XIRR is the discount rate that makes the net present value of a series of dated cash flows equal to zero. Unlike CAGR, which assumes a single inflow and a single outflow, XIRR handles arbitrary cash flow schedules — ideal for insurance policies where premiums are paid over many years and the maturity payout comes much later.
For an LIC endowment, the XIRR cash flow series is: negative entries for each premium paid (one per policy year of the PPT) and a positive entry for the maturity payout in the final year. Most participating endowments produce XIRRs in the 4–7% range — modestly above a fixed deposit, but well below long-term equity returns.