For life insurance policies, some of the premium pays for the cost of the insurance and the remainder goes towards the cash value of the policy and earns interest like a savings account.  consider the following insurance company options.  Company 1: pays 4.5% compounded monthly on the cash value of their policies Company 2: pays 4.52% compounded semi annually on the cash value of their policies  what is the APY offered by each company? (round your answer to the nearest hundredth)

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A:

Types of Insurance Contract

Insurance is a contract wherein an individual or entity gets financial protection from the insurance company for any damages or losses incurred. The individual or entity is called the insured, whereas the insurance company is called the insurer. The insured and the insurer enter a legal contract for a fixed term called the insurance term, and the contract is called an insurance policy.