Question

The leaders of a religious group decided to start a life insurance organization to insure members of the religious group. The insurer will operate as a nonprofit organization, thus receiving favorable tax treatment. The insurer formed will be a
A) health maintenance organization.
B) stock insurer.
C) fraternal insurer.
D) reciprocal exchange.

Answer 1

Answer:

C) fraternal insurer.

Explanation:

A fraternal insurer issues fraternal life insurance which is an insurance covered by a non-profit organization that offers this service to its members.

This insurance works in a similar fashion to normal insurance policies where the insured must pay monthly fees which are called contributions in this case.

Fraternal insurance policies must be provided by fraternal benefit societies which can be religious, ethnic or vocational. Generally most fraternal insurance provide life insurance policies only, and in order to be a client you must belong to their church or group.