Someone asked me what is the reduction in yield for NTUC Income Vivolife. Since I have to calculate, I thought I just post it on my blog. For a male last age 0 of sum assured $200,000 the premium is 3,674.85 over 10 years. The coverage is for life. The surrender value at the end of age 60 is $221,793 and $296,261 for 3.75% and 5.25% projection respectively. Thus the surrender value represents an internal rate of return (IRR) of 3.53% and 3.82% respectively. The reduction in yield (which is the difference between the projected rate of return and the IRR) is 0.21% and 1.43% respectively. Why is there a reduction in yield? It is because of distribution cost, profit margin and mortality charges. Of course, nobody buys a whole life policy to surrender it and so this calculation is only for academic purpose.