Dear Mr. Tan

I paid $112,234 for my whole life insurance premium for 34 years, I can get back $170,000 if I surrender the policy, does that mean the yearly yield for this policy is 5.1%? Thank you.

Reply

The annual premium is $3,301.

I used the RATE function in Excel and obtained the yield of 2.26%.

This is the compounded yield.

If you had earned 5.1% p.a., the accumulated value at the end of 34 years would be $301,096. It would almost be double of $170,000.