905.248.4849
US Term Life Insurance Quote Instant Results!
Canadian Term Life Insurance Quote Instant Results!
Internal Rate of Return calculator for Life Insurance
"Is a given life insurance policy a good investment?
The best way to measure life insurance as an investment is to calculate its Internal Rate of Return (otherwise known as IRR).
What IRR calculates is what the annual return of a given investment is. Investors wants to have the highest possible return on investment. But with interest rates at historical lows it is extremely difficult to generate an meaningful rate of return "risk free"
Many life insurance policies in Canada offer guarantee premiums and pay periods – therefore the only variable is at what point in time your beneficiary will receive your TAX FREE benefit.
Permanent Life insurance allows policyholders to protect their family in the short run and enjoy the benefits of a risk free long term investment. Returns rarely fall below five per cent and best of all money is paid out TAX FREE.
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What useful tool this is !!!
Thanks Tamara - I appreciaite the kind word. If we can help out further please let me know.
Regards … Lorne
How much is a $100,000 of life insurance for a 51 year old male and is there a waiting period until it pays out?
Thanks!
Hi Wilson,
Thanks for your question. You can get an instant quote from the following link http://lsminsurance.ca/calculators/canada/term-life.php
A 51 year old male non smoker would pay the following premiums
$100,000 Term 100 coverage - $1184.00 a year
-level premiums for life
$100,000 20 Pay - $1752.00 a year
-level premiums and policy is paid up after 20 years
The IRR on the Term 100 policy would be
8.43% at age 76
6.04% at age 81
Traditional life insurance policies pay out from Day 1. Certain non medical policies have a 2 year waiting period until the policy pays out.
Regards … Lorne
Hello,
How much is the premium for a 34 year male and 33 year old female, non smokers for a term of 35 years for $ 350,000?
Also let me know for a term 100 policy.
I would like to know if the premiums fluctuate or reamin steady for both kind of policies.
Thank You.
Hi Ajish,
I will send you a seperate email with a quote. The rates on a 35 Year are fixed for the stated Term on a Term 100 the premiums are level for life.
You can also get an instant quote at the link below. Regards … Lorne
http://lsminsurance.ca/calculators/canada/term-life.php
Hi Lorne,
I am 54 years old and my husband is 62. We want to buy a $100,000 life insurance and have received 2 quotes, they both are universal life.
One quote is from Industrial Alliance, it is for a single based on my age. The premium amount is $2676 annually for 10 years and don’t have to pay after that. The death benefit is $100,000.
Another quote is from Empire Life, it is for a joint life. We have to pay $1056 annually until we both passed away, then our beneficiary will get the $100,000 death amount plus all the premium amount.
I can’t decided which one to buy, and also not sure which one will provide a higher IRR. Can you give me some advice?
Thank you.
Hi Pandora,
Thanks for the note.
I have attached quotes based on a female age nearest 54 NS and male age nearest 62 NS
$100,000 - Last to Die -Life Pay - Empire Life $819.00 a year
$100,000 - Last to Die - 20 Pay - Manulife $1384.00 a year
Another variable the Universal Life plans quoted are likely dependent on interest rates - the above plans are guaranteed. The Internal Rate of Return is easy to determine but you need to make an assumption how long it will until the second spouse passes away.
e.g. Under the Empire life plan if you live 20 years the IRR is 15.28% if you live years it is 7.99%
I’m happy to help out further my contact details are below.
Hey, I have never seen a whole life policy with a return of over 3%. How can you promise a 5% rate of return… Also, 5% is not a great return for a long term investment.
Hi Ian,
Thanks for the note. When looking at the IRR on a Permanent life insurance it will always be an estimate because there is no way of knowing when the insured will die. However it will almost always be greater than 3% and is usually around 7%.
E.g. A 60 year old who purchases $250,000 Term 100 coverage. Annual Premium is $4989.12
IRR at age 80 8.13%
IRR at age 85 5.01%
Regards … Lorne
what if I have a series of uneven premium payments, for example, if my client has a term policy say with a fixed premium from age 62 to 75 of $6,230 and we estimate that his conversion premium at age 75 is $ 25,195 payable to age 90 for 1 million of coverage, can you calculate the IRR at 5 year increments?
Hi Luke,
This calculator can determine the rates of return on level premium plans. i.e Term 100, Universal Life with Level Term Cost insurance at the minimum premium or quick pay Whole Life plans.
Best Regards … Lorne
Hey Lorne,
I have a client that has an old Manu UL policy- with a YRT-
He needs to convert to a Level COI-
He’s 57- $300k of coverage- and the Level payment would be $7200/yr. what would the IRR be?
Thx Ryan
Hi Ryan,
Thanks for the note. The IRR assuming level payments for life is as follows. If the insured dies at 72 is 11.98% at 77 6.57% at 82 3.73%.
My husband, 44 non-smoker,
London life, 150,000 whole life
monthly pay 113.78
what is the IRR for live up to age 75,80
thanks.
my daughet’s two policies purchaswes when she was age 5, now she is age 15
Clarica (Sun life)
150,000,univesal life, premium 25(about)
150,000, elite2000 preimum premium 30 (about)
cash very is around 750 now
aret hese two policies good for my daughter?
or there are better solutions?
I am thinking of change to 20 pay.
Thanks
You can see IRR below. Regarding you existing policies we would be happy to review your plans further. All the best!
Coverage amount:
Annual premium:
Number of annual payments:
Age
IRR
49
128.94 %
54
42.09 %
59
22.60 %
64
14.45 %
69
10.10 %
74
7.44 %
79
5.67 %
84
4.43 %
89
3.52 %
94
2.82 %
99
2.27 %
Hey Lorne,
My husband, 44 non-smoker,
London life, 150,000 whole life
monthly pay 113.78
what is the IRR for live up to age 75,80
thanks.
my daughet’s two policies purchaswes when she was age 5, now she is age 15
Clarica (Sun life)
150,000,univesal life, premium 25(about)
150,000, elite2000 preimum premium 30 (about)
cash very is around 750 now
aret hese two policies good for my daughter?
or there are better solutions?
I am thinking of change to 20 pay.
Thanks
This is not the IRR of a life insurance policy. It is the IRR of the death benefit.
The IRR of the cash value is separate.
Whole Life insurance is NOT an investment because it cannot go down in value. It is contractually guaranteed to increase ever year.
Whole Life insuance is fixed income ASSET CLASS. The rates of return it will earn must be compared to that of other fixed income asset classes (bonds, CDs, treasuries, etc). You can’t expect one tool in an asset class to perform like a totally different tool in a totally different asset class.
A CD or Money Market will not get the returns of a stock or mutual fund and neither will Whole Life.
Over a 25 to 30 year period of time a Whole Life policy from a mutual insurance company (not a stock company) will produce anywhere between a NET 5.5% to 6.5% (tax free) rate of return. In order to get that return in a taxable vehicle you’d need to be getting around an 8.5% return to NET out at the 5.5% to 6.5%. This is historical FACT proven by any In Force Illustration from a MUTUAL insurance company such as Mass Mutual, Guardian, New York Life, or Northwestern Mutual.
Term isn’t bad and most often a combination of term and whole life makes the most sense. Getting the correct death benefit is first and foremost. I don’t understand why some people think it’s an “either/or” scenario. I own lots of term and lots of whole life personally.
Thanks for the note. I agree a combination of Whole Life and Term often makes sense it depends on the clients situation and needs.
The above calculator is only intended to measure the IRR on the death benefit of a Life Insurance and as you pointed out life policies compare quite favourably with other risk free investments especially in todays low interest rate enviroment.