Insurance Broker Certification Practice Exam

What is the primary purpose of fraternal benefits societies?

1. To provide insurance for corporate employees

2. To provide insurance for members of affiliated organizations

3. To distribute profits to shareholders

4. To manage state-run insurance programs

The correct answer is: To provide insurance for members of affiliated organizations

Fraternal benefits societies primarily exist to provide insurance and other benefits to members of affiliated organizations, such as religious, ethnic, or social groups. These societies operate on a not-for-profit basis and are often founded on the principles of mutual aid and brotherhood, emphasizing social and community connections among members. By offering insurance products, fraternal societies aim to foster a sense of fellowship and solidarity among their members, ensuring that they have access to financial protection and support. This collective approach not only strengthens the bond among members but also reflects the core mission of fraternal organizations to serve their communities rather than distribute profits like a typical corporate structure would. This focus on member benefits rather than shareholder profits exemplifies the distinct nature of fraternal benefits societies as compared to more traditional insurance providers or businesses that prioritize corporate profits. Therefore, the main function of these societies aligns closely with the goal of providing insurance tailored to the specific needs of their member communities.