Question

In which company may policy owners receive policy dividends when there is a profit?

A. Mutual Insurance Company
B. Captive Insurance Company
C. Stock Insurance Company
D. Reciprocal Insurance Company

Answer 1

Policyholders may receive policy dividends from a Mutual Insurance Company, which is owned by the policyholders and shares profits with them.

Step-by-step explanation:

Policy owners may receive policy dividends when there is a profit in a Mutual Insurance Company. Mutual insurance companies are owned by the policyholders themselves, and so any excess profits are often returned to these owners as dividends. This is different from Stock Insurance Companies where dividends are typically paid to shareholders, and not policyholders.