State RegulationsTX specificDifficulty 2/5
Which statement about the financial position of a member of a Texas fraternal benefit society is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under TIC 885.001 and the related provisions of TIC Chapter 885, a fraternal benefit society is a nonprofit organization without capital stock that exists for the benefit of its members and their beneficiaries. Because there is no stock ownership, membership does not create the personal liability of a proprietor or partner, and the society's funds are held to pay members' benefits rather than to generate profit for owners. That nonprofit structure is also why a fraternal is treated differently from a stock or mutual insurer under the Insurance Code.
Why the other options are wrong
- A) There are no shareholders to levy assessments; assessments, if any, are governed by the society's laws and Chapter 885.
- B) A fraternal is nonprofit, so members receive contract benefits rather than a share of profits.
- D) Membership does not make a person personally liable for the society's debts or obligations.
Memory hook
A fraternal member is a beneficiary of a nonprofit, not an owner liable for its debts.