Alabama Insurance Adjuster Practice Exam

Which of the following best describes a Fraternal Benefit Society?

1. A non-profit organization providing insurance benefits

2. A community for political and social activism

3. A profit-driven insurance company

4. A cooperative for agricultural interests

The correct answer is: A non-profit organization providing insurance benefits

A Fraternal Benefit Society is accurately described as a non-profit organization providing insurance benefits. These societies are typically formed around a common bond, such as membership in a specific community, profession, or religion, and are dedicated to mutual aid and support among their members. They offer insurance products, including life insurance and other benefits, to members as part of the societal mission to promote welfare and assistance. Fraternal Benefit Societies operate without the profit motive that characterizes traditional insurance companies, instead redirecting any surplus funds back into the society to provide better benefits and services to their members or to support charitable activities. Their structure allows for a communal approach to insurance, where members can also participate in communal activities and governance, fostering a sense of community and support.