Whole Lotta History: A Look Back on Life Insurance

Life Insurance: A History Lesson

By Rafael Onak, InsuranceAgents.com Staff Writer

Cicero once wrote:

“History is the witness that testifies the passing of time; it illuminates reality, vitalizes memory, provides guidance in daily life and brings us tidings of antiquity.”

I couldn’t have described life insurance better myself. If you’re confused, you should be—life insurance is a complex commodity that is composed of many twists and turns. Sure, the idea of it is simple, but to fully understand what life insurance is today, you need to find out how it originated.  If you're not ready for this history lesson, and simply want to find out about getting the best quotes on life insurance rates, then use our quick form to compare rates free, or talk to a local life insurance agent.

One of the oldest types of insurance in existence, life insurance stems from the old principle that if a villager’s home was damaged or burned down, the other villagers would lend a hand to rebuild the house. Lorenzo Tonti, a 17th-century Italian-born banker, then created a concept known as the tontine annuity system. Under this system, groups of individuals were formed without any reference to age, and each member contributed to a fund that was eventually established. The sum was then invested and by the end of the year, the interest was split evenly among the survivors. Sound familiar?

The Evolution of Life Insurance

A dash of Tonti’s system can still be found in life insurance policies today. But times have obviously changed and the reasons why people purchase life insurance have evolved from the original purpose. Here are some reasons why individuals obtain life insurance today:

• Pay off outstanding debts. These typically include mortgages, car payments and credit cards.
• Education funding. A premature death can prevent your children from going to college. With a life insurance policy, you can ensure your children obtain enough funds to attend college.
• Future expenses. Funerals are expensive and can have a stressful toll on your family. Prevent your family from having to financially deal with the funeral by purchasing life insurance.

The thought of having to purchase life insurance can be uncomfortable for some. Keep in mind that life insurance is not for you, but rather for your survivors. It’s always better to be safe than sorry, so contact a life insurance agent today to ensure your family doesn’t suffer financially from your death.

Published: Tuesday 13th October 2009