Change any number and press "Calculate" – or use "Type in" on the right to watch it entered step by step.
What if …
Years × Annual return›
What you learn
The difference between the premium paid and the mathematically required savings premium reveals the ongoing costs of the policy – that is how you see what really works for you.
In short: The difference between the premium paid and the mathematically required savings premium reveals the ongoing costs of the policy.
Formula
R = (FV − K0·q^n) / ((q^n − 1)/(q − 1))
With the example numbers
R = 60,000.00 $ / ((qn−1)/(q−1)), q = 1.006434, n = 180 = 177.72 $
How to read the formula
Here the final-value formula is solved for the rate: you divide the target by the compounding factor (qⁿ−1)/(q−1), which shows the multiple to which a rate of $1 grows. Takeaway: the longer n, the larger this factor – and the smaller the rate needed.