Where Did Insurance Come From?
Where Did Insurance Come From?
The concept behind life insurance is pretty simple, really. When the person who has a life insurance policy dies, the people that the deceased has designated as beneficiaries will receive money from the insurance provider.But where did the concept of life insurance policies come from?Actually, this type of policy is one of the oldest kinds of financial products in existence. The concept of insurance derived from the practice of all of the villagers in a community combining their resources in order to help to rebuild another villager's home when the home had burnt down.Then, in seventeenth century Paris, a concept was developed by a banker named Lorenzo Tonti. It came to be known as the tontine annuity system. The way it worked was that individuals formed associations and created a fund that was composed of equal contributions by every member, no matter their age.The money that was collected was invested. Then, at year's end, whatever interest was accrued by the fund was divided amongst the survivors. As time went on and people in the association died the amount of interest collected by each of the survivors increased. Then, when there was only one person remaining, that person received all of the principal as well as the interest for that year.Modern life insurance evolved from these rudimentary beginnings.In 1752 Benjamin Franklin helped to begin the insurance industry in the US when he helped to found the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. As the industry became more complex the necessity of having regulators evolved. So, in 1851 the first insurance commissioner in the United States was appointed in New Hampshire.Then, almost 100 years later, in 1945, the McCarran-Ferguson Act was adopted by Congress. This act declared that the insurance business should be regulated by the states and affirmed that this was in the best interest of the public.Many people are not comfortable with the process of investing in life insurance products, mainly because they are forced to face what will happen when they die. However, if they keep in mind that whatever life insurance they buy they are not buying for themselves. Rather, they are investing in it to protect the ones they love - the survivors who will have to continue once they are gone.If someone depends on you for their well being, if your income makes the difference between their being comfortable and their having to face difficult times, then you may want to do whatever it takes to face your demise and invest in a policy that will take care of them when you're gone.
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