Florida Life and Health Insurance License Practice Test

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What is the main difference between a mutual insurance company and a stock insurance company?

  1. Investment strategy

  2. Policy benefits

  3. Ownership structure

  4. Premium calculation

The correct answer is: Ownership structure

Mutual insurance companies and stock insurance companies differ in their ownership structure. A mutual insurance company is owned by its policyholders, while a stock insurance company is owned by shareholders. Therefore, the main difference between the two lies in who owns the company and thus may have control over decision making and profits. Options A, B, and D are incorrect because investment strategy, policy benefits, and premium calculation can vary between both types of insurance companies and may not necessarily be the main distinguishing factor.

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