What percentage range is often associated with the contract interest rate in life insurance?

The percentage range associated with the contract interest rate in life insurance is often found to be between 3 to 6%. This range reflects the typical interest credited to policy cash values or investment accounts within life insurance products.

Life insurance policies, particularly whole life or universal life policies, typically guarantee a minimum interest rate, which frequently falls within this 3 to 6% bracket. This range is deemed competitive enough to attract consumers while still allowing the insurance company to manage its investment risk effectively.

Options that suggest lower percentages, such as 1 to 2%, do not adequately represent the typical market rates offered by life insurance products, as they may be too low to be attractive for long-term investments. Similarly, higher percentages, such as 7 to 10% or over 10%, would be considered unusually high in the current economic environment, where interest rates are managed cautiously by financial institutions to ensure solvency and meet regulatory standards. Therefore, B is identified as the correct answer because it accurately reflects the average interest rates that policyholders can expect from life insurance contracts.