Internal Rate Of Return
Definition of "Internal rate of return"
Method used to determine the policyholder's return on premiums paid into a life insurance policy. This method is illustrated in two ways:
- .Surrender of Policy Approach calculation of the interest rate required for the accumulated value of the total premiums paid(minus any DIVIDENDS) into the policy at a given time to equal the CASH SURRENDER VALUE of the policy at that time;
- DEATH BENEFIT Paid Approach calculation of the interest rate required for the accumulated value of the total premiums paid(minus any dividends) into the policy at a given time to equal the death benefit of the policy at that time.
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