July 23, 2021

What Is a Fraternal Insurance Company? | BetterLife

A fraternal insurance company is a not-for-profit, member-owned organization offering insurance as a primary benefit to its members. They are known for putting their members’ needs first and providing them with superior products, making them an appealing option to anyone looking into buying life insurance!


First, What Is a Fraternal Company?
What are the Different Types of Fraternal Organizations?
Fraternal Benefit Societies Definition
What Is A Fraternal Insurer?
Fraternal Life Insurance Policies
How Is Fraternal Benefit Society Life Insurance Different?
What Does Fraternal Benefit Society Mean in Terms of Insurance?
Why Choose a Fraternal Insurance Company Over a Traditional Insurance Company?


First, What Is a Fraternal Company?

Definition of Fraternal

Fraternal comes from the Latin term ‘frater’ meaning “brother.” This is where fraternities originate. Fraternities were established by Catholic orders, such as Knights Templar, during medieval times when it was customary that men would live together under one roof, whether or not they were related by bloodline. These days, you’re more likely to find them on college campuses eating pizza on Friday night like any other student!

However, what we mean when we use the term “fraternal,” is a much different concept than the college fraternities you’re likely familiar with.

Fraternal Company

Fraternal companies offer a great way to meet others with similar interests or ambitions and promote camaraderie among members. One common theme in fraternal organizations is providing opportunities for charitable contributions to communities in need. BetterLife is proud to have donated over $509,000 in charitable contributions last year (2020) alone. The organization’s values are based on creating a better life for all its members and those around them who need it most.

What are the Different Types of Fraternal Organizations?

Though the term ‘fraternal’ was formerly used to describe an association of only men, it is now interchangeable with any organization created for a common purpose, whose members associate for mutually beneficial purposes.

These can include:

Service Clubs

Service clubs are a group of individuals who share a common interest in serving others. The members meet regularly and do charitable work either by direct hands-on efforts or through raising money for other organizations. Some service club benefits include social occasions, networking opportunities, and personal growth opportunities to encourage involvement with the group’s mission.

Secret Societies

A secret society is an organization that attempts to conceal its activities, events, and inner functioning. They may or may not attempt to hide membership as well. The term usually excludes covert groups like intelligence agencies that are public about their existence but keep certain aspects hidden from the general population, such as memberships.

Fraternal Benefit Societies Definition

What Are Fraternal Benefit Societies?

While many community-focused life insurance companies are moving away from using the term “fraternal benefit society,” you may still hear it from time to time.

Fraternal benefit societies describe not-for-profit membership groups that unite individuals with common bonds. The society is organized by a system of local chapters, lodges, or branches that govern themselves and coordinate various social programs for its members and the community. These groups are also given the right to vote in corporate and insurance affairs of the society.
Fraternal benefit societies are more like mutual insurance companies because they don’t have shareholders. Profits that are not needed for operations, claims payments, and maintaining reserves are returned to their members by putting the money back into their communities or towards member-exclusive benefits.

These organizations provide families the ability to secure their financial wellness through life insurance and investment products. They do so while being one of the nation’s most effective volunteer networks by providing billions in aid to those who need it.
As a result of their volunteer efforts and charitable programs, fraternal benefit societies are subject to Chapter 501(c)(8) of the Internal Revenue Code and are thus tax-exempt.

What Is A Fraternal Insurer?

Life insurance is important for everyone, but it can be expensive. As such, fraternal insurers are a great option to explore if you’re looking for competitive rates or would like to have membership in an organization that offers this coverage as part of their benefits package.

Insurance typically associated with fraternal orders and associations is issued to its members, formerly meeting obligations by assessments upon them when an obligation arose, but now generally through legal reserves. These groups are no longer restricted to traditional insurance products such as health or life insurance; they also offer less-traditional services like final expense insurance, and member benefits programs like retirement planning, member grants, and community initiatives.

Fraternal insurance can provide coverage at an affordable price for you and your family. Talk to one of our BetterLife agents today!

Fraternal Life Insurance Policies

BetterLife volunteers preparing for an eventLife is unpredictable, and sometimes life-changing events take place without warning. It’s important to be prepared; a fraternal life insurance policy offers affordable security when disaster strikes to ensure your loved ones have what they need without facing financial hardship.

There are many different fraternal life insurance policies available. One popular type is a term life insurance policy that provides coverage for a certain period of time to protect your family if something happens to you. This is a perfect policy for parents of young children who want to protect their financial situation in the event of their death. BetterLife offers level term insurance, which means your rates won’t change during the 15, 20, or 30-year plan you choose. BetterLife also offers a unique conversion option, so if you decide during the conversion period* that you’d like more permanent insurance, you can convert your policy to a whole or universal life policy as long as you pay your premiums. *You can convert your policy until the end of the initial term or age 70, whichever is earlier.

The primary reason fraternal benefit societies exist is to provide life insurance protection for their members. That’s why BetterLife offers some of the most appealing life insurance policies, because it’s not just about us…it’s about YOU. Talk to a BetterLife agent today to explore which options might be best for you.

How Is Fraternal Benefit Society Life Insurance Different?

Fraternal benefit societies offer a range of financial and community benefits that traditional insurance companies do not. Further,fraternal benefit societies are recognized as 501(c)(8), not-for-profit fraternal organizations, by the Internal Revenue Service.

Fraternal carriers provide members an opportunity to perform charity work through volunteering or participating in things like fundraising events and benefits. BetterLife offers a variety of event and volunteer opportunities; reach out to our Member Engagement Team at memberengagement@betterlifeins.com to learn more!

A fraternal benefit society’s life insurance policy offers many other advantages to its members and their families. Not only will you receive great benefits for yourself when you purchase your insurance policy from a fraternal insurance company, but it may also offer  health benefits, member scholarships, family benefits, disaster relief, funds towards member community projects, lifeline screening, donations to community service projects, and so much more at no additional cost. When you purchase a BetterLife policy, you become a BetterLife member and gain access to our free and exclusive member benefits.

What Does Fraternal Benefit Society Mean in Terms of Insurance?

Fraternal benefit societies are a unique blend of membership, insurance, and volunteerism. They are not-for-profit organizations that offer life insurance, disability coverage, and/or other related products while also carrying out charitable and public programs for the well-being of their members and communities. Four requirements determine their claim to a tax-exempt status: (1) a common purpose among members (or common bond), (2) operate under and maintain an active chapter system, (3) insure members and their families against death, disease, or disability, and (4) hold a democratic form of government.

Why Choose a Fraternal Insurance Company Over a Traditional Insurance Company?

Group of BetterLife members

A traditional insurance company is typically a stock or mutual corporation; in other words, an organization created to generate profit for its shareholders. A fraternal company like BetterLife, on the other hand, is often times founded based on a “common bond,” which can include a characteristic that members share such as a geographic area, ethnicity, religion, profession, or gender. With a fraternal company, the members come firstnot the profits. They are member-owned, not-for-profit organizations that offer life insurance products and other benefits to their members, operating much like mutual insurance companies, as they have no shareholders. They provide a local lodge, chapter, or branch system that govern themselves and coordinate various social, educational, charitable, and patriotic programs for their members and the community. These lodges, chapters, or branches also have a right to vote in corporate and insurance affairs of the society. Except for a reasonable reserve fund, all income from premiums and investments over and above the cost of operations, claims payments, and maintaining reserves are refunded to insured members, put back into members’ communities, or used for member-exclusive benefits.

A traditional insurance company is typically a stock or mutual corporation; in other words, an organization created to generate profit for its shareholders. A fraternal company like BetterLife, on the other hand, is often times founded based on a “common bond,” which can include a characteristic that members share such as a geographic area, ethnicity, religion, profession, or gender. With a fraternal company, the members come first—not the profits. They are member-owned, not-for-profit organizations that offer life insurance products and other benefits to their members, operating much like mutual insurance companies, as they have no shareholders. They provide a local lodge, chapter, or branch system that govern themselves and coordinate various social, educational, charitable, and patriotic programs for their members and the community. These lodges, chapters, or branches also have a right to vote in corporate and insurance affairs of the society. Except for a reasonable reserve fund, all income from premiums and investments over and above the cost of operations, claims payments, and maintaining reserves are refunded to insured members, put back into members’ communities, or used for member-exclusive benefits.

If you would like to learn more about the advantages of a fraternal insurance policy, talk to a BetterLife agent today.