Which type of insurance company is owned by its policyholders?

A mutual life insurance company is indeed owned by its policyholders. This structure differentiates it from other types of insurance companies. In a mutual company, policyholders are essentially the shareholders, meaning they have a direct stake in the company's performance and outcomes. This ownership can manifest in the form of dividends or policyholder benefits, allowing policyholders to potentially receive a share of the company’s profits.

Distinct from stock companies, which are owned by stockholders who may or may not hold insurance policies with the company, mutual companies focus on serving the interests of their policyholders. This ownership model fosters a commitment to policyholder welfare and can influence the company’s decision-making, prioritizing long-term stability and customer satisfaction.

While fraternal life insurance companies also serve specific groups and have a not-for-profit motive, they do not operate on the same mutual ownership model as mutual life insurance companies. Health insurance companies may also operate as either profit or non-profit entities and do not have the same direct ownership structure tied to policyholders. Thus, mutual life insurance companies are clearly characterized by their ownership structure rooted in policyholder participation.