Myth #11: Does Mutual Really Matter? Yes and No

Updated: Oct 15, 2020


A common refrain heard throughout the mutual company sales forces is "mutual matters". This obviously serves these companies' agenda to really sell more of their contracts. What IS "Mutual"? (Besides consent, of course.)


Mutual is simply a business entity. Investopedia gives us a great definition:

https://www.investopedia.com/terms/m/mutualcompany.asp


What Is a Mutual Company?

A mutual company is a private firm that is owned by its customers or policyholders. The company's customers are also its owners. As such, they are entitled to receive a share of the profits generated by the mutual company.

The distribution of profits is typically made in the form of dividends paid on a pro rata basis, based on the amount of business each customer conducts with the mutual company. Alternately, some mutual companies choose to use their profits to reduce members' premiums.

A mutual company is sometimes referred to as a cooperative.