When you buy life insurance, you’ll typically choose between a mutual or a stock company.
Only about 25% of U.S. life insurers are mutual life companies, according to the latest data from the American Council of Life Insurers. However, buying a life insurance policy from a mutual company can have some benefits.
What is a mutual life insurance company?
A mutual life insurance company is owned by its policyholders, while a stock insurance company is owned by shareholders. In some cases, mutual company policyholders may be eligible to receive dividends.
Mutual life insurance companies generally earn higher marks for customer satisfaction from policyholders. For instance, mutual life insurers held the top five spots in the 2025 JD Power U.S. Individual Life Insurance Study.
» MORE: Best life insurance companies
How mutual life insurance companies work
In a mutual life company, policyholders elect a board that directs management. Essentially, the policyholder is both a customer and an owner in a mutual life insurance company.
Mutual life insurers sell participating policies, usually whole life insurance, that often pay annual dividends. An opportunity to earn dividends is the main incentive to buy a whole life policy through a mutual company.
Keep in mind these companies also issue regular, nonparticipating policies. This usually includes term life insurance and universal life insurance.
What are life insurance dividends?
Mutual life insurers with strong financials usually share earnings with whole life insurance policyholders. Some mutual companies may also offer dividends for other types of permanent life insurance. These payments often happen annually and are called dividends.
Several mutual life insurers boast a long history of paying annual dividends. For instance, Northwestern Mutual life insurance company has paid out some of the largest dividends in the last century. Penn Mutual has one of the longest records of consistently paying dividends since the company was founded in 1847.
How can policyholders use life insurance dividends?
If you have a whole life policy that pays dividends, you can usually choose to use the money in one of four ways.
- 💰Take the cash. You can have a check mailed or in some cases deposited directly into your bank account. From there, it’s up to you how to spend it.
- ➕ Buy extra coverage. This option is sometimes called purchasing paid-up additions. You can use dividends to buy more coverage or help cash value build more quickly.
- 🧾 Fund your premiums. You might opt to use dividends to pay the policy’s premiums, reducing the cost of your coverage.
- 🏦 Pay back your loans. If you withdrew money against the cash value of your policy, you could use dividends to pay down the balance of the loan.
Mutual insurance vs. stock insurance companies
While policyholders elect the board in a mutual company, a stock insurer has a board of directors chosen by shareholders. In a stock company, policyholders are customers only, while shareholders are the owners of a stock insurance company.
Another difference between mutual and stock companies is what happens when the company needs to raise money. Mutual insurers must issue debt or borrow from policyholders, and that money is repaid from the insurer’s operating profits. A stock insurance company can raise money by issuing debt or by issuing more stock. The ability to raise money by issuing stock gives stock insurance companies more flexibility.
Did you know...
Insurance companies can “demutualize.” This involves changing the legal structure of a company from a mutual form of ownership to a stock form of ownership. When an insurer demutualizes, it usually issues stock or other compensation to policyholders. Pros and cons of mutual life insurance companies
Pros
Potential to earn dividends.
Companies may focus more on policyholder interests.
Mutual companies tend to have exceptional financial stability.
Cons
Only permanent policyholders earn dividends.
Dividends could be taxable in specific but rare situations.
Who should consider buying a policy from a mutual life insurance company?
If you’re looking for whole life insurance, consider mutual life insurance companies. Whole life policyholders are typically eligible for dividends. This built-in benefit could increase the value of your whole life policy or save money on your premiums.
Shopping for term life insurance? You won’t be eligible for dividends but mutual life insurance companies are still worth considering. Mutual life insurers tend to have affordable rates and earn top marks for customer satisfaction.
Largest mutual life companies in the U.S.
These are the five largest mutual insurance companies in the U.S., based on market share. This data comes from the National Association of Insurance Commissioners (NAIC):
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The best mutual life insurance companies in 2026
NerdWallet’s top mutual insurers sell “participating” whole life policies that may earn dividends. Note that because life insurance dividends are based on a company’s financial performance, they aren’t guaranteed. But many of the mutual insurers on this list have paid dividends annually for a century or more and have exceptional financial strength.
| Insurer | NerdWallet rating | Dividend awards expected in 2026 | |
|---|---|---|---|
| Best for health conditions | | $1.7 billion. | |
| Best for fast applications | | $2.78 billion. | |
| Best for customer satisfaction | | $9.2 billion. | |
| Best for flexible payment options | | $2.9 billion. | |
| Best for policy options | | $300 million. | |
| NerdWallet rates insurers at the company level, not the policy level. This means our star rating reflects the company as a whole, and not any of its life insurance policies specifically. | |||
Frequently Asked Questions
Do policies from mutual companies cost more?
The cost of your policy will depend more on what type of life insurance you’re buying than if you’re buying it from a mutual life insurer. Whole life’s long-term coverage and guaranteed death benefit can be more expensive than other types of policies. However, whole life policies from mutual companies are also eligible to earn dividends.
Are life insurance dividends taxable?
Generally, dividends you might receive from a mutual company are not taxable. The IRS regards dividends as a refund on premiums you already paid rather than income.
However, if you choose to use your dividends in a way that overpays your premiums, cash withdrawals from your policy could become taxable. It’s best to consult with a tax professional to avoid this situation.
How can I tell if a life insurer is a mutual company?
Often, life insurers that operate as mutual companies have “mutual” as part of the company name. Some examples include Northwestern Mutual, Penn Mutual and MassMutual. Other mutual companies might not be as obvious. In cases like these, you can usually learn more about how the company operates by visiting the insurer’s website.
Methodology
How we rate the best life insurance companies
✅ 445 life insurers reviewed
📝 210 policies assessed
🔢 1,515 data points analyzed
📊 Star rating categories
When NerdWallet evaluates life insurance companies, our editorial team considers the insurer's strengths and weaknesses, as well as the things that matter most to customers buying a long-term financial product. We then weigh these factors carefully:
💰 Financial strength (35%). We use AM Best ratings to confirm an insurer’s financial stability and ability to pay claims far into the future. The top life insurance companies have an exceptional financial strength rating of A+ or A++ (Superior).
🗣️ Consumer complaints (35%). Our top-rated life insurance companies have fewer than the expected number of complaints to state regulators over a three-year period, according to the National Association of Insurance Commissioners — so you can expect a smoother customer experience.
☎️ Consumer experience (20%). Insurers who allow consumers to contact them by email, phone and live chat earn the highest scores. The same goes for insurers who support online quotes, beneficiary changes and claims.
👀 Transparency (10%). Our methodology gives higher scores to transparent insurers who clearly display information about their policy options, coverage amounts and term lengths (if applicable) on their site.
⭐ What our star ratings mean
Companies with 5 stars are exceptional, with strong financials, diverse policy lineups and great reputations for customer service.
Companies with 4.5 stars are excellent, with solid financials and policy offerings, and good customer service track records.
Companies with 4.0 stars are good, and potentially great for people looking for niche coverage options.
Companies with 3.5 stars or fewer could do better in certain categories, like financial strength and customer complaints.
NerdWallet does not receive compensation for our star ratings or our reviews. Read more about our life insurance ratings methodology and editorial guidelines.
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- 1. American Council of Life Insurers. American Council of Life Insurers 2025 Fact Book. Accessed May 27, 2026.
- 2. JD Power. Life Insurance Customer Satisfaction Varies Widely Based on Carrier and Distribution Channel, JD Power Finds. Accessed May 27, 2026.
- 3. Northwestern Mutual. Northwestern Mutual Expects Record-Breaking $9.2B Dividend Payout in 2026. Accessed May 27, 2026.
- 4. Penn Mutual. Penn Mutual Announces Record-Breaking Dividend Award in 2026. Accessed May 27, 2026.
- 5. National Association of Insurance Commissioners (NAIC). Life and Fraternal Insurance Industry 2025 Top 25 Groups and Companies by Countrywide Premium. Accessed May 27, 2026.
