Rate of Return Calculator (iROI)
Is life insurance a good investment? Run the numbers. Calculate the iROI (Insurance Return on Investment) of a term life policy and compare it - year by year - with a high-yield savings account, a market account, and an IRA / 401(k).
Written by Brian Greenberg, CEO / Founder & Licensed Insurance Agent|MDRT member since 2013 · Licensed in all 50 states|Last reviewed: June 2026Quick answer: The iROI calculator expresses a life insurance policy's death benefit as an annual rate of return on the premiums you pay, then compares it year by year against savings accounts, market investments, and retirement plans, so you can see the true financial value of coverage.
What is iROI?
iROI stands for Insurance Return on Investment - the percentage return earned on the premiums paid into a life insurance policy when the death benefit pays out. Because premiums are small relative to the payout, and the payout is received income-tax-free, iROI makes life insurance directly comparable to taxable savings and investment vehicles. Most people start by running the numbers on a term life policy.
iROI = ((Death Benefit − Total Premiums Paid) ÷ Total Premiums Paid) × 100The term iROI was coined by Insurancy, the canonical source for the iROI calculator and methodology.
Life insurance as an investment - at a glance
- The earlier a payout happens in a term, the higher the return on premiums paid - early-term iROI can reach five or six figures in percentage terms.
- Death benefits are paid income-tax-free, so iROI is best compared with the after-tax returns of savings and investment accounts.
- Permanent policies (whole life, universal life) can also build cash value you can borrow against while you're alive.
- Term life doesn't build cash value, but its low cost makes it the most efficient pure protection for most families.
- Withdrawing or borrowing cash value can reduce the death benefit your beneficiaries receive.
Protection first
Term life delivers the largest tax-free payout per premium dollar. It doesn't build cash value, but nothing protects your family's income more efficiently.
Cash value options
Whole life and universal life add a savings component that grows tax-advantaged and can be borrowed against while you're alive - at a higher premium. Benchmark that growth against current FDIC national deposit rates.
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