A Short History of Life Insurance

Today, almost everyone realizes that life insurance is something that is important and necessary. It is one more security we can offer our loved ones in the face of unfortunate events and it is something that most people would not consider doing without. It may interest you to know that our ancestors had much the same concerns that we did and that they also wished their families and loved ones to be taken care of. What you may not know is that the institution that we know as heath insurance, with all its intricacies and variations, is actually an ancient concept going back thousands of years.

While insurance began as a way of reducing the hazards of travel around about 5000 BC, life insurance is actually a bit younger, and finds its birthplace in Rome. Burial clubs were formed to cover the funerary costs of members, and the leftover funds were often given to the departed's surviving family as help against impoverishment. The idea behind the fund was the same as it was in the modern day. As long as there have been communities, there have been funds created to prevent the survivors of tragedy with some sort of monetary help. While this might have begun as simply as passing a hat, the practice has been come refined to the point of being a self-supporting industry.

During the European Middle Ages, guilds were the union shops of their day, ensuring a certain quality of craftsmanship and training up younger members. Guilds, especially in the larger cities, had quite formalized arrangements regarding the death of a member and the support of his family. This support could range from an annuity that would be paid or the payment of a single lump sum. At the very end of the 1600's, Edmond Halley, of Halley's Comet fame, composed the first mortality table, trying to predict an individual's life and expected lifespan. This was one of the first attempts to calculate premiums; up until this point, you paid the insurance company the same few no matter what age you were.

In the United States, the first insurance company was formed in Charleston Carolina in 1732. This fledgling company only provided fire insurance, but it was followed less than fifty years later by the Presbyterian Synods in the New England states. This organization created the Corporation for the Relief of Poor and Distressed Widows and Children of Presbyterian Ministers. It wasn't long before Episcopalian priests organized a similar fund and dozens of small companies followed suit. While most of these companies folded, there were a handful that hung on and, in one incarnation or another, are still around today.

Life insurance is something that no modern person should be without, and with a little bit of peering into history, we can see that our ancestors didn't like to be without it either!

 

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