Yield on a Life Insurance Policy

Microsoft Excel has a function to calculate the yield on a life assurance policy. You can get this function using Insert > Function > Financial > Rate.

Policy taken for 18 years
Monthly premium of $50
Surrender value at end of 18 years is $12,800
What is the yield?

You have to enter the following values in the RATE function:
NPER - number of periods: 18
PMT - payment: $50 X 12 = $600
PV - present value: 0
FV - future value: -12,700 (show as negative as the money is being received)
TYPE: payment type: 0.5 (for monthly payment)

This returns a value of 1.68%