Mutual Companies vs. Stock Companies
When deciding on an insurance company, it is important to determine whether the insurance company is a mutual company or a stock company. By figuring out which type of company they are, it will be easier to see who they answer to and what their priorities are. At Starlight Financial, we can help you assess insurance companies and decide which is most appropriate for you.
Mutual companies are owned in part by their clients and customers, so they are supposed to operate in the best interests of their clients. With an insurance company, this means policyholders often pay lower premiums than they would for an identical policy from a stock company. Additionally, policyholders can receive a “dividend”, or annual rebate on policy payments, if a mutual company makes a profit that year. Should the company decide to convert to a stock company, current clients are often given the first right to purchase stock, often at lower rates than what non-customers would pay.
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stock company is a business in which shares of the company can be bought and sold by shareholders. Because of this, stock companies must act in the best interests of their shareholders, which may not always line up with the best interests of their clients. Dividends are paid to shareholders rather than clients, and premiums may be higher. Shareholders of a stock company also have some liability for the company’s debts.
At Starlight Financial, our advisors are committed to helping you find the right insurance for you and your family or business. We will help you assess different companies and determine which one would act in your best interests. We have locations in Lexington, the Louisville/New Albany area, Florence, and Pikeville, KY, Kingsport, TN, Phoenix, AZ, Fredericksburg, VA, and Linton, IN. We serve the surrounding areas, and we will soon have a new location in southern Illinois.