California Life and Health Insurance Practice Exam

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Question: 1 / 400

A participating company is also referred to as which type of insurer?

Stock insurer

Reciprocal insurer

Mutual insurer

A participating company is accurately referred to as a mutual insurer. This type of insurer allows policyholders to participate in the company's profits and losses, which is done through dividends or reductions in premium costs. The key distinction of a mutual insurer is that it is owned by its policyholders, with each policyholder having a stake in the company and the ability to share in its financial successes.

In contrast, a stock insurer is owned by shareholders and may pay dividends to them instead of the policyholders. A reciprocal insurer is a type of insurance exchange where the members mutually insure one another, and a fraternal benefit society serves a specific social or religious group, often providing insurance and other benefits to its members. Therefore, the mutual insurer model encapsulates the essence of a participating company, focusing on the involvement of policyholders in the company's operations and profits.

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Fraternal benefit society

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