What type of policy dividends are typically paid to policyholders of mutual life insurance companies?

Mutual life insurance companies are owned by their policyholders, and one of the benefits these policyholders enjoy is the potential to receive dividends. The dividends paid by mutual life insurance companies are typically in the form of cash dividends. This means that policyholders may receive a portion of the company's profits distributed to them as cash. This distribution comes from the surplus funds of the insurance company after it has covered its expenses and obligations.

Cash dividends can be particularly appealing to policyholders as they provide immediate financial benefit and can be used for various purposes, such as paying premiums, investing, or other personal expenses. In contrast to stock dividends, which are related to shares of stock in a company, or term dividends, which are not a recognized term in life insurance policy profit sharing, cash dividends directly reward the policyholder for their investment in the mutual company. Hence, the focus on cash dividends reflects the nature of mutual companies in distributing earnings to the individuals who hold their policies.