Lic Rate of Return Calculator

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LIC Rate of Return (IRR) Calculator

Calculate the actual percentage yield of your Life Insurance Policy

Yearly
Your Policy's Net Annualized Return (IRR): 0%

Understanding LIC Returns: More Than Just Sum Assured

Many policyholders are often misled by the large "Sum Assured" or "Expected Maturity" figures presented in LIC brochures. However, because these premiums are paid over a long period (15 to 25 years), the effect of time on money is significant. To understand if your policy is a good investment, you must calculate the Internal Rate of Return (IRR).

Traditional LIC plans like Jeevan Anand, Jeevan Labh, or Jeevan Umang typically offer returns ranging from 4% to 6%. While these are safe and offer tax benefits under Section 80C and 10(10D), they often struggle to beat inflation compared to other instruments like PPF or Mutual Funds.

Realistic Example:
If you pay an annual premium of ₹50,000 for 20 years and receive a maturity amount of ₹20,00,000 at the end of the 20th year, your total investment is ₹10,00,000. While it looks like your money doubled, the actual Rate of Return is approximately 5.95%.

How to use the LIC Rate of Return Calculator?

  1. Annual Premium: Enter the total premium you pay in a year (excluding GST for more accuracy).
  2. Policy Term: Enter the number of years you will pay the premium.
  3. Maturity Amount: Enter the final amount you expect to receive (Sum Assured + Bonus + Final Additional Bonus).
  4. The Result: The calculator uses a root-finding algorithm to determine the precise IRR, which is the true annual growth rate of your money.

IRR vs. CAGR in Insurance

CAGR (Compounded Annual Growth Rate) is usually used for a one-time investment. Since insurance involves multiple payments over time, IRR is the only mathematically correct way to measure performance. Our calculator assumes premiums are paid at the beginning of each policy year, which is the standard practice for LIC policies.

function calculateLICIRR() { var premium = parseFloat(document.getElementById('lic_premium').value); var term = parseInt(document.getElementById('lic_term').value); var maturity = parseFloat(document.getElementById('lic_maturity').value); var resultBox = document.getElementById('lic_result_box'); var irrDisplay = document.getElementById('lic_irr_value'); var feedback = document.getElementById('lic_feedback'); if (isNaN(premium) || isNaN(term) || isNaN(maturity) || premium <= 0 || term <= 0 || maturity <= 0) { alert("Please enter valid positive numbers for all fields."); return; } if (maturity <= (premium * term)) { resultBox.style.display = "block"; irrDisplay.innerHTML = "Negative or 0%"; feedback.innerHTML = "The maturity amount is less than or equal to the total premiums paid. This indicates a loss or zero growth."; return; } // Binary Search for IRR // Formula for Annuity Due: Maturity = P * [((1+r)^n – 1) / r] * (1+r) var low = 0.0; var high = 1.0; var mid = 0.0; var iterations = 0; var calculatedMaturity = 0; while (iterations < 100) { mid = (low + high) / 2; calculatedMaturity = premium * ((Math.pow(1 + mid, term) – 1) / mid) * (1 + mid); if (Math.abs(calculatedMaturity – maturity) maturity) { high = mid; } else { low = mid; } iterations++; } var finalIRR = (mid * 100).toFixed(2); resultBox.style.display = "block"; irrDisplay.innerHTML = finalIRR + "%"; if (finalIRR = 5 && finalIRR < 7) { feedback.innerHTML = "Performance: Average. This is a standard return for LIC participating plans."; feedback.style.color = "#f0ad4e"; } else { feedback.innerHTML = "Performance: Good. This is a high return for a traditional life insurance product."; feedback.style.color = "#5cb85c"; } }

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