Life insurance is not a modern invention–it has existed since ancient Rome, so people have been protecting their legacy and families for centuries. But, when and how exactly did life insurance start?
100 B.C.
A Roman military leader, Caius Marius, came up with the idea of a burial club among his troops. Thus, in the event of an unexpected death of a club member, the remaining associates would pay for the funeral. Joining the club was optional. Yet, Roman soldiers also believed that failing to bury someone properly resulted in a miserable afterlife, so this belief likely contributed to club participation. Later, the league began issuing stipends upon a member’s passing. This association became the start of life insurance as we know it today.
1688
A coffee shop in London, Edward Lloyd’s Coffee House, was a popular place to meet ship captains and owners. It became a useful place for shipping news and announcing maritime auction prices. Eventually, the coffee hotspot turned into a place for marine insurance. Bankers started accepting premium payments in exchange for bearing shipping risks for the announced scheduled routes. This instance was the start of the modern concept of insurance. The bankers would physically pen their names under the sailing vessels documented on the wall-to-wall covered blackboards, which displayed explicit information about each ship’s cargo, crew, destination, and weather. This activity led to coining a term that remains in the insurance business: underwriting.
1837-1875
The financial crisis created a shift toward mutualizing in 1837, and 17 mutuals that required little initial capital were chartered. The spread of these mutuals created a boom period for life insurance companies, thus prompting the foundation of the Widows and Orphans Friendly Society in Newark. John Dryden founded the company and aimed to provide life insurance for those in post-Civil War America who struggled financially. Initially, they had only one product: burial insurance. This organization was the first company to make life insurance available to the working class. Dryden oversaw his company for 36 years. It was renamed Prudential Insurance Company of America in 1877, and the organization continues today.
1911-1930
In 1911, the Equitable Life Assurance Society wrote a policy covering all 125 employees of Pantasote Leather Company. This situation was the birth of group life insurance. After World War I, life insurance sales rose dramatically. By the Great Depression, there were life insurance policies for almost as many people living in the United States. The total was roughly 120 million policies.
1965-1976
By the end of World War II in 1945, roughly 72 percent of the adult population in the United States owned life insurance in some form. On September 29, 1965, Congress established The Servicemen’s Group Life Insurance to ensure coverage for army members on active duty. Initial coverage was up to $10,000. Current coverage can go up to $400,000. Group policies are issued by private insurance companies and supervised by Veteran Affairs. This insurance is available for active duty members, ready reservists, retired reservists, National Guard members, ROTC members, and service academy personnel.
2001-2010
The September 11th terrorist attacks shook society. A total of 2,977 people died, and insurance companies paid out $1.2 billion in claims.
Since 2010, the number of life insurance policies held by adults decreased significantly. According to a study by LIMRA, only 30 percent of U.S. households had no life insurance protection. Only 44 percent had individual life insurance, marking a 50-year low for the life insurance industry.
Today
In 2023, policy sales increased throughout the life insurance industry by four percent. Term life insurance sales significantly contributed to this growth as premiums reached nearly $3 billion, up five percent from 2022.
The term life policy count grew by four percent in 2023, while whole life insurance increased by two percent. Variable Universal Life sales also rose by two percent. Fixed Universal Life sales decreased, but Index Universal Life saw policy sales increase by 20 percent.
The history of life insurance gives a person some great insight into how life insurance came into this world. Learning more about where it came from and how it has helped others can help you decide if a policy is right for you.
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This article was updated on 11/15/24.