Questions: David is a policy owner in a mutual insurance company and had purchased life insurance for 25 per 1,000 of face amount. The company did very well this year and declared a dividend of 3. How does David receive this? As cash As credit towards the next premium payment As credit on the premium statement As stock in the company

The answer is: As cash

In a mutual insurance company, policyholders are often entitled to receive dividends when the company performs well financially. These dividends can be distributed to policyholders in the form of cash. This is a common option for receiving dividends, allowing policyholders to use the money as they see fit.

While this is a possible option for receiving dividends, it is not the default or only method. Policyholders may choose to apply their dividends as a credit towards their next premium payment, reducing the amount they need to pay out of pocket.

This option is similar to applying the dividend as a credit towards the next premium payment. It involves using the dividend to offset future premium costs, but it is not the only way dividends can be received.

In a mutual insurance company, policyholders do not receive stock as dividends because mutual companies do not issue stock. Instead, policyholders are considered part-owners of the company, and dividends are typically distributed in cash or as premium credits.