Mutual life insurance companies, on the other hand, do not trade on the stock market. There isn’t a stock to buy or you can’t own them in a fund inside of your whole life policy because they have no shares.
For good reason, a participating mutual insurance company is my preferred of the two. Stock life insurance companies, while they want their customers to be safe, also want to give their stockholders higher returns on their investments or split dividends between stockholders and policyholders.
In participating mutual life insurance companies, on the other hand, policyholders are owners, not stockholders. Profits are not split with any outside shareholders. While they still generate profits, stability and safety are the ultimate goals—and all the profits go to the owners, the policyholders.
As these numbers would indicate, these companies are stable. Statistics drive the profits; as long as the equation is correct, these companies make predictable profits. A very small allocation of their accounts goes to the stock market, so their value isn’t as volatile as the stock exchanges.
And again, since there are no shareholders, Wall Street analysts and money managers cannot pressure these companies into making short-term, shortsighted decisions. Therefore, they are free to pursue long-term strategies and can be managed conservatively. They don’t use margin and leverage, and they generate large amounts of cash that they pay out every year in large dividends.
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