Who created the concept of life insurance, or even life insurance with living benefits? Why do we need it? Can you get living benefits with life insurance? 

These are complicated questions, but if you’re thinking about getting life insurance, you need to know the answers before handing over your money. We’ll answer these questions and more as we trace the history of life insurance.

Tracing Life Insurance Back to Greece and Rome

While life insurance may seem like a modern phenomenon, it can be traced back to ancient Greece and Rome as far back as 600–100 BCE. Some residents of these early advanced civilizations had access to life and health insurance — although insurance wasn’t how we know it today.

Roman military leader Gaius Marius is credited with inventing the notion of “burial clubs” among his fellow soldiers. They would join together to pay for the funeral costs if a soldier was slain during a military expedition. 

Initially, the notion was exclusively used by soldiers, but it expanded across ancient Rome and ultimately embraced the general population. 

Colonial America and Life Insurance

Churches in the American colonies controlled most of the life insurance policies in the colonies during the time when great founders like Ben Franklin were alive. 

1759 saw the Presbyterian Synod of Philadelphia create a life insurance corporation for its ministers. It was called the Presbyterian Ministers Fund. 

The spouses and children of individuals who died as members of the corporation would receive the yearly dividends set at a preset amount. On the other hand, many priests argued that life insurance is a sort of gambling, which was discouraged by the church.

The Beginning of Life Insurance in England

An English coffeehouse is where this story took place in the 17th century when life insurance was just beginning to take hold in England. 

Edward Lloyd’s institution was a popular gathering place for merchants and sailors who discussed insurance dealings as a subject of leisure chatting. The Society of Lloyds — later renamed Lloyd’s of London — was born out of these informal discussions, which rapidly evolved into a more official insurance organization. 

Despite the liability of the famously risky marine and trading industries, underwriters, who were often wealthy members of society, accepted the risk. This informal commerce was formalized in 1774 when the society merged its operations with the royal exchange. 

The Life Assurance Act was passed in Great Britain in the same year to restrict insurance brokers from bribing their customers. Today, Lloyd’s of London is one of the most well-known life insurance companies globally.

20th-Century Life Insurance

AXA Equitable established Pantasote Leather Company’s first group life insurance policy in 1911. 

By 1930, life insurance premiums totaled over $117 billion in the U.S. alone, demonstrating how widely adopted this concept had become. Fraud and deceit had skyrocketed due to the insurance industry’s recent expansion and the formation of many businesses. 

Clients were charged high fees and couldn’t get a claim payment in the most typical circumstances. Some insurers took advantage of a lack of regulation in the business at this point. 

In 1935, the Social Security Act was passed, providing a financial safety net for both the retired and the jobless for the first time. 

Since the government got more engaged, the life insurance business has lost part of its market share. A U.S. Supreme Court decision in 1944 said the sector should be governed federally. 

A few years later, Congress approved the McCarran-Ferguson Act, which said that the states should be in charge of their own borders. In the current day, the state is still in charge of everything.

What Life Insurance Looks Like Today

Legally, life insurance is a contract between the policyholder (the insured) and the insurance company (the insurer). 

On death or after a certain length of time, the insurer agrees to pay a predetermined quantity of money (also known as “Sum Assured” or “Cover Amount”) to the insured person’s beneficiary. 

The primary goal of life insurance is to give financial assistance to loved ones in the event of an insured person’s early death. Losing a loved one is never easy, but life insurance takes away some financial sting.

When the insured passes away, the insurance pays a designated sum known as a “death benefit” to the designated beneficiary. The death benefit can be life sustaining for families that live on a strict budget.

And since someone can own multiple life insurance policies, a family can be assisted financially from an insured’s individual life insurance policy as well as from an employer-sponsored life insurance policy that’s part of the insured’s employee benefits.

Traditional insurance companies are now joined by others that operate online, and the application procedure is considerably more efficient. You can even find life insurance for incarcerated persons.

When it comes to insurance, the fundamental concept remains the same: It serves as a financial safety net in case the unimaginable happens.


Karen Condor writes and researches for the life insurance comparison site, QuickQuote.com. She stays up to date with new life insurance trends and helps others make wise decisions when planning for the future.