The history of life insurance is not difficult to understand. Today, life insurance is simply the contract between a single person and an insurance company that dictates that the company must pay the policyholder’s beneficiary if the insured dies. But where did the idea of being insured in the event of death come from? Who were the first people to implement this idea? What did they do when the cash amounts were not as high as those of the life insurance industry companies today? When did the actual life insurance industry begin? These are all quite interesting questions and the fact is that some of them cannot be answered to a great extent; however, we know a lot about the history of this wonderful thing that today includes people from all over the world.
The first few signs in life insurance history
Historians have searched for the true beginnings of life insurance as we know it, but they first deciphered the baby steps that eventually ended in the actual death benefit. According to the Financial Shopper Network in ancient China, sailors would prevent pirates from stealing all of their goods by carrying parts of other ships’ cargoes, so that if a pirate stole one ship’s cargo, the entire cargo would not be lost. A little later in Babylon, merchants simply issued loans that had to be repaid when the contents of the trade were delivered safely.
What does this have to do with life insurance? Well, both civilizations avoided losing everything. They took small baby steps that would help in the long run. Life insurance as we know it; started in the city of Rome. The people of this very advanced civilization decided to form what they called “funeral clubs”. These clubs are designed with only one purpose: in the event of an unexpected death of a club member; everyone else would be willing to pay their funeral expenses and help the survivor’s family with some money. The concept of life insurance as they knew it ended dramatically in AD 450 when the Roman Empire fell and its practices were abandoned for a long time. It is also important to emphasize that many historians agree that the Indian Empire and its citizens also formed “funeral clubs” around the same time in Rome to pay for funerals and help people with expenses. An indication of this according to the Financial Shopper Network is that the “yogakshema, the name of Life Insurance Corporation of Indian’s Corporate Headquarters” refers to the Vedas.
Great Britain and its footstep in life insurance history
However, modern life insurance only took off when the British decided to try and make it work. The practice of life insurance was spread all over the European continent, except in England, and it was precisely the British who started the most prominent life insurance companies that the European countries know today. It was in the middle of the 17th century that on the streets of London, England, a group of people gathered at Lloyd’s Coffee House and decided to come up with life insurance ideas. The coffeehouse was a famous place for merchants, shipowners and traders and so it would be the perfect place to discuss life insurance, knowing that most of those people had money.
History of life insurance in the United States
Knowing the basics of life insurance and the things that could help people like the life insurance industry, the British decided to give it a try in the United States of America. After discussing how they would decide to come up with the first life insurance company, they decided to base the British model known at the time. The first life insurance company on American soil was established in the southern colony of Charleston, South Carolina in the year 1735.
About 20 years later, the entire colonies recognized that this was a good idea, so the Presbyterian synod of Philadelphia decided to sponsor the first life insurance company in the United States, which issued its first policy in the year 1761. at the time that many religious groups opposed it because it would be like anticipating one’s own death and with the religious fervor in the North American colonies at the time; it turned out to be quite a challenge to get the whole thing going.
The actual life insurance industry as we know it really took off in the year 1840 as those religious groups calmed down and stopped interfering in government affairs. Another major reason for the emergence of life insurance companies turned out to be the New York and Chicago fires that took the lives of a slew of people in each of the two cities. After this, more and more life insurance companies came along and in the 1900s the business really grew. People wanted to be protected in the event of an accidental death.
The 1900s proved to be an era of growth for the life insurance industry. Two wars went through and many people decided to take out insurance to build a secure financial future for their families. It is also said that after an attack on the country, more people buy life insurance. No one can dispute that simply because after Pearl Harbor a group of people panicked and decided to open policies out of fear for their lives. The same is true after the turn of the century, when the attacks on the World Trade Center took place. People decided that it wasn’t worth having no protection and that a small monthly premium was better than leaving their families in financial trouble.
Life insurance today
As you can see, life insurance has changed quite a bit since it first started in Rome and India. Big corporations with big world interaction and power have emerged. Companies have emerged that have a lot to say in both the economic and political worlds. As you can see, the market is booming right now and many life insurance companies are springing up. Who knows what will happen in the future, but from now on, the customer should be happy with their options and the thousands of companies to choose from!