You just paid $344,000 for a policy that will pay you and your heirs $11,600 a year forever. what rate of return are you earning on this policy

Calculation of rate of return from the policy:

It is given that you just paid $344,000 for a policy that will pay you and your heirs $11,600 a year forever. It means the nature of the return is perpetual. And the perpetual rate of return can be calculated with the help of following formula:

Perpetual rate of return = Annual return / Investment

= 11600 /344000

= 0.0337

=3.37%

Hence the rate of return from the policy is 3.37%

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