State RegulationsTX specificDifficulty 1/5
An organization operating under TIC Chapter 885 as a fraternal benefit society must have which of the following characteristics?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under TIC 885.001 and the related provisions of TIC Chapter 885, a fraternal benefit society must be organized without capital stock, carry on its activities for the benefit of its members and their beneficiaries, and operate through a lodge, chapter or similar system under a representative form of government. That combination of a lodge system and representative government is the structural feature that separates a fraternal from an ordinary stock or mutual life insurer in Texas.
Why the other options are wrong
- A) Fraternals do not distribute surplus to subscribers; funds are held to pay members' benefits.
- C) Fraternal benefits are limited to members of the society and their beneficiaries, not the general public.
- D) A fraternal is a nonprofit organization without capital stock, so there are no investor-shareholders.
Memory hook
Fraternal equals lodge system, representative government, members only.