What Is a Mutual Life Insurance Company?

A mutual life insurance company is an insurer that's owned by policyholders instead of shareholders.
Robin Hartill, CFP®
By Robin Hartill, CFP® 
Edited by Lisa Green Reviewed by Tony Steuer

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When you buy life insurance, you’ll typically have two types of insurance companies to choose from. A mutual life insurance company is a company that’s owned by policyholders, while a stock insurance company is a company that’s owned by shareholders.

Only about 15% of life insurance companies doing business in the U.S. as of 2020 were mutual life companies, according to the American Council of Life Insurers

American Council of Life Insurers. American Council of Life Insurers 2022 Fact Book. Accessed Dec 4, 2023.

In a mutual life company, policyholders elect a board that directs management, whereas with a stock mutual company, the board of directors is chosen by shareholders. Essentially, the policyholder is both a customer and an owner in a mutual life insurance company. With a stock insurance company, policyholders are customers only. Shareholders are the owners of a stock insurance company.

Mutual life insurers usually issue participating life insurance, which are whole life policies that often pay a dividend when the company delivers strong financial performance

New York State Department of Financial Services. Types Of Life Insurance Policies. Accessed Dec 4, 2023.
. However, most mutual insurance companies also issue nonparticipating policies like term life insurance and universal life insurance.

One big difference between mutual life insurance companies and stock insurance companies is that when a mutual life company needs to raise money, it must issue debt or borrow from policyholders. That money is repaid from the insurer’s operating profits. A stock insurance company can raise money by issuing debt or by issuing more stock. The ability to raise money by issuing stock gives stock insurance companies more flexibility.

Many insurance companies have demutualized over the years. Demutualization is the process of changing the legal structure of an insurance company from a mutual form of ownership to a stock form of ownership. When an insurer demutualizes, it typically issues stock or other compensation to policyholders for their ownership in the mutual company

University of Massachusetts Boston. Demutualization in the Life Insurance Industry: A Study of Effectiveness. Accessed Dec 4, 2023.

Top mutual life companies in the U.S.

These are the five largest mutual insurance companies in the U.S., based on 2022 market share for individual policies, according to S&P Global Market Intelligence.

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