History of The Life Insurance Policy
Historians claim that this concept started way back with the Romans in the city of Rome. In those days, the Romans were considered a civilization that was “highly advanced.” They formed what might be called “burial arrangement” organizations. It really was nothing more than a group of citizens that chipped in money that was used to pay for the funeral expenses of the surviving family members. Quite a bit different from getting on the Internet and getting a term life insurance quote and comparing costs!
Through the centuries, as time went on, it turns out that the British actually started what we might consider “insurance” for your life. It really came about in a little place called “Lloyd’s Coffeehouse.” It was actually “banned” in the European communities. However, as we know it, the British are given the credit.
In 1735, the first company that was formed in America was in a little colony in Charleston, South Carolina. The first “term insurance” policy was actually written in 1761. It gained support from the Presbyterian Synod (Philadelphia), but religious opposition stifled the movement. The reason for the opposition was that religious elders felt that it was sacrilegious in that church members may be anticipating or predicting their deaths.
In the 1840s, the Chicago and New York fire’s provided the spark for industry of insuring one’s life for the benefits of the family and/or loved ones. Business really began to grow in the early 1900s. Two World Wars convinced people to insure themselves so that their families would be guaranteed a secure financial future in the event of their untimely death. Acts of war, like the World Trade Center and Pearl Harbor further bolstered the industry into the giant that it is now.
Recent studies are revealing hundreds of thousands of Americans are selling off their term insurance or whole life insurance policies due to economic woes. This is causing a trillion dollar problem in insurance settlements within the industry.
Unemployment and layoff situations are not likely to change in the near future. There are savvy investors out there that are buying up these policies and putting them into their bond portfolio. They know each policyholder will eventually have to die, which will give them a guaranteed payment. They profit on the difference between the amount they paid for the policy and what its cash value is upon your death. This gives them “hedge” security in the event that the banks happen to fold. In addition to that, Wall Street is also being affected.
Some of the reasons cited in this study are:
- The insurance requirement status for the policyholder could have changed.
- The policyholder may have been affected by the economy and therefore can’t make the payments.
- A different kind of insurance may be needed and nonexistent funds may be required.
- Cash may be needed for an unexpected health expense.