State RegulationsNC specificDifficulty 1/5
Which statement best describes a fraternal benefit society under North Carolina insurance law?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under G.S. 58-24-1 and the fraternal benefit society provisions of Article 24, a fraternal benefit society is a not-for-profit organization operating on a lodge system, providing insurance benefits to its members and their beneficiaries, and it is exempt from many of the statutes governing other insurers. Its defining features are the lodge structure, membership basis, and reciprocal character of the benefits.
Why the other options are wrong
- B is wrong because the fraternal society's exemption from many general insurance statutes is precisely what distinguishes it from commercial insurers.
- C is wrong because coverage flows from membership in the society; it is not sold to the general public at large without membership.
- D is wrong because fraternal benefit societies are state-regulated under Article 24 and overseen by the Commissioner of Insurance, not by federal law.
Memory hook
Fraternal = lodge + members + benefits, exempt from many ordinary insurer rules.