Which statement is correct regarding stock life insurance companies?

Question

Quizplus · Accepted Answer

Stock companies generally sell nonparticipating policies, which means that policyholders do not participate in the profits or losses of the company. This is because stock companies are owned by shareholders, not policyholders. Participating policies are typically sold by mutual insurance companies, which are owned by policyholders. Choice A is incorrect because stock companies sell nonparticipating policies, not participating policies. Choice B is incorrect because it is not true that stock companies always charge higher premiums than mutual companies. Choice C is incorrect because, as mentioned earlier, policyholders do not participate in the profits or losses of a stock company. Choice E is incorrect because stock companies are owned by shareholders, not policyholders.

Which Statement Is Correct Regarding Stock Life Insurance Companies