Stock Company Vs. Mutual

benseattle

Expert
58
I've long understood that mutual companies are a far better deal for the consumer than life insurance sold by stock companies... mainly because of the dividends but also because stock companies answer to the stockholders while mutual companies operate for the benefit of the policyholder.

Does this make sense... do we agree on this?

My real question is: with stock companies such as Metlife, Prudential and Principal among the largest most successful in the industry, do they offer the policyholder any benefits NOT provided by the mutuals?

Aside from what I mentioned above, are there any other appreciable differences?
 
You sure mutual companies are better for policyholders than a stock company?

The most important part they share in common, if you die, they pay.
 
Stock companies offer FULL public disclosure that Mutual companies don't. Why? Because they have stock holders.

That said, stock companies typically have more liberal underwriting because they want to make good numbers NOW. Mutual companies are typically more strict in underwriting because they have a longer-term investment time horizon to look out for.

The fact is, is that if there was only ONE way to do business, (and mutual was always better than stock), then there wouldn't be any competition, now would there?
 
I've long understood that mutual companies are a far better deal for the consumer than life insurance sold by stock companies... mainly because of the dividends but also because stock companies answer to the stockholders while mutual companies operate for the benefit of the policyholder.

Does this make sense... do we agree on this?

My real question is: with stock companies such as Metlife, Prudential and Principal among the largest most successful in the industry, do they offer the policyholder any benefits NOT provided by the mutuals?

Aside from what I mentioned above, are there any other appreciable differences?

Sounds like you have been drinking some Kool Aid :yes:.
 
Stock companies offer FULL public disclosure that Mutual companies don't. Why? Because they have stock holders.

That said, stock companies typically have more liberal underwriting because they want to make good numbers NOW. Mutual companies are typically more strict in underwriting because they have a longer-term investment time horizon to look out for.

The fact is, is that if there was only ONE way to do business, (and mutual was always better than stock), then there wouldn't be any competition, now would there?

DHK you beat me to it about Full Disclosure. I would be very leery in this day and age beating my chest about how much better a mutual company is to the policyholder because you may wake up one day and have to explain to your client why its now good that the mutual you sold them is now a Stock company or how about that ugly stepchild the Mutual Holding Company?
 
Can I get a quick schooling on MHCs?

...before I go talk to Mr. Google.

Mutual Holding Company: A Shell Game

What isn't mentioned in this article is what a MHC gets with the passage of time...All new policies come from the stock company. The older Mutual Policy holders get ownership in the MHC but if you just wait for them to die off and the policy to pay out then the MHC can finish Demutualizing and not pay any of the value to policyholders.
 
As far as disclosure, I do get a finanical every year from NYL done by the same firms that do the other guys.

From what I understand the reason several companies "demutualized" was to raise additional capital which is easier as a Stock.

As far as "better than others", I guess I would fall back to ratings and track record. For whole life I like Mutuals, I like dividends, I like the quality those companies represent. I am sure there are stock companies with just as good ratings, but I learned the "mutual" way for life and I do like what those policies do. But to each their own.
 
Back
Top