What is a fraternal benefit society?

A fraternal benefit society is a non-profit organization that provides insurance benefits to its members, primarily for the purpose of sharing risk. Members typically join these societies based on a common affiliation, such as ethnicity, religion, or another social bond. These organizations operate on the principle of fraternity and mutual aid, where benefits are paid out to members' beneficiaries upon certain events, such as death.

The non-profit aspect is crucial as it indicates that any profits generated by the society do not go to shareholders but instead are used to promote the welfare of the members and to enhance the services provided. This communal approach differs significantly from for-profit organizations, which aim to generate profit for investors and typically function in a competitive market environment. Unlike governmental insurance programs, which are provided and regulated by the state, fraternal benefit societies are member-led and operate independently, maintaining their own rules and regulations. The characterization of charging high premiums does not align with the nature of fraternal societies, which seek to provide affordable rates for their members in order to promote accessibility and benefit sharing.