Fraternal benefit societies are member-owned, not-for-profit organizations that offer life insurance products and other benefits to their members. Each society must have a system of local lodges, or branches, that govern the society and coordinate various social, educational, charitable, and patriotic programs for its members and the public.

Fraternal benefit societies operate much like a mutual insurance company, as they have no shareholders. Except for a reasonable reserve fund, all income from premiums and investments over and above the cost of operation, payment of claims, and maintaining of the reserves, is refunded to the insured members.

Because 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.