New Jersey Life Insurance Exam Practice Question

Correct Answer: A

Rationale: Policyowners of a mutual insurance company have the right to elect the governing body, typically the board of directors, which oversees the company's operations and strategic direction. This democratic process ensures that policyowners have a voice in management decisions.

Option B is incorrect because mutual insurance companies do not issue stock; instead, they are owned by their policyholders who do not contribute capital for stock purchases.

Option C is misleading; while policyowners may receive dividends, the amount declared is determined by the board based on the company’s financial performance, not directly by policyowners.

Option D is also incorrect, as premium rates are set by the company’s management and actuaries based on risk assessments and market conditions, rather than by policyowners.