Life Insurance is That Old?

Scattered in my readings are interesting historical tidbits. I enjoy history, because it allows you to learn from other people’s mistakes. I don’t have a favorite place or time in history, but I like the history of inventions and ideas. How people approached and devised a solution to a problem, either scientific, or military, or even just in general. I also enjoy being corrected (or correcting others.. heh) in misapprehensions about history.

So here’s a question: how old is life insurance?

I shan’t lead you on: 2600 years, give or take. The Romans and Greeks had guilds which a person would pay into, and they would take care of funeral expenses and stipends for the family of the deceased. The concept of insurance in general goes back to the Code of Hammurabi, which gave a form of maritime insurance to those who take a loan and lose a ship at sea. If you think about it, the idea of property insurance is just a redistribution of risk from taking out a loan. Loans are a result of an individual or organization having a surfeit of money and wishing to invest. Money itself is a shorthand for transfer of goods and labor, which comes from a settled, agricultural society[1]. So property insurance itself isn’t that complicated, it just naturally arises from money. Life insurance is a little more complex, but it too naturally arises from property insurance.

[1] I neglected to mention trade as a factor, which is a whole topic in itself: measuring investment against the risk of maritime loss. I do not exaggerate when I say that trade is perhaps one of the hugest factors in world history, and is often hidden as a motivation in high school textbooks.

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