1.5.8 Fraternal Benefit Societies
Certain criteria must be met in order for an entity to qualify as a fraternal benefit society.
To be considered a fraternal, the organization must:
- have a lodge system, complete with ritual or ceremonial routines;
- be nonprofit, governed by elected officials; and
- offer insurance only to its members.
Fraternal benefit societies are based on religious, national, or ethnic lines. Any profits derived within the society are considered nontaxable.
Two of the most well known examples of fraternals are the Shrine organization and the Elks organization.
Most fraternals today issue insurance certificates and annuities with many of the same provisions found in policies issued by commercial insurers.