These insurance programs were a unique form of insurance which began in groups organized as social, ethnic, and often religious fraternities. Originally, benefits were derived from member assessments to aid the dependents of members who left their families in distress situations. This grew into a form of insurance by regular assessments or premiums to establish sinking funds rather than random assessments.

Today, many of the original fraternals are more insurers than fraternities and sell the same kind of policies as private insurers. To be classified as a fraternal insurance distributor the organization must have:

1. a lodge with a ritual or social system

2. elected local officers. (Representative form of government)

3. they must be non-profit, and

4. operate under special legislation as they may be organized as associations, or societies, as well as corporations.

All other types of insurers must be corporations.

In the current insurance environment, the leading commercial fraternal insurers market to the general public and not just to their own membership.

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Fraternal Insurance companies are approved by special legislation and have unique requirements. They must be non-profit, and may be organized in any one of three ways.
As a C , as a S , or as an association.

Fraternal Insurance companies require local units to have a R form of government.

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