Download Stock Insurance Companies Versus Mutual Insurance

Life | Whole
Stock Insurance Companies
Versus Mutual Insurance Companies
Myths and Realities
Let’s take a look at the details behind some of these myths and measure them against
reality in each situation.
MYTH: Stock insurance companies can only offer non-participating policies but mutual companies can offer
participating policies in addition to non-participating policies.
REALITY: Whole life insurance policies can be designed and priced to be participating (dividend paying) or non-participating (non-dividend
paying) and can be designed, priced, issued and distributed by either a stock or mutual insurance company. Each state and jurisdiction
reviews and approves all life insurance policies sold in their locale. The MetLife Promise Whole LifeSM products are designed, priced, filed and
approved as participating policies that are eligible to pay dividends.
MYTH: Mutual companies do not have shareholders and thus are able to pay more policy dividends than stock
companies on their participating policies.
REALITY: While stock companies have shareholders and mutual companies do not, this difference does not enable mutual companies to pay
more policy dividends. Stock and mutual companies have the same competitive concerns when deciding to pay policy dividends. In addition,
both stock and mutual companies operating in New York must comply with stringent regulations regarding reserves and the accumulation of
surplus, but the rules are slightly different pertaining to mutual and stock companies. A mutual company is permitted to maintain a surplus
above all of its reserves and liabilities while a stock company, like MetLife1, can only maintain a surplus above the reserves and liabilities of its
participating policies. That means that a mutual company could choose to maintain more surplus and pay out less in dividends while a stock
company is only allowed to look at the reserves and liabilities related to its participating policies (which are less than its total reserves and
liabilities) when establishing the amount of surplus to maintain.
Although dividends are not guaranteed, Metropolitan Life Insurance Company (MLIC) has consistently paid policy dividends to its
eligible policyholders. These dividend payments began when MLIC was a mutual company and have continued as a stock company.
MLIC deliberately decided to continue issuing dividend-paying policies when it became a stock company by designing, pricing and filing
participating whole life policies.
MYTH: A mutual insurance company that has a higher dividend scale interest rate than a stock insurance company
must pay higher dividends and have higher values within the policy.
REALITY: A mutual or stock company can have a higher dividend scale interest rate and yet have lower values accumulate within the policy.
While interest rates are a significant factor in the calculation of policy dividends, dividends are also based on other factors such as mortality
rates and expenses, so a higher dividend scale interest rate does not necessarily correlate to higher dividends. When comparing policies,
it is important to go beyond just a dividend scale interest rate comparison and instead focus on all aspects of the product design, such as
premium level and the level of cash values and dividends credited over time.
“MetLife” consists of Metropolitan Life Insurance Company, MetLife Investors USA Insurance Company, New England Life Insurance
Company, and General American Life Insurance Company, all of which are wholly owned subsidiaries of MetLife, Inc.
1
We hope that we have helped you to understand the important facts necessary to make informed decisions when choosing a company for
your protection and asset accumulation needs.
The MetLife Promise Whole Life products offer some of the industry’s most competitive and exciting features designed for the benefit of
both you and your family. Some of those include:
• Strong Guarantees — Guaranteed increasing cash value, guaranteed premium and guaranteed death benefits. The cash value of a
whole life policy keeps growing every year that premiums are paid, guaranteed.
• Annual Dividends — Even in uncertain economic times, participating whole life insurance policies may pay an annual dividend to
policyholders. Although dividends are not guaranteed, MetLife has an excellent track record of paying dividends to whole life insurance
policyholders, and expects to pay approximately $1.25 billion in policyholder dividends in 2014.2
• Flexibility — In addition to providing funds to protect families in the event of a premature death, whole life policies can be tailored to
fit many individuals’ needs with the use of dividends and the availability of optional riders.3 Whole life may be appropriate for a person
interested in building wealth, leaving a guaranteed inheritance for the next generation or both.
For more information about the MetLife Promise Whole Life products, please contact your
financial professional or go to metlife.com.
This amount is expected to be declared by the boards of directors of the issuing companies in February 2014.
2
There may be an additional charge for optional riders.
3
Like most insurance policies, MetLife’s policies contain charges, limitations, exclusions, termination provisions and terms for keeping them in force. Contact your
financial representative for costs and complete details.
Descriptions of the policy features and options are only partial; for complete details and limitations ask to see a specimen policy.
MetLife Promise Whole Life, MetLife Promise Whole Life 120, MetLife Promise Whole Life Select 10, MetLife Promise Whole Life Select 20, and MetLife Promise Whole
Life Select 65 are issued by MetLife Investors USA Insurance Company generally on Policy Form 5E-12-10 in all jurisdictions except New York, where they are issued by
Metropolitan Life Insurance Company on Policy Forms 1E-12-10-NY and 1E-12-10-NY-A. All guarantees are subject to the claims-paying ability and financial strength
of the issuing insurance company. November 2013
Whole Life Insurance Products:
• Not A Deposit • Not FDIC-Insured • Not Insured By Any Federal Government Agency • Not Guaranteed By Any Bank Or Credit Union
MetLife Investors USA Insurance Company
5 Park Plaza, Suite 1900
Irvine, CA 92614
metlife.com
CLWL23570 L1013349032[1114]
© 2013 MetLife, Inc. PEANUTS © 2013 Peanuts Worldwide
Metropolitan Life Insurance Company
200 Park Avenue
New York, NY 10166