What Company Do I Choose – Mutual or Stock?

The Decision Process

When considering the purchase of permanent life insurance, part of the decision process not only should include performing due diligence of the solvency of companies, but I suggest also considering whether you prefer to own a policy from a mutual company or a stock company.

Stock Company

Companies that are set up in a stock form of ownership raise capital by selling stock… similar to most public, for-profit companies in the world. The leadership of the company reports and is accountable to its shareholders. Any person who is eligible to purchase stock can own a share or shares of stock in a stock life insurance company. It's logical to conclude from this that stock companies make decisions with strong consideration to how it will affect its stockholders.

Mutual Company

Companies set up in a mutual form of ownership are owned by its policyholders. The company and its leadership report and are accountable to its policyholders. Only persons who have purchased an insurance policy from that company may vote on issues that, in a stock form of ownership, stockholders would vote. It's logical to conclude from this that mutual companies, such as Guardian, make decisions with strong considerations and in the best interests of its policyholders.