"You pay ₹1 lakh a year for 10 years and get ₹18 lakh at maturity" sounds impressive until you actually calculate the annualised return behind it.
Last reviewed 26 August 2026. General education, not financial advice — verify anything specific against the current policy wording.
XIRR (extended internal rate of return) calculates the annualised return of a series of cash flows that happen on irregular or spread-out dates — exactly the shape of an insurance policy, where you pay premiums across several years and receive one payout years later. A single "total premium vs total payout" comparison ignores the fact that money paid in year 1 has been "working" for far longer than money paid in year 9, which a simple ratio can't capture but XIRR does.
A maturity value quoted as "1.8x your total premiums" can correspond to very different actual XIRRs depending on how long the policy ran and how the premiums were spread — a 20-year policy needs a much lower annual return to hit that multiple than a 10-year one does. Insurance brochures rarely state XIRR directly (illustrations show absolute maturity values at 4%/8% assumptions instead), so calculating it yourself — or asking an advisor to — is often the only way to compare a policy honestly against an alternative like a mutual fund SIP over the same period.
List every premium you'd pay, with its year. List the maturity or death benefit, with its year. Use any spreadsheet's XIRR function (dates and amounts, with premiums as negative and the payout as positive) to get an annualised percentage. Compare that single number against what a term plan plus a simple index fund SIP would plausibly have returned over the identical period — that's the real comparison, not "1.8x my money."