Guest Post by Alicia Eberle
There are two common forms of insurance companies: 1) mutually owned, and 2) publicly traded.So why does a life insurance company’s ownership structure matter to a policyowner – to you?
When choosing a life insurance company, it’s important to know how a company is run. While both a mutually owned company and a publicly traded company can provide you with life insurance protection, the company’s ownership structure is one factor that can help guide you as to which company is right for you.
By asking the following questions, at a high level, you may learn the differences in how a company is run and what drives its business strategy:
• When making decisions, who comes first – policy owners? Shareholders?
• Does your insurance company have the financial strength to always keep your needs
a top priority?
• Will you be able to take some role in the decision making process of your
insurance company by exercising certain voting rights?
Mutually owned insurance companies
A mutual company is owned by and accountable to its members and participating policyowners,not stockholders. Mutual companies have no shareholders; instead, policyowners and members are often described as sharing in its ownership. Members who are insured under certain policies issued by a mutual insurance company may be eligible to vote for its board of directors and, those who also own the policy, may be eligible to share in dividends the company may declare.
Of course, dividends for a given policy are influenced by such factors as policy series, issue age,policy duration, policy loan rate, smoking status, changes in experience, and are not guaranteed.Publicly traded insurance companies
A publicly traded company must balance the interests of its policyowners with the earnings expectations of its shareholders. Shareholders typically judge a company’s performance based on a number of factors, including projected earnings for the next quarter or the next year, which might conflict with the long-term interests of policyowners. Knowing how a company is run may be one factor to help you decide which works best for you. Learn more about prospective companies before deciding which company is the right choice.
© 2010 Massachusetts Mutual Life Insurance Company.
Guest Post by Alicia Eberle @ http://investmentspeak.blogspot.com/