Life & Health Insurance Practice Exam 2025 – Your All-in-One Guide to Exam Success!

The correct choice refers to a fraternal benefit society, which is designed to provide insurance and other benefits to its members rather than focusing on generating profit. These organizations typically operate on a not-for-profit basis, emphasizing mutual aid and social welfare among members who often share a common bond, such as religion, culture, or occupation.

Fraternal benefit societies provide a range of benefits including life insurance and other types of coverage, but their main purpose is not to distribute profits to shareholders, as is the case with stock insurance companies. Instead, any surplus generated may be used to provide additional benefits or services to members. This underscores the organization's commitment to its members' welfare over profit-making.

In contrast, stock insurance companies aim to provide returns to their shareholders and focus on profit maximization. Mutual insurance companies allow policyholders to share in the ownership of the company, but their operational structure is not based on fraternalism. Cooperative insurance companies also function to serve their members but do so with a broader business model than the close-knit communal approach of fraternal societies.