What Is The Internal Rate Of Return On Death Benefit? – IRR

For us at Life Insurance Nerds, Death Benefit IRR looks like this:

Death benefit IRR

… is the rate of return of a life insurance policy, displayed annually, comparing the cumulative premiums against the DB obtained in a hypothetical future. Depending on the premium paying strategy, DB IRR usually declines throughout the life of the policy. This measurement tool is most useful in evaluating the ultimate performance of a life insurance policy’s DB in comparison to other product designs or investment strategies.
Or put another way, IRR measures the interest rate at which the net present value of the total premiums paid equals the net present value of the DB.

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