What distinguishes a fraternal insurance company?

A fraternal insurance company is characterized by its ownership structure, which is typically associated with fraternal organizations. These companies are formed for the mutual benefit of their members, who are often part of a lodge or society that shares a common interest or affiliation. The profits and benefits of the insurance company are directed towards the members rather than shareholders or corporate entities. This mutual benefit aspect, alongside the social and community engagement of fraternal organizations, sets fraternal insurance companies apart from other types of insurance companies that may be profit-driven or government-owned.

The other options describe different types of ownership models that do not align with how fraternal insurance companies operate. Government ownership implies control and funding by a state entity, corporate ownership suggests a for-profit structure focused on maximizing shareholder value, and foreign policyholders refer more to the geographical or customer base rather than ownership. Understanding this distinction is crucial in recognizing how fraternal insurance companies serve their members through shared interests and mutual aid rather than through profit motives.