The History of Life Insurance

Life Insurance

With this being life insurance awareness month, I thought I would take some time to talk about the history of life insurance.

Insurance began as early as 2000 BC in China and in 1750 BC in Babylon as a way for reducing risk to traders. In Ancient Rome, burial clubs was an early form of life insurance, as they paid for its member’s funerals and assisted their survivors financially.

In the 18th Century, modern life insurance coverage was established. The very first company to have life insurance was the Amicable Society for the Perpetual Assurance Office. They were founded by Sir Thomas Allen and William Talbot in London during 1706. (Famous First Facts 2000 by Steven Anzovin). Members paid a fixed premium on shares ranging from one to three shares and these members had an age range from 12 to 55 years old. Every year, the wives and children of the members who had passed away would receive a payment proportionately to the amount of shares they owned.

In the 1750’s, the appropriate mathematical and statistical tools were established for the development of modern life insurance. A mathematician and actuary named James Dobson tried to create a new company that would have premiums to correctly offset the risks of long term life insurance. This was done after he was denied entrance to the Amicable Life Assurance Society due to his age.

In 1762, Edward Rowe Mores, who was a disciple of James Dobson, created the Society for Equitable Assurances on Lives and Survivorship. This was the first mutual insurer that used age-based premiums on mortality rating laying “the framework for scientific insurance practice and development (Importance of the Equitable life Archive ) and “the basis of modern life assurance upon which all life assurance schemes were subsequently based.” (Today and History: The History of Equitable Life ). The Society for Equitable Assurances on Lives and Survivorship wanted to treat their members fairly, so they tried to make sure that their policyholders got a fair return on their investment. They used one’s age to determine the individual’s premium and everyone could be accepted regardless of health.

Life insurance was not available to be sold in the United States until the late 1760’s. In 1759, The Presbyterian Synods in Philadelphia and New York City created the Corporation for Relief of Poor and Distressed Widows and Children of Presbyterian Ministers. A similar fund created by the Episcopalian priests was organized in 1769. Between the years 1787 and 1837, there were in excess of two dozen life insurance companies started but less than half a dozen survived.

This was just a brief overview of the history of life insurance. Based on this historical information, you can see how even in ancient times, people could see the importance of life insurance as a way to provide family protection. 

About the author: Jim Marcinkewicz has been in the life insurance business for over 6 years. He is a big supporter of the American Red Cross and teaches both CPR and First-Aid classes. With two daughters in college, Jim knows the expense it takes to care for your family and enjoys helping others prepare their futures as well. You can reach Jim at 1-800-651-1953 or JMarcinkewicz@Pivot.com.