General Insurance PrinciplesQuestion 198 of 716
Which statement BEST distinguishes a stock insurer from a mutual insurer?
a.A stock insurer issues only assessable policies, while a mutual insurer issues only non-assessable policies to its member-owners
b.A stock insurer is owned by shareholders and pays them dividends; a mutual insurer is owned by its policyholders and may pay policy dividends
c.A mutual insurer is regulated by the SEC as if it were an investment company, while a stock insurer answers only to the California Department of Insurance
d.A stock insurer is organized as a non-profit corporation, while a mutual insurer is organized to earn profits for its founders
Explanation
A stock insurer is a corporation owned by shareholders who receive shareholder dividends from profits. A mutual insurer is owned by its policyholders, who may receive policy dividends. Both are regulated by the California Department of Insurance.
Law Reference: Cal. Ins. Code §1100This topic, taught in full in the California Life & Health Insurance Producer Exam guide. California Life & Health Insurance Producer Exam — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
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