LIC IRR Calculator
Evaluate the annualised rate of return of policy premium series and irregular cash flows using actuarial numeric solvers.
7.21%
Net compounded yield of the policy.
• IRR represents the real compounding return of a series of cash flows paid at different times.
• Unlike absolute yield, IRR factors in the exact time when money was paid in and paid out.
Understanding IRR
The Internal Rate of Return (IRR) is the discount rate that makes the Net Present Value (NPV) of a series of cash flows (both positive and negative) equal to zero.
- NPV Equation: NPV = Sum( CF_t / (1 + IRR)^t ) = 0
- Dynamic Solving: Requires high-fidelity numerical iterations (like bisection or Newton-Raphson solvers).
Why IRR Matters for LIC
Unlike simple savings accounts, insurance plans have recurring premiums followed by a delayed maturity payout. IRR accounts for the time-value of money, making it the only accurate yield metric.
Frequently Asked Questions (FAQ)
What is the typical IRR of traditional LIC endowment plans?
Traditional LIC endowment plans like Jeevan Labh or Jeevan Lakshya typically yield an IRR between 4.8% to 6.2%, depending on policy term and sum assured.
Why does the IRR calculator show an error for certain cash flows?
IRR solvers require both negative values (premium outflows) and positive values (maturity inflows) to compute successfully. If all inputs are positive, IRR cannot be solved.
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