Mutuals describe what kind of insurance companies?

• A. Not-for-profit
• B. For-profit
• C. Government
• D. International

Answer: (A)

Mutuals are owned by the people they insure—the policyholders. That ownership arrangement means profits aren’t paid to outside investors; instead, any excess funds stay with the company to benefit the insureds—like lower premiums or policy dividends. So, in practice, mutuals operate on a not-for-profit basis, focusing on serving their members rather than earning profits for shareholders. This differs from stock insurers, which are owned by shareholders and distribute profits to them, and from government programs, which are run by the state. “International” isn’t a form of ownership or operating model for this context.