Real-return calculation for annuity insurance

Take the illustration and compute the real "high yield" behind the pitch

The annuity IRR calculator uncovers the real compound return behind "high-yield" pension insurance pitches. Most illustrations use the guaranteed rate, not the true IRR; actual returns depend on the insurer's investment performance and dividend realization. Enter premiums and the payout schedule for the real IRR, comparing single vs periodic payment and lifetime vs fixed-term options. For conservative savers evaluating products.

Premium Schedule (outflow)

Payout Schedule (inflow)

See through insurance sales' "high-yield" pitches

Pitch 1: "Look, your money triples in a few decades!"

Salespeople love quoting absolute returns. CNY 500K becoming 1.5M sounds like a 1M gain — but across 30 to 50 years with inflation, tripling your money isn't impressive. Under IRR, many "3x" products compound at just 2.5%–3.0% a year.

Pitch 2: "A 3.0% guaranteed rate — very high!"

A 3.0% guaranteed rate ≠ 3.0% in your pocket.
The insurer first deducts operating costs and agent commissions; only the remainder compounds at 3.0%. That's why most policies show negative real returns for the first 5–10 years (surrendering early loses money). Only after 20+ years does IRR slowly approach 3.0%.

Simple vs Compound: The Magic Difference

Bank deposits pay simple interest (interest earns nothing), while insurance illustrations compound. Over long horizons (say 30 years), 3.0% compounded roughly equals 4.8% simple interest at a bank — that's why we show an "equivalent simple interest" figure for easy comparison with deposits.

Frequently Asked Questions

Are annuities' "high returns" real?

Most advertised "high yields" are illustrations at the guaranteed rate — not the real IRR. What CNY 100K/year for 10 years ultimately pays depends on the insurer's actual returns and dividend realization. This calculator uses IRR to reveal the true compound rate.

Who should consider an annuity?

Suits those with spare cash seeking stability and forced saving. Not for chasing short-term yields.

How is IRR computed?

Feed annual premiums (negative cash flows) and payouts (positive) into the IRR equation and solve for the rate where NPV = 0.

Which contribution schemes does this calculator support?

Supports single or periodic premiums (annual/monthly), with lifetime or fixed-term payouts.

📚 Further Reading

Want to dig into the math behind Annuity Real Return (IRR)? Recommended reading:

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Annuity real IRR: testing the "high yield" pitch
Is the "4.5% compound" in annuity pitches real? IRR says actual returns may be just 2.5%–3.5%, far below the pitch.
⏱ About 6 min read