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Life Insurance: A Long History of Helping in Times of Need

Life insurance. It is a concept that virtually everyone is familiar with, and more and more people are selecting either whole or term life insurance. But how did life insurance come to be? The roots of life insurance stretch back in time. Here is a look at the history of life insurance, as well as some other facts that might surprise you.

Ancient Roots of Insurance

Life insurance got its start in the 17th and 18th centuries. However, the roots of life insurance run much deeper. So deep, in fact, they can be traced to Ancient Rome. Romans created burial societies, which were essentially clubs that ensured members would be able to have a proper burial. Geared toward the less affluent members of society, these burial clubs collected weekly dues from each member. The dues were pooled to cover the burial costs of the deceased. Some societies went so far as to also offer help to the deceased’s family members. From this perspective, these burial societies form the basis of modern-day life insurance.

More Modern Beginnings of Life Insurance

The more modern concept of insurance can be traced back to the late 1600s in England where marine insurance was created at Edward Lloyd’s Coffee House. After specializing in ship and cargo insurance, a group of underwriters broke from the original coffee house and founded a new coffee house in 1769. Generally considered the first modern insurance company, what is now known as Lloyd’s of London was born.
In the early 1700s, Sir Thomas Allen and William Talbot created the Amicable Society for a Perpetual Assurance Office. Members who were between the ages of 12 and 55 paid premiums based on a certain number of shares. Payments, also known as amicable contributions, were made to surviving family members based on the number of shares owned after their death. More than 2,000 members joined at the society’s creation.
In the middle of the 18th century, James Dobson, an actuary and mathematician, developed tools that would make life insurance resemble modern-day insurance even more closely. After the Amicable Life Society rejected him due to his age, he worked to create tools to determine premiums more accurately using statistical mortality tables.
Then, in 1762, Edward Rowe Mores became the chief executive officer of The Equitable Life Assurance Society, which used the work of James Dobson to offer whole-life and fixed term policies from age-based premiums. Over the centuries, this company continued to grow, until it offered coverage to more than 1.5 million policyholders at its peak.

Insurance Lands Stateside

The concept of insurance arrived in the United States a bit later. Benjamin Franklin is often credited with the emergence of insurance in America. He was actually first involved in mutual fire insurance in the 1750s. Life insurance, as we understand it today, took almost another decade to take root.
Eventually, Benjamin Franklin supported the creation of the Presbyterian Ministers’ Fund (PMF). PMF was initially created to provide support to Protestant evangelical ministers, but eventually grew its reach to all families. In fact, it is credited with being one of the first life insurance companies to offer insurance to everyone, instead of particular groups. PMF existed for more than 200 years, until it was bought out in the 1990s.

Facts About Life Insurance

After exploring the history of life insurance, these statistics from LIMRA can help better understand and appreciate the current life insurance landscape:
More than half of all Americans have life insurance of some kind.

  • Over 50 percent of millennials have life insurance.
  • 40 percent of children own life insurance.
  • More men than women own life insurance.
  • Americans who say they are most likely to buy life insurance are families with young children.
  • Almost a third of Americans believe that they should carry more life insurance.
  • Half of the consumers said they would have a difficult time paying expenses after the death of the primary earner. This suggests though the majority of Americans have life insurance, many feel underinsured.

The Long History of Life Insurance

Though we may tend to think of life insurance as a more modern creation, it has a lengthy history. From the lower class members in Ancient Rome to evangelical ministers in the 1700s, individuals throughout time have recognized the important role that life insurance can play for just about everyone’s situation. While life insurance hasn’t always looked the way it does today, its purpose has always been to provide for loved ones in a time of need.
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