The History of Insurance and its benefits

The history of life insurance from ancient civilizations to the present. It encompasses Indian, Babylonian, and Chinese origins.

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The History of Insurance and its benefits

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In honour of Life Insurance Awareness Month, we've put together some key moments in the history of life insurance to give you a better idea of product history. The history of insurance can be traced back to the development of the modern business of insurance risks relating to freight, property, death, car accidents and medical treatment. [Sources: 3, 6]

The public granary represented an early form of insurance against famine. When a family's house was destroyed, neighbours pledged to help rebuild it. When the 1800s came and went, insurance companies developed that included life insurance and several other forms of insurance. [Sources: 0, 3]

Over the centuries, insurance has evolved into a modern business that protects people from various risks. It has been profitable for many years and is an important aspect of private, public and long-term finances. It is an established company, but it will change and change in the future to meet the changing needs of consumers. [Sources: 0]

The first forms of insurance were recorded in antiquity by Babylonian and Chinese traders; the concept of insurance dates at least to the 18th century BC with the Code of Hammurabi. Reports of the earliest written insurance policies appear in a Babylonian monument on which is engraved the Code of King Hammurabi. [Sources: 0, 9]

These old laws were extreme in most respects, but basic insurance was offered if a debtor could not repay his loan or if a personal catastrophe made it impossible (disability, death, flood, etc.). [Sources: 9]

Consider that the first written assurances are to be found in ancient Babylonian monuments. With the invention of mortality tables to predict life expectancy, life insurance became widespread and affordable. With the recent invention of health insurance, the concept was merged with employer insurance. [Sources: 9, 10]

Life insurance is an option for short- and long-term needs to protect children's homes, mortgages, lifestyles, and costs of secondary education. Insurance approaches can be pursued to cover the cost of medical care for the elderly, but the main problem is to find satisfactory funding to make this applicable. [Sources: 5, 7]

A major obstacle to financing health insurance for the elderly is the high cost of care for the elderly, combined with the low incomes of pensioners. Older pensioners are more likely than younger workers to seek medical care, and when insurance premiums associated with the risk of older people are so high that they must be paid out of retirement income, or so low that they become an impossible burden for the average citizen. This is desirable but puts them at a competitive disadvantage when it comes to attracting younger subscribers compared to private insurance plans with different contribution rates for young workers and older retirees. [Sources: 5]

For buyers of life insurance with cash value, there are many considerations that may not be immediately obvious. Many life insurance buyers focus on annual premium offers, but factors such as internal policy costs and a company's investment performance can influence the financial benefits of a policy in the future. Here are some tips for buying a cash value policy, based on the factors we use to identify the best life insurance policies. [Sources: 8]

Believe it or not, your claim history is one of the biggest factors in your insurance premium. Insurers track this history and check your records to calculate your premium, so it's worth bearing in mind that you may have filed minor claims before. [Sources: 1]

When you take out insurance, you transfer the cost of any potential losses to the insurance company for a fee known as a premium. The insurance company then invests the funds and the funds grow to pay out the claims. [Sources: 7]

Today, it is a major reinsurer and primary insurer, but it was not long ago that it was active in the insurance business, through member insurers who accepted insurance on their own account and took full risk in competition with each other. The first American insurance company was founded in Philadelphia in 1752 by Benjamin Franklin with the help of a foundation. The first life insurance company in the American colonies was the Presbyterian Ministers Fund, founded in 1759. [Sources: 4]

In 1820 there were 17 stock and life insurance companies in New York state. No discussion of the early development of insurance in Europe is complete without referring to Lloyds of London and the international insurance market: their activities were the two most important and successful English insurers and the beginning of modern property and liability insurance. [Sources: 4]

In colonial America, the first fire insurance company was founded in 1732 in Charles Town (now Charleston, South Carolina). In 1752, Benjamin Franklin founded the American Insurance Company. Franklin helped popularize and establish standard insurance, property insurance, which spread the risk of loss in the event of a fire as a form of perpetual insurance. [Sources: 3]

After the Great Fire of London in 1666 fire insurance was developed which not only warned of specific fire hazards but also refused to cover certain buildings where fire risk was too great, such as wooden houses. More than 13,000 homes were destroyed during the fire, which is widely considered the introduction of the modern insurance policy. [Sources: 2, 3, 4]

It was not until 20 years later that the well-known insurance entrepreneur Benjamin Franklin popularized insurance coverage. The insurance found its way to Charles Town (now Charleston, South Carolina), where the first fire insurance company was founded. The Charles Town Insurance Company was founded in 1752 and was instrumental in preventing fires and setting a precedent for the industry. [Sources: 2]

The panic of 1837, which led to a financial crisis, led to a shift to communitarization of life insurance. Between 1838 and 1849, only one life insurance company raised capital on a share basis. [Sources: 6]