Common Stock Investments

What Does Common Stock Investments Mean?

Common stock investments involve purchasing shares of stock in a corporation, typically through stock exchanges like NASDAQ. A common stock represents an individual share of ownership in a company.

Many insurance companies invest the money they receive from premiums by buying common stock.

Insuranceopedia Explains Common Stock Investments

Insurance companies often invest in common stock for two reasons: to increase their profits and to help their policyholders grow their wealth. Many life insurance companies offer various investment opportunities, including common stock, as part of their policies. These are usually the life insurance policies that build cash value, rather than term policies that only pay out on death. Products like indexed universal life insurance tie a portion of the cash value growth to stock market index returns, so how common stocks perform can change what policyholders earn inside the policy. If the stocks perform well, they can yield significant returns for both the insurer and the policyholder.