Thursday, February 26, 2009

History of Life Insurance.

By Tom Martens

Insurance offers financial protection against risk, and buying insurance policies has become a normal part of modern life for almost all of us. Although one form or another of insurance has been around for thousands of years, most of the everyday kinds of insurance in common use today are relative newcomers on the historical scene.

As early as 5000 BC, the ancient Chinese formed mutual aid groups called tangs. These associations acted as a form of insurance to protect traders. There are man y historical stories and even modern mutual aid societies indicating a kind of humane "insurance," in which neighbors or settlers or members of the same church or club take care of each other during emergencies. While a caring community cannot be assigned monetary value-many would consider its value to be incalculable-we can consider a caring community to be a form of insurance. Life insurance, however, did not arrive until long after the first caring communities.

Life insurance dates back to ancient Rome, but it wasn't called life insurance then. The Romans had "burial clubs," in which members paid for the funeral expenses of the deceased and helped the deceased's survivors financially. This was part of what was considered a proper burial. The Romans believed that if a person was not buried properly, they would not rest in the afterlife. The burial clubs were necessary to cover the funeral expenses, because part of a proper burial was a large and often lavish funeral celebration.

Modern life insurance dates from the late 1600's in England. Life insurance was originally intended, like the ancient Chinese tangs, to protect the transactions of merchants and traders. The death of a business partner, without insurance, could lead to disastrous results to the commercial enterprise. These early life insurance policies protected those who brought goods into society and those who sold them to the public. Life quickly became essential to stable commerce.

The earliest American life insurance company appeared in 1732 in Charleston, in the colony of South Carolina, although at its founding, the company only offered fire insurance. Life insurance was not sold in the Thirteen Colonies until the 1760's, but it quickly became a big business. In the southern states of the US, life insurance policies were issued for slaves. One company in New York allegedly issued 485 policies on slaves in just two years during the 1840's. However, as the northern states became more adamant in their opposition to slavery, insurance companies were ordered to stop insuring slaves. If the records are to be believed, the sale of life insurance on the lives of slaves stopped several years before the Emancipation Proclamation of 1863. Ordered to search their records to purge any policies that indirectly supported slavery, life insurance companies found no such policies even before the Civil War.

Regardless of what type of insurance policy you may hold, it is clear that the history of insurance is a rich and complex history. But one constant hasn't changed. Insurance is designed to protect us from whatever life sends our way. Contact a qualified insurance provider if you have questions about how insurance can benefit and protect you. A qualified insurance provider will examine your specific situation and help determine what type of insurance will best protect you and your family.

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