A brief history
The history of life insurance is almost too long to fit on one timeline, whereas various life insurance products have entered the fray in far more recent times.
Insurance originally began as a way for traders to reduce their risk, reportedly as early as 1750 B.C. in Babylon and 2000 B.C. in China. Life insurance dates back to circa 600 B.C., when ancient Greeks and Romans created groups called “benevolent societies,” which cared for the families of deceased members, and paid the members’ funeral expenses.
It wasn’t until the 1750s that the necessary mathematical and statistical tools were in place for the development of modern life insurance. The world’s first life insurance company was the Amicable Society for a Perpetual Assurance Office (aka the Amicable Society), which was founded in London in 1706 by William Talbot and Sir Thomas Allen.
This company’s first life insurance product was structured so that each member paid a fixed annual payment per share on one to three shares, with the eligible age range of the membership being 12 to 55. At the end of the year, a portion of the “amicable contribution” was divided among the wives and children of deceased members, in proportion to the amount of shares the heirs owned. This first product had many imperfections by today’s standards, but it served as the basis of the life insurance products and policies that exist today.
Towards the end of the 17th century, modern life insurance really started to take off, with more than two dozen life insurance companies starting up between 1787 and 1837 in the U.S. alone. As part of this expansion, life insurance products also developed in terms of their features, a reflection of the increasingly competitive environment and the emergence of the life insurance market.