Some 2,000 years ago in Roman times a form of life insurance was practiced by burial societies who paid out funeral costs of members funded by monthly contributions. It is thought that these were year to year arrangements but unfortunately there is not enough evidence remaining to be exact on how they operated.

In Britain in the middle ages Trade Guilds provided funeral costs to members in much the same way.

The earliest life insurance policy in England was recorded as being effected on the 15th June 1583. The policy was on the life of a William Gybbons (a salter in the City of London) and was taken out by a Richard Martin. The premium was set at £8 per £100 pounds of benefit insured. Even at that early date it is of interest that when the policy ended in a claim there was dispute between the insurer and the policy holder over whether the policy should pay up. Luckily for Richard Martin he won the case and the insurer lost.

In those days life insurance policies where underwritten by individuals as opposed to insurance companies. It was also common practice for people to take out life policies on the rich and famous in the hope that they might benefit if that person died. We would have regarded it as a form of gabling.

The first actual life insurance company was the Annuity Association founded by the Rev Dr Assheton on the 4th October 1699. Unfortunately this company only survived for 46 years before going bankrupt.

Many life insurers were set up as mutual companies where ownership of the company was among the members of the life fund.  The policies did not have fixed sums insured as they do today, but instead the fund would pay out what it could afford based on the number of people in the fund that died that year.

Now we can be thankful that life insurance has developed since those days. Most policies offer fixed sum insured which can be up to very large amounts. There are a numerous number of insurers all vying for your business. Not only are there pure protection policies but also those which are also linked to some form of investment factor.

Life insurance law has grown up and now there are several layers of protection for the naïve consumer.

Whilst all these changes have been good for the consumer it also means that the consumer needs to be more aware of what type of life policy they need and where best to purchase that cover.  Choice is a wonderful commodity but you need to be able to make a wise selection.

More recent changes have been in the growth of life insurers and life insurance intermediaries who are using the internet as a place of business. Here costs can be controlled, wider markets searched at the click of a mouse and policies handled and concluded at a faster pace. Why not check out what term life cover you could get by visiting www.protected.co.uk

The author is Keith Clark who acts as a compliance consultant for Free to Work Consultancy. Keith is a Fellow of the Charted Insurance Institute.

This article was written on the 15th February 2007.

This article does not represent 'financial advice' as each persons individual requirements will be unique to their needs. If there is something in the article which you which to rely on then please check those details with any person from whom you purchase a term life policy at the time of purchase.

The views in this article represent those of the author and not those of Netbasic Limited.

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