Many insurance plans promise to double your money. Here's how to calculate the actual return.
Published by Mint
Abhishek Kumar's role: Quoted
Abhishek Kumar, founder of SahajMoney, said buyers fall for 'double your money' pitches because of anchoring bias and overlook time, and that such policies should be judged by their XIRR.
More of Abhishek's views on insurance
Mint explains why life insurance plans pitched as paying back more than double what you put in do not double your money once the time value of money is counted. It walks through calculating a policy's XIRR in Excel from the benefit illustration, with worked examples of about 5.4% a year, and stresses comparing post-tax returns with inflation and other options before buying. It includes comments from Abhishek Kumar.
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Many insurance plans promise to double your money. Here's how to calculate the actual return.
