New law protects fraternal order insurance

SPRINGFIELD – People who join fraternal benefit societies for life insurance will have greater protection under a new law that takes effect Jan. 1.

“These benefit societies serve an important, unique role by offering insurance and advancing worthy causes. This law reinforces the trust many people place in these organizations,” said State Sen. Bill Haine, D-Alton, the plan’s sponsor.

Fraternal benefit societies – or mutual benefit societies – are non-profit organizations that use members’ premium payments to issue insurance coverage for their members and to advance charitable missions.

Haine’s plan – Senate Bill 646 – better regulates the leadership structures of these societies and allows early state intervention in the affairs of struggling organizations. The new rules also allow underperforming societies to transfer members to other benefit societies to avoid insolvency.

The plan is supported by the American Fraternal Alliance, a trade group representing these organizations.