Fraternal Benefit Society

Fraternal benefit societies date from the second half of the 19th century. Most were established to provide life and health insurance benefits to those ethnic, religious, or occupational groups that were unable to get coverage from commercial companies. Members typically shared a common background; hence many fraternals still have by-law provisions that restrict membership accordingly.

Like insurance companies, fraternal benefit societies sell insurance. Both are chartered and licensed in accordance with state insurance laws and both are examined and reviewed by state insurance departments. However, the similarities stop there.

Fraternal benefit societies are non-profit organizations that are defined by law as: “Any incorporated society, order or supreme lodge, without capital stock, conducted solely for the benefit of its members and their beneficiaries, and not for profit, operated on a lodge system with a ritualistic form of work, having a representative form of government, and which makes provision for the payment of benefits in accordance with this chapter, is hereby declared to be a fraternal benefit society.”

Fraternal societies are also subject to different legal restrictions and different tax laws than insurance companies; this exempts them from paying income and premium taxes. In addition, fraternals also have limitations on the type of insurance that can be issued; group insurance, credit life or closed contracts are prohibited.

We cordially invite you to join our community – visit our Contact Us form or call us at 1-800-282-2263 for a quick insurance quote. We look forward to hearing from you!