Demutualization Claims Clearinghouse
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- Date Submitted: 08/14/2010 10:40 AM
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Demutualization Claims Clearinghouse
FIS/250
After reading the Demutualization Claims Clearinghouse Frequently Asked Questions Web site, I found the difference between stock and mutual insurance companies is mutual insurance companies are owned by policyholders and converted into a publicly traded stock owned by shareholders. Although the shareholders of stocks can also be policyholders of the mutual life insurance company, this relationship must be approved by both policyholders and government regulators. Ownership in the insurance company comes with its own benefits like a combination of stock, cash, as well as policy credits in the new company. It is easier to raise capital if a mutual insurance company is demutualized into a stock. Another benefit to a mutual insurance company being demutualized into a publicly traded stock is it makes for more effective mergers and acquisitions as well as retaining employees with stock options.
There are three types of marketing systems, life insurance, property and casualty, and group insurance. Some of the characteristics of life insurance are cash values accumulate on a tax-deferred basis, death benefits are a tax-free income, and loans may be taken against the policy. Life insurance is a long-term decision that most people just look at the cost upfront. Group insurance is different from individual insurance because it covers many people, most group insurance plans are employers contributed, and group insurance cost less in most cases. Group insurance is typically more beneficial to an individual because an employer is responsible for maintaining an affordable insurance plan that individuals can afford. Regardless of which way an individual goes with insurance, one should always do the research to see which would be more beneficial to them.
FIS/250
After reading the Demutualization Claims Clearinghouse Frequently Asked Questions Web site, I found the difference between stock and mutual insurance companies is mutual insurance companies are owned by policyholders and converted into a publicly traded stock owned by shareholders. Although the shareholders of stocks can also be policyholders of the mutual life insurance company, this relationship must be approved by both policyholders and government regulators. Ownership in the insurance company comes with its own benefits like a combination of stock, cash, as well as policy credits in the new company. It is easier to raise capital if a mutual insurance company is demutualized into a stock. Another benefit to a mutual insurance company being demutualized into a publicly traded stock is it makes for more effective mergers and acquisitions as well as retaining employees with stock options.
There are three types of marketing systems, life insurance, property and casualty, and group insurance. Some of the characteristics of life insurance are cash values accumulate on a tax-deferred basis, death benefits are a tax-free income, and loans may be taken against the policy. Life insurance is a long-term decision that most people just look at the cost upfront. Group insurance is different from individual insurance because it covers many people, most group insurance plans are employers contributed, and group insurance cost less in most cases. Group insurance is typically more beneficial to an individual because an employer is responsible for maintaining an affordable insurance plan that individuals can afford. Regardless of which way an individual goes with insurance, one should always do the research to see which would be more beneficial to them.