A mutual life insurance company refers to that insurance company that has no private shareholders. Rather, such insurance company is altogether owned completely by its policy holders. There are a number of companies offering different add-on facilities such as life insurance coverage, accident insurance, critical insurance covers for the convenience of the policy holders. The policy holders, however, seem to remain quiet unconvinced about the value of the mutual coverage plans. Here, in this article, we aim at helping the policy holders develop a comprehensive idea about the insurance policy, the pros and cons and benefits associated with it.
Pros and cons:
When it comes to profit sharing, the funds are equally distributed amongst its policyholders. Although the inception of insurance companies basically started with mutual structure, it struggles with one disadvantage of raising fresh funds during times of its needs. This reason has been the prime cause of demutualization of many such companies that have been struggling to gather funds whenever their needs have demanded.
The unique kind of ownership rights binding the individual policy holders makes the mutual life insurance policy truly beneficial. The policy holders of a mutual company enjoy many conventional rights ranging from selecting the board of directors of the company to assessing the company's yearly turnover. These companies maintain reasonable rates of their premium as compared to stock-based insurance companies. The reason of the maintenance of their low premium is their unconcern attitude towards financial profits and returns. In the contemporary times, several mutual life insurance companies are coming to the fore with their clear ideology of wealth management, financial protection and income management. They skillfully work towards acquisition of their goals by market campaigning, earning clients' trust and building their immunity towards economic turbulence and financial recession.
Benefits:
Amongst many, one advantage of mutual life insurance is to make their policy holders, alias customers, feel confident about their significant choices. The insurance providers interact with their customers in an effective way so as to tender them some tangible methods of securing their financial stability tomorrow. By hinting about their financial sturdiness, the companies offering diverse range of financial products, mutual structure of ownership, cater to the preferences of their client's needs as their foremost priority. They offer mostly financial products, services and programs such as life insurance plans, annuity plans, disability-income insurance, long-term care insurance, retirement insurance products, income organization etc.
To summarize some of the benefits that lifeinsurance brings are:
- Zero clash of interests between shareholders and policyholders
- Immunity from drudgery of mergers & takeovers
- Attractive dividend for policyholders
Sometimes, mutual life insurance companies opt for their demutualization. This term refers to conversion of mutually managed insurance companies into stock-based enterprises. The main reason behind the trend of demutualization is to gain strong foothold in the market by being able to raise capital whenever required. The dividends payments to both the policy holders as well as the share holders have proved to be immensely beneficial.
In a nutshell, mutual insurance companies cater to all those investors who believe in mutual financial bonding rather than going after meaningless quest of profiteering and fortune building. Read More
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