State RegulationsTX specificDifficulty 2/5
A Houston resident who belongs to no lodge asks a newly licensed Texas agent to buy a fraternal benefit society contract. Under TIC Chapter 885, what is the agent's correct response?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under TIC 885.001 and the related provisions of TIC Chapter 885, a fraternal benefit society provides life, accident and health and annuity benefits to its members and to the members' beneficiaries. Membership is a condition of coverage, so a person outside the society cannot simply purchase a fraternal certificate; the applicant must be admitted to membership first. An agent who places fraternal business with nonmembers violates the society's authority and exposes himself to TDI discipline.
Why the other options are wrong
- A) A fraternal has no capital stock, so no stock certificate can be issued.
- B) Fraternals are not open to the general public and have no obligation to accept every applicant.
- C) A higher premium does not cure the absence of membership; the eligibility requirement is membership, not rating.
Memory hook
No lodge membership, no fraternal certificate.