by Joe June 17, 2019

The Origins of Life Insurance

Life insurance was originally developed as a way to protect a surviving family when the primary breadwinner faced an unexpected death.  Throughout history, society has been overwhelmingly patriarchal. With men being the laborers, any unexpected and early death meant a family was left alone.  Deaths created widows and orphans that struggled to make ends meet. While communities could band together to help, some people would inevitably fall through the cracks.  As society became less and less communal, that void grew larger. To fill this need, life insurance was created. It provided a safeguard for families faced with the unexpected.


Roman Empire (First Century)

While insurance was standardized in the modern age, there were shadows of its presence during the Roman Empire.  In the first century, Roman soldiers formed burial clubs whereby members would pool money together. If a soldier died, this pool would be used for paying the burial expenses.  Later, they would expand and give money to the surviving family. And while modern life insurance didn’t take its inspiration from the Romans, they were definitely ahead of the game.


United Kingdom (1706)

The Amicable Society was the first life insurance society, which was founded through a charter from Queen Anne.  It started with a maximum of 2,000 members and was offered to those between the ages of 12 and 45. Everyone paid the same annual contribution; and at the end of the year, the monies were disbursed to families of members that had died.  It had great success and grew by the thousands throughout the years. Eventually, the regulations required by the charter were impeding growth. It was acquired in 1866 through an act of parliament.

The Equitable Life Assurance Society was created in 1762 from the ideas of James Dodson (who was rejected from the Amicable Society because he was too old).  Dodson came up with a mathematical way to calculate premiums by using mortality tables and probability studies. The benefit to members was that premiums were fixed and the dollar amount paid at death were guaranteed.  

Age-based premiums proved effective and thousands got policies.  Equitable Life was able to fine-tune their data and offer a 10% premium reduction in 1777.  A few years later, they started a system for sharing regular bonuses with policyowners. They would effectively give money back to members to show their desire to be fair.  These principles of fairness and innovation have helped Equitable Life maintain itself as the oldest insurance company in the world.


United States (1754)

The Synodical Company was created by the Presbyterian Presbytery of Philadelphia to offer life insurance to ministers.  Their goal was to help sick ministers and their families upon death. Premiums were paid by the minister or their church.  To get legal standing, the Presbytery received a grant from the governor of Pennsylvania in 1759. With this grant, they changed their name to “Corporation for Relief of Poor, and Distressed Ministers, and of the Poor and Distressed Widows, and Children of Presbyterian Ministers.”  

This first life insurance company in America had very minimal growth in its early years.  They expanded offerings to include annuities; and in time, allowed other denominations and even laypeople to become members.  Despite trying to expand their reach, membership wasn’t as great compared to the United Kingdom. Americans were much more concerned with fire and marine insurance.  It took time for life insurance to catch on. While the first insurance company lived on, it was eventually taken over by another insurance company, which itself was acquired by Nationwide.


Conclusion: Needs Haven’t Changed

Even though times have changed, we still live in a society where either one primary breadwinner is necessary to support the household, or where the salaries of both spouses are needed to support the household.  The question to ask yourself is this: “If you or someone in your household were to pass away, would it be difficult financially to move forward?” If the answer is yes, you should seriously consider life insurance in order to prevent the unexpected from causing long-term hardship to your loved ones.