Mutual life insurance companies are owned by policy holders whereas stock life insurance companies are owned by shareholders.
 

According to Nelson Nash, the reason that mutual companies are preferable is that they focus on keeping the policy holders happy, not stockholders, which makes a lot of sense from client point of view!  One way this manifests is mutual companies may pay higher dividends to policy holders as a return of premium, versus a stock company that must focus on maximizing profits for stockholders.