A mutual life insurance company is owned by its policyholders, while a stock insurance company is owned by shareholders.
However, only about 25% of U.S. life insurers are mutual life companies, according to the latest data from the American Council of Life Insurers.
While mutual companies may not make up a majority of life insurance companies, you’ll find them dominating our recommendations for top-rated insurers. Why? Mutual companies tend to offer significant benefits, especially for whole life policyholders — who may be eligible to receive dividends.
These insurers also tend to have strong financial stability, fewer complaints to state regulators and a better reputation for customer service. For instance, mutual life insurers held the top five spots in the 2025 JD Power U.S. Individual Life Insurance Study.
» MORE: Best life insurance companies
How mutual life insurance companies work
In a mutual life company, policyholders elect a board that directs management. Essentially, the policyholder is both a customer and an owner in a mutual life insurance company.
Mutual life insurers sell policies, usually whole life insurance, that can pay annual dividends. An opportunity to earn dividends is the main incentive to buy a whole life policy through a mutual company.
Keep in mind these companies also issue regular, nonparticipating policies. This usually includes term life insurance and universal life insurance.
What are life insurance dividends?
Mutual life insurers with strong financials usually share earnings with whole life policyholders. Some mutual companies may also offer dividends for other types of permanent life insurance. These payments often happen annually and are called dividends.
Several mutual life insurers boast a long history of paying annual dividends. For instance, Northwestern Mutual life insurance company has paid out some of the largest dividends in the last century. Penn Mutual has one of the longest records of consistently paying dividends since the company was founded in 1847.
How can policyholders use life insurance dividends?
If you have a whole life policy that pays dividends, you can usually choose to use the money in one of four ways.
💰Take the cash. You can have a check mailed or in some cases deposited directly into your bank account. From there, it’s up to you how to spend it.
➕ Buy extra coverage. This option is sometimes called purchasing paid-up additions. You can use dividends to buy more coverage or help cash value build more quickly.
🧾 Fund your premiums. You might opt to use dividends to pay the policy’s premiums, reducing the cost of your coverage.
🏦 Pay back your loans. If you withdrew money against the cash value of your policy, you could use dividends to pay down the balance of the loan.
Mutual insurance vs. stock insurance companies
While policyholders elect the board in a mutual company, a stock insurer has a board of directors chosen by shareholders. In a stock company, policyholders are customers only, while shareholders are the owners of a stock insurance company.
Another difference between mutual and stock companies is what happens when the company needs to raise money. Mutual insurers must issue debt or borrow from policyholders, and 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.
Pros and cons of mutual life insurance companies
Pros
Potential to earn dividends.
Companies may focus more on policyholder interests.
Mutual companies tend to have exceptional financial stability.
Cons
Only permanent policyholders earn dividends.
Dividends could be taxable in specific but rare situations.
Who should consider buying a policy from a mutual life insurance company?
If you’re looking for whole life insurance, consider mutual life insurance companies. Whole life policyholders are typically eligible for dividends. This built-in benefit could increase the value of your whole life policy or save money on your premiums.
Shopping for term life insurance? You won’t be eligible for dividends but mutual life insurance companies are still worth considering. Mutual life insurers tend to have affordable rates and earn top marks for customer satisfaction.
How to choose a mutual insurance company
If you’re thinking about buying a policy from a mutual company, think about these factors:
Financial strength. Because your life insurance policy may not pay out for decades, it’s important to know the issuer will be around well into the future. You can check financial strength ratings for life insurance companies via rating agencies such as AM Best. All the companies in the list above have exceptional financial strength.
Coverage. Make sure the company has the policy and riders you want. Then, get quotes from a handful of insurers for the same type of coverage to ensure you’re comparing apples to apples.
Consumer complaints. The National Association of Insurance Commissioners tracks consumer complaints about each insurance company. You can look up the carriers you’re interested in on the NAIC website or check out our life insurance reviews, which include complaint data.
Dividends. If you’re looking to buy a participating whole life insurance policy, look at each mutual company’s history of dividend payouts. (Keep in mind, however, that dividends are never guaranteed.)
» MORE: Life insurance company reviews
Largest mutual life companies in the U.S.
These are the five largest mutual insurance companies in the U.S., based on market share. This data comes from the National Association of Insurance Commissioners (NAIC):
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The best mutual life insurance companies in 2026
NerdWallet’s top mutual insurers sell “participating” whole life policies that may earn dividends. Note that because life insurance dividends are based on a company’s financial performance, they aren’t guaranteed. But many of the mutual insurers on this list have paid dividends annually for a century or more and have exceptional financial strength.
NerdWallet rating | Dividend awards expected in 2026 | |
|---|---|---|
Guardian Best for joint life insurance | $1.7 billion. | |
New York Life Best for payment options | $2.78 billion. | |
Northwestern Mutual Best for hybrid policies | $9.2 billion. | |
MassMutual Best for cash value return rate | $2.9 billion. | |
Penn Mutual Best for policy options | $300 million. | |
NerdWallet rates insurers at the company level, not the policy level. This means our star rating reflects the company as a whole, and not any of its life insurance policies specifically. | ||
The best whole life insurance policies
Several whole life policies from our top-rated life insurance companies are standouts for offering features or benefits you might not find from other life insurers.
Where Guardian stands out
Guardian offers joint life insurance policies that cover two people and pay out when the second one dies. This type of coverage could be a good fit for spouses or business partners.
» Read the full review: Guardian Life
Where New York Life stands out
New York Life’s Custom Whole Life Insurance policy gives you the flexibility to pay it off early. Another whole life policy, Secure Wealth Plus, builds cash value more quickly in the first few years you have coverage.
» Read the full review: New York Life
Where Northwestern Mutual stands out
Northwestern’s Whole Life Plus is a hybrid policy that blends the benefits of term life and whole life insurance. It can maximize what you’re putting into the policy and boost cash value.
» Read the full review: Northwestern Mutual
Where MassMutual stands out
MassMutual’s Whole Life 100 has an appealing guaranteed cash value return rate of 3.75% per year and is available to people age 0 to 90.
» Read the full review: MassMutual
Where Penn Mutual stands out
Penn Mutual has two whole life policies on offer, both of which build cash value but have different potential payment schedules. The company also has a long list of life insurance riders to choose from that makes customizing coverage easier.
» Read the full review: Penn Mutual
Do policies from mutual companies cost more?
Are life insurance dividends taxable?
How can I tell if a life insurer is a mutual company?
Methodology
How we rate the best life insurance companies
✅ 445 life insurers reviewed
📝 210 policies assessed
🔢 1,515 data points analyzed
📊 Star rating categories
When NerdWallet evaluates life insurance companies, our editorial team considers the insurer's strengths and weaknesses, as well as the things that matter most to customers buying a long-term financial product. We then weigh these factors carefully:
💰 Financial strength (35%). We use AM Best ratings to confirm an insurer’s financial stability and ability to pay claims far into the future. The top life insurance companies have an exceptional financial strength rating of A+ or A++ (Superior).
🗣️ Consumer complaints (35%). Our top-rated life insurance companies have fewer than the expected number of complaints to state regulators over a three-year period, according to the National Association of Insurance Commissioners — so you can expect a smoother customer experience.
☎️ Consumer experience (20%). Insurers who allow consumers to contact them by email, phone and live chat earn the highest scores. The same goes for insurers who support online quotes, beneficiary changes and claims.
👀 Transparency (10%). Our methodology gives higher scores to transparent insurers who clearly display information about their policy options, coverage amounts and term lengths (if applicable) on their site.
⭐ What our star ratings mean
Companies with 5 stars are exceptional, with strong financials, diverse policy lineups and great reputations for customer service.
Companies with 4.5 stars are excellent, with solid financials and policy offerings, and good customer service track records.
Companies with 4.0 stars are good, and potentially great for people looking for niche coverage options.
Companies with 3.5 stars or fewer could do better in certain categories, like financial strength and customer complaints.
NerdWallet does not receive compensation for our star ratings or our reviews. Read more about our life insurance ratings methodology and editorial guidelines.
Article sources
- 1.American Council of Life Insurers. American Council of Life Insurers 2025 Fact Book. Accessed Jul 27, 2026.
- 2.JD Power. Life Insurance Customer Satisfaction Varies Widely Based on Carrier and Distribution Channel, JD Power Finds. Accessed Jul 27, 2026.
- 3.Northwestern Mutual. Northwestern Mutual Expects Record-Breaking $9.2B Dividend Payout in 2026. Accessed Jul 27, 2026.
- 4.Penn Mutual. Penn Mutual Announces Record-Breaking Dividend Award in 2026. Accessed Jul 27, 2026.
- 5.National Association of Insurance Commissioners (NAIC). Life and Fraternal Insurance Industry 2025 Top 25 Groups and Companies by Countrywide Premium. Accessed Jul 27, 2026.
