I bet most people will be shocked to hear that life insurance has been around since the days of ancient Rome. The origins and the concept of life insurance can be traced back to a Roman military leader by the name of Caius Marius. He created what he referred to as a “burial club” for his troops. The idea was if one of the other club members or troops in the club died the remaining members would all pitch in and pay the funeral expenses ensuring a proper burial, and not some junky pine box with the name sprayed painted on it. The reason Caius felt it was important to have a proper burial was because the Romans believed that anyone who was improperly buried would live a very unhappy after life as a ghost.
These clubs were heavily adopted by government and military members because of their belief that a proper burial was essential to everyone in the government and military no matter what your social class. As these clubs evolved, they would later begin providing funds to the survivors of the deceased as well.
Now the fad of these “life insurance” clubs died out after a while, but after the Roman Empire fell in 450 A.D., ship captains, ship owners and merchants began gathering at Edward Lloyd’s Coffee House in London for coffee and chit-chat. This became a very popular gathering place for shipping industry gossip, and eventually marine insurance began being offered at the shop for boats and equipment. It was at Edward Lloyd’s Coffee House in London that the idea of the modern insurance company was born.
It was a group of underwriters in 1769 that started a new Lloyd’s Coffee House, which eventually became what we know now as Lloyd’s of London.
The first insurance company in America was formed in 1735 and only offered insurance to protect against fire at first. The company was based in Charleston, South Carolina, and it wasn’t until 1760 that they added life insurance to their portfolio after hearing about it overseas. In 1752, Benjamin Franklin helped form a mutual insurance company called the Philadelphia Contributionship, which is still the nation’s oldest insurance company in operation.
Insurance companies continued to develop over the next 60 years, but it was the financial crisis in the late 1830s that started the shift towards mutualizing life insurance companies, which means that the money in the pool is accessible and sharable amongst the policy holders. Before that, the insurance companies were strictly a cash holding spot only to be paid upon death. For the next 10 or so years, only one life insurance company raised capital on a stock basis. During this same ten or so years, almost 20 mutual companies were started which didn’t require much capital initially.
Originally, preachers had given life insurance a bad name by referring to it as “gambling” with your life, and deterred people from buying it. It was the migration towards mutual companies, some legal changes allowing women to purchase life insurance, and a consumer mindset change that finally helped shift the population away from the negativity. This loosening of the social image of life insurance is really what created a surge for life insurance companies, but it was still only being offered to upper class people. Some of the most well-known life insurance companies today were born during this time too, like John Hancock and Metlife.
It wasn’t until around 1875 that life insurance was offered to the working class. It was in Newark, NJ that the Widows and Orphan’s Friendly Society was formed offering a simple burial product to the working class; however, no other fancy life insurance plans were available for them like those available for the wealthy folks in town. But again, it was the first time the working class was able to purchase any sort of life insurance. The Widows and Orphan’s Friendly Society later became the insurance company that we now know as Prudential, who is still an industry leader in life insurance sales.
Life insurance sales continued to rise at a steady pace from then on and after World War I the sales increased at a dramatic rate like no one had ever seen before. By the time the great depression hit, there were so many life insurance policies sold that the policy count was equal to that of every man, woman and child in the U.S. By the time the economic boom hit America following World War II in the late 1940s, more than 90 percent of all married couples had some form of life insurance.
Sadly, in recent years the life insurance policy count has dropped significantly. LIMRA studies show that only 44% of U.S. households have life insurance in place putting the country at a 50 year low in terms of policy ownership. With the advancements in technology and the use of computers, smartphones and tablets, the population is in dire need of a place to accommodate the new way of researching and buying life insurance. There are more insurance companies trying to move into the 21st century with their product, but too many are slow to improve. Private companies like Quotacy are taking the steps to offer life insurance information and products to the new age consumer hoping to give more people the tools and information they need to make the right choice. No one ever anticipates needing to use life insurance, but the unexpected happens. Be prepared and get a free and anonymous term life insurance quote today.
Photo credits to S3ISOR