Difference between a Stock and a Mutual Insurance Company

The main dif­fer­ence between a Stock Insur­ance Com­pany and a Mutual Insur­ance Com­pany is that the Stock owned com­pany is respon­si­ble for mak­ing money for the stock hold­ers where as a Mutu­ally owned com­pany is respon­si­ble for mak­ing money for the Pol­icy Hold­ers, which would be YOU.

A stock owned insur­ance com­pany must keep their stock hold­ers happy. There are no stock hold­ers in a mutu­ally owned life insur­ance com­pany. Why does that mat­ter? The stock insur­ance com­pa­nies have incen­tive to take risks, they are there­fore vul­ner­a­ble to the pres­sures of max­i­miz­ing short term quar­terly prof­its in order to please stock hold­ers. Oh and any div­i­dend gains the stock hold­ers receive are of course taxed.

The exec­u­tives of a Mutu­ally Owned Insur­ance Com­pany have a totally dif­fer­ent mind-set though. They answer to their share­hold­ers who are their pol­icy hold­ers. Their focus is to guar­an­tee max­i­mum ben­e­fits to the pol­icy hold­ers and are not pres­sured to take risks to max­i­mize short term prof­its. This allows man­age­ment to always have in mind the long term safety, secu­rity and return for YOU the pol­icy owner & shareholder.

The pol­icy hold­ers actu­ally own a share of the com­pany and so par­take in the prof­its of the com­pany as well. Any div­i­dend gains the pol­icy hold­ers receive are tax free because they are con­sid­ered a return of pre­mium. A return of an over­pay­ment of pre­mium. The stock com­pany pol­icy hold­ers were over charged also, but to the ben­e­fit of the stock hold­ers not the pol­icy owners.

These facts alone show exactly why the safest place to park and grow your money is in a Mutual Insur­ance Company.

In Decem­ber of 2008 FORBES mag­a­zine wrote an arti­cle, a por­tion of which can be seen below. It depicts the con­trast and con­se­quences between man­age­ment work­ing for stock hold­ers and work­ing for pol­icy hold­ers stat­ing: “With their sur­vival on the line , pub­licly traded insur­ers are scram­bling for cash by cut­ting div­i­dends, and issu­ing new shares (dilut­ing exist­ing investors) beg­ging reg­u­la­tors for a relax­ation of cap­i­tal require­ments and lob­by­ing Wash­ing­ton for a cut of the $700 bil­lion wall street bailout. Their Mutu­ally owned rivals haven’t asked for a dime. Their statu­tory sur­pluses (the reg­u­la­tory coun­ter­part to book value) have held steady or even increased. Some are announc­ing plans to pay out near record div­i­dends to pol­icy hold­ers. This might explain why Mutu­ally Owned  Insur­ance Com­pa­nies have paid out div­i­dends  every year , year after year for over 100 and some over 150 years even dur­ing the depression.”

To under­stand fur­ther, the value of being a part owner in a Mutual Life Insur­ance Com­pany please read best sell­ing author Nel­son Nash’s book, ‘Becom­ing Your Own Banker’. Also, along with Nelson’s book you must also read ‘How Pri­va­tized Bank­ing Really Works’.

So if you are look­ing for a safe place to not just park your money but to flow your money through, beware, there are over 2000 insur­ance com­pa­nies in the USA but only 38 are Mutu­ally owned. Of all these insur­ance com­pa­nies only one has fully embraced the con­cepts depicted and described in these books. And the type of pol­icy nec­es­sary to prop­erly func­tion like a pri­vate bank­ing reserve sys­tem must be struc­tured in a way that best suits the clients goals. Only a qual­i­fied, expe­ri­enced, pro­fes­sional agent who has been trained by Nel­son and his top train­ers and who work in close rela­tion­ship with this par­tic­u­lar Mutual Com­pany can sat­isfy all these requirements.

So, do you want your insur­ance com­pany work­ing for YOU or work­ing for who knows who? Do you want a return of your pre­mi­ums over time so your insur­ance really ends up cost­ing you noth­ing, or do you want to just keep pay­ing for insur­ance that is fund­ing some­one else’s pocket?

Call me today so we can set up an appoint­ment to get you started on your edu­ca­tional process of under­stand­ing how per­ma­nent insur­ance can be set up and used as your own pri­vate bank­ing reserve sys­tem, as described in the two books above.

Jen­nifer Hansen 845 – 649-7487 or jen­nifer @ debtdiagnosis.com

If you haven’t yet pur­chased Becom­ing Your Own Banker by Nel­son Nash, do so now.

 

                                                                     

 

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September 20, 2010 · Jennifer · One Comment
Tags: , , , , , , , , , , ,  · Posted in: FINANCIAL EDUCATION 101, STOCK vs MUTUAL Insurance Co's, Stock vs Mutual Insurance Companies

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