A mutual life insurance company is one that pays its policy holders dividends. This is the only kind of insurance company that does this. If you are in the market for life insurance you should look into buying your policy from a mutual life insurance company. Mutual life insurance is a life insurance that you buy from a mutual insurance company, rather than a stock insurance company. A mutual life insurance company is a provider that owned by policy holders rather than by stock holders. The very first insurance companies that were ever created in the United States were all mutual insurance companies. They provided insurance for their members and were often called “mutual associations.” The insurance companies that exist today grew out of these associations. There are still some mutual insurance companies in the United States today, but the majority have de-mutualized and become stock insurance companies now.
There are 5 nations today that have mutual life insurance companies still in existence. These nations are the United States, United Kingdom, Germany, Japan and Spain. Some of the well known mutual life insurance companies in the United States today are Mutual of Omaha, State Farm and American Family. A large well known mutual life insurance company in the UK is the Equitable Life Assurance Society.
A mutual life insurance company is typically able to offer life insurance coverage with low premium rates. The other types of insurance companies are called stock insurance companies, which are owned by stock holders who are entitled to the net assets of the company if it were to ever go out of business. Mutual life insurance companies operate much the same way as stock holder insurance companies do. Their only difference is in their ownership. The main advantage over a stock insurance company is the fact that a mutual life insurance company will cater to the needs of its policy holders, rather than stock holders. This is one reason why so many people prefer to buy their life insurance through a mutual life insurance company. Mutual life insurance companies offer life insurance in various forms such as whole-life, term life, adjustable and indemnity life insurance products. You will also find that mutual life insurance companies quite often supplement life insurance policies with investment services.
If you purchase a participating mutual life insurance policy you will receive dividends from the mutual life insurance company’s earnings. The dividend amounts are determined by the board of directors and are considered tax free by the IRS if they are not more than the premium amount you paid throughout the year. You can use the dividends you receive to help reduce premiums, buy additional insurance or receive them as a cash payment. It should be noted that not all policies you can buy from a mutual insurance company are participating policies however so ask the agent if the one you are considering is a participating policy. Dividends are not guaranteed and are not required either.
You can buy whole life insurance polices from a mutual insurance company. Whole life is permanent life insurance which will last your entire life. This kind of policy has a guaranteed death benefit and fixed premium. Whole life polices are not normally offered by stock insurance companies. Mutual life insurance companies do not normally sell term life insurance products. Term life is a policy that is in force for a limited number of years which can depend on the individual policy that you buy. Term life is best for young families. Most mutual life insurance companies have high financial strength ratings from credit rating agencies like Moody’s, Fitch and S&P. Whenever you are shopping for life insurance it is best to look for companies that have financial stability ratings.