This tool calculates the internal rate of return on both the cash value and the death benefit of a life insurance product (based on the policy illustration.) The premiums are the cash outflows (from the client’s perspective). The cash value (or death benefit) is the cash inflow. |
No script is provided for this screen. |
The financial IRR (internal rate of return) function is used to calculate the rate of return of the cash flows. When calculating IRR, one must have both negative and positive cash flows. The negative cash flows (premiums) are straightforward. Each premium is a cash outflow. For the cash inflow, it is assumed the client either surrenders the insurance product and takes the cash value or the client dies and his/her heirs receive the death benefit at the end of the projection period. |