MR. WATSON: I want to go over something with you that is on the state exam, but in real life nobody will ever ask you about this. Guys, in 26 years, nobody has ever asked me this. We are going to talk about fraternal companies. Do I have any Catholics in here?

(Hands up.)

Do I have any Catholic men? I have a Catholic man here. Catholics have the Knights of Columbus. The Knights of Columbus is a fraternal organization. Their goal is to take good men and make better men out of these guys. They want to benefit society somehow. They want to leave a mark. But they also sell life insurance. Just like stock companies sell life insurance, just like mutual companies sell life insurance, they also sell the same kinds of insurance -- whole life, universal life, term insurance, variable life. It doesn’t have to be the Knights of Columbus. It can be any fraternal organization that sells life insurance. But what we are talking about is what happens to the money at the end of the year.

Let's take this Catholic man. He joins the Knights of Columbus. When he gets old and senile and he is incontinent, can't take care of himself, getting lost in the neighborhood; instead of sending him to a nursing home, which is very expensive, he can transfer his assets. No matter how great or small, he can transfer those assets to the Knights of Columbus. And they will take care of him with dignity, style, and class for the rest of his life – as well as his wife. Does that make sense?

What happens to the money at the end of the year, if they have money left over, with the fraternal organization like the Knights of Columbus? They don't give it back to anybody. It's funneled down to the members in the form of additional benefits. Maybe they're going to add a new wing to their old folks' home up in Cleveland. Maybe they're going to build a new old folks' home over in St. Petersburg. But no money actually goes back in the form of cash to these guys. It's funneled back down in the form of benefits. Does that make sense?

STUDENTS: Um-hmm.

MR. WATSON: Guys, let's paint a picture. You need to know the four characteristics that make up a fraternal organization like the Knights of Columbus or the Masonic organization, Shriners, or The Independent Order of Foresters.

With my accent, I’m a southerner, what do you think I know about a snow ski lodge? I don't know anything. Don't want to know either.  Anybody here snow ski? Here's my idea of a snow ski lodge. Roaring fire, big old bear-skin rug, a libation in this hand, illegal cigar in that hand. That's a snow ski lodge to me.

I’m just painting you a picture here, visualize it.  I am walking up this snow-covered mountain, and from afar I see this lodge. What kind of wood is this lodge made out of?

STUDENT: Logs.

MR. WATSON: Which way are those logs running?

STUDENT: Sideways, horizontal.

MR. WATSON: Logs, horizontal on top of each other. All that together makes up the what? Not the cabin, but the what? The lodge. Can you see the chimney? What's coming out of the chimney? Smoke. What's covered on top of the roof top? Snow. So what are we looking at?

STUDENTS: The lodge.