Final answer:
Non-participating (non-par) insurance policies are provided by corporations owned by shareholders, and such policies do not pay dividends to policyholders. Revenue comes from insurance premiums and investments, where funds are handled conservatively to be liquid for potential claims.
Step-by-step explanation:
The insurance policies issued by companies that are owned by stockholders and which do not pay policy dividends are known non-participating or non-par policies. These insurance products are offered by insurers who might operate in the form of a corporation, which is a business owned by shareholders. The corporation structure allows these companies to have limited liability for the company's debts while stockholders can benefit from the company's profits. However, in the case of non-par insurance policies, profits are not distributed in the form of dividends to policyholders but are instead typically reinvested back into the company or distributed to the stockholders.
Insurance companies derive revenue from insurance premiums and investment income. They invest funds that were previously collected but not yet paid out in claims to ensure a rate of return. These investments are typically conservative to maintain high liquidity, as the funds need to be readily available in case of major claims such as those resulting from natural disasters.