History of Life Insurance

The history of life insurance goes back to ancientcould very well result from these terrible losses, they
times, in fact. There may be no direct root, nocame up with a system: ship their crops via several
singular antecedent, for life insurance as we know itdifferent ships, so that if one or two were lost the
today. But the concept has its roots in ancientbulk of the crops would still make it to their
mankind's own root concepts about minimizing risksdestination. Those who had bought the crops were
against calamity and death in the face of uncertaintyhappy and fulfilled, and the farmers suffered only
and the ever-present possibility of natural disasters.relatively small financial losses at the most.
The future is uncertain. Even those who can "read"It's also said that the ancient Babylonians beginning
the future say this. Mankind has always felt terriblyaround 1300 BCE had a system in place whereby the
vulnerable facing down the uncertainty of the future.wealthy would guarantee the returns on a
People, therefore, do things to cut down on their riskcommercial sea shipment even in the face of the
of having to face tragedy, calamity, and so on. Now,ship's sinking in exchange for a certain amount of
there's really not much that people can do toupfront money from the shipping merchants, an
minimize these things. Instead, people do things toamount which would never be repaid other than for
mitigate the severity of the effects of these thingsrecompense of a tragic loss at sea.
on their lives.But probably the oldest form of life insurance as we
Life insurance cuts down on the risks that peopleknow it today comes from the Roman Empire.
might face in the future. If the insured dies, the"Fratres" were formed by free people who had little
money from his policy goes to his surviving wife, hismoney; these probably started with Roman military
children, his best friend, or whoever is deemedmembers and expanded to slaves, merchants, and so
worthy by him to receive all or some of the deathon. The Romans had a belief against the dead
benefit money--an amount which represents thebecoming angry, hungry ghosts wandering about.
deceased's financial life in continuation, which is nowThey believed a good burial was essential to safe,
used to settle other debts and/or help along thosesecure passage into the afterlife. But that burial cost
he loved and upon whom he had an immediatemoney. So money was pooled among members of
impact while they carry on with their lives.the Fratre; and soon enough it was for more than
It used to be that life insurance carriers could namejust giving the. They met once per month and also
anyone at all as their beneficiary--even someone whogot together during Festivals. At these times,
was a stranger to them! So, the insured would all toomembers were expected to pay their dues. Members
often end up murdered and his fortune dissipated.who failed to pay their dues for an extended period,
Necessary regulations have, since then, emerged tosuch as six months, were told they were no longer
prevent the insured from being able to name anyoneentitled to expect burial expenses (or other benefits).
who cannot be shown to, somehow, have a directBut the entire modern concept of insurance started
and emotional bearing on the policy holder's life. Butin England in the late 1600s with traders, ship owners,
the same overall principle still applies: the carrier of lifeand merchants meeting at The Lloyds' Coffee House
insurance is doing what he can to secure his lovedwhere the ancient Italian Peninsula practice of signing
ones' future(s) against the event of his untimelycontracts for marine insurance to take part in either
death, which among other losses could be a financialthe profit or loss of a venture was active. Those
loss to him. Although it probably doesn't seem like itwho participated in the contracts would sign their
at first, this is a way of showing tangible caring fornames and the assumed amount of risk underneath
others.the contract.
It seems that the oldest forms of insurance at allThe modern concept of insurance spread to the New
trace their roots back to 5000 BCE and the ChineseWorld, first with Presbyterian churches and then very
people. Back then, it is recorded, the Chinese farmerssoon after with Episcopalian churches, who almost
who needed to trade goods over water, such asalways insured against fire. Benjamin Franklin helped
with the Japanese, started to realize that no matterchampion the concept of insurance so that from
what they did there were always accidents at sea1787 to 1837 between 25 and 30 new insurance
which, among other losses, resulted in their losingcorporations were started. And while just about all of
money. So, to mitigate the personal devastation thatthese totally failed, the stage was set.