New York State Life Insurance Exam Questions Practice Question
An insurer that is owned by its policyholders and can pay annual dividends to them is considered a
Correct Answer: A
Rationale: A mutual company is owned by its policyholders, who share in the company’s profits through annual dividends, aligning the interests of the policyholders with the company’s performance.
A reciprocal exchange involves members who insure each other, lacking the direct ownership structure of a mutual company.
A fraternal society is a type of organization that provides insurance primarily to its members, often with a social or charitable focus, but does not operate like a mutual company.
A stock company is owned by shareholders, who do not necessarily have to be policyholders, and profits are distributed to shareholders rather than policyholders.
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