Q. I plan to purchase an insurance product that is offered by both a public company and a mutual company. Which company is better?
A. There are two major types of insurance companies: public insurance companies and mutual insurance companies. It's a hard to answer which type of companies are better. Each company chooses to be a public or a mutual company based on its unique considerations.
Generally, a mutual company is "owned" by its policyholders, which means it will return its profits back to its clients in the format of dividends. This is quite like a credit union. However, it's hard to say if a credit union is better than a bank.
As a public insurance company, it is accountable to its shareholders who are the company's owners. With access to the public market, such companies could finance its operations with more (and better?) options. There is a general trend within the insurance industry that mutual companies are de-mutualizing the business structure.
The bottom line is, you want to pick a product that is best fit for your unique needs. There are both good and bad public or mutual insurance companies.
A. There are two major types of insurance companies: public insurance companies and mutual insurance companies. It's a hard to answer which type of companies are better. Each company chooses to be a public or a mutual company based on its unique considerations.
Generally, a mutual company is "owned" by its policyholders, which means it will return its profits back to its clients in the format of dividends. This is quite like a credit union. However, it's hard to say if a credit union is better than a bank.
As a public insurance company, it is accountable to its shareholders who are the company's owners. With access to the public market, such companies could finance its operations with more (and better?) options. There is a general trend within the insurance industry that mutual companies are de-mutualizing the business structure.
The bottom line is, you want to pick a product that is best fit for your unique needs. There are both good and bad public or mutual insurance companies.
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