What is a key characteristic of mutual companies?

Mutual companies are fundamentally characterized by their ownership structure, where the company is owned by its policyholders. This means that individuals who purchase insurance policies have a vested interest in the company and can benefit from its profits, typically in the form of dividends or reduced premiums. This structure differentiates mutual companies from stock companies, which are owned by stockholders and exist primarily to maximize shareholder value.

In mutual companies, the interests of the policyholders are prioritized, and the decisions regarding profit distribution and company management are made with the policyholders' best interests in mind. This ownership model fosters a strong alignment between the company and its customers, as policyholders have a say in corporate governance through voting rights.

The other options describe characteristics that do not align with mutual companies: stockholders are not involved in mutual companies, and they do not issue capital stock like stock insurance companies. Moreover, while many mutual companies do offer life insurance, the existence of mutual companies is not limited by the types of insurance they provide. Thus, the correct understanding highlights the unique mutual ownership model that distinguishes these companies in the insurance industry.