State RegulationsTX specificDifficulty 1/5
Under TIC 885.001-.706, which of the following is required of a fraternal benefit society operating in Texas?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under TIC 885.001-.706, a fraternal benefit society is an incorporated organization, without capital stock, organized and carried on solely for the benefit of its members and their beneficiaries rather than for profit. It operates through a lodge system with a representative form of government and provides insurance benefits to its members. For the agent, the practical consequence is that a fraternal certificate is a membership product: the insured must be a member of the society, and it cannot be marketed as an ordinary commercial policy sold at a profit to the general public.
Why the other options are wrong
- A) Ownership by the policyholders of a single employer group is not the fraternal structure; the society is organized around its lodge membership rather than around an employer.
- B) A fraternal is expressly not a for-profit venture and does not solicit the general public; it provides benefits only to its members and their beneficiaries.
- D) A fraternal benefit society has no capital stock and no shareholders, so there is nothing on which dividends could be declared.
Memory hook
Fraternal means incorporated, no stock, members only, and never for profit.