This is a follow up on my earlier post, Returns of a 99-year term.
The same exercise is done, this time using a 20-year limited pay whole life plan.
The rest of the parameters used are the same. Male non-smoker, 26 years old of age next birthday and sum assured of $120,000 for death, total and permanent disability (TPD) and critical illness (CI). Premiums payable annually for 20 years is $2378.40.
The IRR is calculated based on projections of 3.75% and 5.25% returns as given in the benefit illustration.
![](data:image/svg+xml;charset=utf-8,<svg height="410" width="395" xmlns="http://www.w3.org/2000/svg" version="1.1"/>)
A comparison shows that the “returns” from the 99-year term offers a greater financial leverage. This advantage gets lesser as time goes by. In this particular example, the IRR at 40 years for both the term and the whole life (based on 5.25%) are the same.
Unfortunately, the benefit illustration for the whole life plan ends at year 40 so I’m unable to compare beyond that.
Note that this is a purely academic exercise as:
1) Projection returns of the whole life plan are not guaranteed.
2) Premiums for critical illness are not guaranteed and can change.
3) Premiums and projected returns can vary greatly between different insurers.