yearly premium and how many years you pay.
- Add each payout from the illustration (the year and the amount). Maturity and money-back payouts each get a row.
- Enter the term premium for the same cover and the return you assume on investing.
- Read the policy return, the two final values and the break-even return.
What each setting does
- Year: 0 is the day you start. Premiums are paid at the start of years 0, 1, 2 and so on; a payout in year 10 arrives ten years after you start.
- Term premium: the cost of term cover for the same sum assured. The rest of your premium is assumed invested each year.
- Return you assume: the yearly growth of the invested amount. Payouts are grown at the same rate so the two sides are fair.
- Break-even return: the investing return at which both ways end equal.
Worked example
Pay 100 at the start of years 0 and 1, and receive 231 in year 2. The policy return is exactly 10.00% a year. With a term premium of 0 and investing at 8%, the investment path ends at 224.64, below 231, so the policy ends higher; the break-even return is 10%.
FAQs
Why is my IRR lower than the illustration’s 8%? The illustrated rate is on the fund or the bonus, not on what you pay in after charges and cover costs. IRR counts every premium.
Are tax and charges included? No. They are left out, so check them separately. Tax rules differ by country and change; check the official source.
Does the policy’s cover count? Not in the return. Its value is the life cover you would otherwise buy as term, which the term premium prices.
How it’s worked out: IRR solves sum of flow(t) / (1+r)^t = 0 by bisection; term and invest grows (premium - term premium) each year at your assumed return.
Where the numbers come from
- Internal rate of return: the rate r that makes the sum of each cash flow divided by (1+r)^t equal zero. Checked: paying 100 at the start of years 0 and 1 and receiving 231 at year 2 gives exactly 10.00%. Payouts come from the benefit illustration your seller gives you, checked 2026-11-10; check the official source for tax rules.
Standard scientific values, such as constants, atomic weights and melting points, are facts found in every textbook; we name where ours were checked. If you are an author or publisher and want a value, a credit or a table changed or removed, tell us and we will act quickly.
Last updated 2026-11-10.