THE LINTON YIELD (Effective Rate of Return
Read below if this is your first calculator use.
Linton Yield Calculator Click Here
The Linton Yield, named for the late distinguished actuary M. Albert Linton, is a mortality adjusted Internal Rate of Return calculation on a cash value life insurance policy between the inflows of premiums (and outflow of withdrawals) and the resulting end of period cash values. A mortality cost is generated on the Pure Insurance (pure insurance is the difference between the death benefit and cash values.) It is this corridor of this decreasing pure death benefit, to which the mortality is added to the resulting cash value to give a Linton Yield. The Linton Yield is expressed as an Internal Rate of Return. The Linton Yield calculates what you are actually buying, that is, what you are really receiving is an end of period cash value plus the value of the pure death benefit over the course of a year. Add the two together and calculate the IRR.
The Calculator is very easy to use, just enter the age, cut-and-paste the premiums, cash values, and death benefits. Then run the results. The calculator is a very powerful back end IRR calculator engine. The program is very fast and accurate. In the event you get a "no guess" result in the IRR columns, it is because the engine did not want to give what is considered as the second guess of all IRR solve engines. There are two sensitivity ratings that you can play with to try to get as few "no guess" results as possible.
The calculator is free to use, and it saves you a lot of money if you have been paying someone to do your Linton Yields. Now you can do them for free and get the results each and every year. We do not require any form of registration, we collect no information, the calculator stores no form of data, other than the traffic logs. You can rerun the same calculation over again by hitting your back button and recalculating, because the calculator does not save the data. Each time you run the calculator, it digests all of the information from the input screens.
Please note, the number of premiums you enter, that is, one per line, have to equal the number of cash value entries, as well as match the number of death benefits you entered. That is, all three columns must have the same number of entries, or the calculator will give you a counting error. In the Premium column you have to enter a '0' if there is no premium, the calculator counts zero's as a flow. If that happens, use your back up button and then check your column entry counts. The best way to do it is to use Excel. Take the life insurance illustration (Either a sales illustration or an in-force illustration) and type into Excel the premiums, cash values, and death benefits. Then cut-and-paste the premium column into the calculator, then repeat for the cash values and death benefits.
Note on the Mortality Rates that I use in the Linton Yields. I use a 90% discount off of the New York Y mortality table. This is a very conservative, low cost, calculation. The New York Y table is widely used by group life insurance companies for the formulation of low cost of group life insurance, and it is readily recognizable in the life insurance industry. In the future I may program the ability to designate your choice of morality rates, but for now a 90% discount off of the New York Y is a very conservative valuation. Email me if you want to have such a feature.
For those technically knowledged, I programmed the Linton Yield Calculator in binary fastCGI, using Visual Basic 6. This creates a very small executable (74k) that is very fast and easy on the resources. The program only has one entrance, and that is a single GET, and only accepts one of two POSTs (see below.) I do not use Java or any type of scripting, everything is on the back end. For those that want to call the calculator from your programs, feel free, as long as the traffic load is not bearing down on the server (Just POST the field values to /cgi-bin/linton.exe/2, it will then spit out a comma delimited string with no HTML). If you want to add the calculator to your website, please contact me. The program uses only pure HTML so it will work in any browser, on any platform. It will even work on your cell phone, just use your phone web browser and come to this site. The small executable only host on a Windows® webserver. For those that want the source code I may be enticed to sell it if the price were right. I coded the entire program and own 100% of its rights. It is very compact, accurate, and concise coding. The average iteration for each IRR calculation is 3.
If you find the calculator useful, I loved to get the kudos. If you disagree with the concept of the Linton Yield, don't bend my ear about it. I did not invent it, Linton did, I just provide the calculator. One last note, those life insurance illustrations that you have from the insurance company are all based on hypothetical assumptions. The governmental regulation authority (FINRA) does not allow these life insurance illustrations to be used to compare one life insurance product to another. Only the first few years of a given illustration may prove useful, but after so many years, you can't use them in comparisons.
If you need me for anything, visit my website at www.LifeInsuranceConsulting.com, or davidbardes@davidbardes.com.
Thank you,
On Cash Value Life Insurance)
Please read carefully and follow all of the directions.
David A. Bardes
President & CEO
Bardes Consulting, Inc.