A mutual life insurance company is a company which has no capital stock or stockholders.  It is owned by its policyholders, and is managed by a board of directors chosen by the policy owners.

Mutual insurance companies have never been looked upon as very exciting or sexy, but they are finally getting some respect.  With the stocks of publicly held life insurers taking a nose dive in this past year  (according to Forbes Magazine), they are scrambling for cash by cutting dividends, issuing new shares (diluting existing investors) and begging regulators for a relaxation of capital requirement and lobbying Washington for a cut of the $700 Billion Wall Street bailout.

Mutual companies, on the other hand have not held out a hand to Wall Street and have statutory surpluses that make their publicly-held brethrens’ mouths water.  Many are paying record-breaking dividends to their policyholders.  A check of the various company ratings (A.M. Best, S&P, and Fitch) validates the financial soundness of these mutual companies.

Why am I mentioning this in a blog about disability insurance?  It’s simple -  two major players in the disability marketplace (and two of the companies we represent) are mutual companies.  They are Guardian Life Insurance (also written by Berkshire Life, a wholly-owned subsidiary of Guardian Life) and Mass Mutual Life Insurance.  Financial strength of the insurance company should be a major factor in your decision when evaluating different policies, so I thought a brief discussion about mutual companies in the environment we are in now was in order.