Insurance Broker Certification Practice Exam

What is the primary source of funding for fraternal benefit societies?

1. Federal grants

2. Membership fees

3. Investments in real estate

4. Dividends from mutual funds

The correct answer is: Membership fees

Fraternal benefit societies primarily rely on membership fees as their main source of funding. These societies operate on a not-for-profit basis, emphasizing mutual aid and support among their members. The fees collected help cover the costs associated with the benefits offered to members, such as insurance coverage, healthcare services, and other financial support in times of need. Membership fees create a pool of resources that can be used for their various programs and benefits. This model is vital because it fosters a sense of community and collective responsibility among members, reinforcing the fraternal spirit that is central to these organizations. Other potential funding sources, like federal grants or dividends from investments, may play a role but are not fundamental to the society's operations. Instead, the reliance on membership fees aligns with the mission of fraternal benefit societies to promote solidarity and mutual support among their members.