Life Insurance Basics

Life Insurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a designated beneficiary a sum of money upon the occurrence of the insured individual's or individuals' death or other event, such as terminal illness or critical illness. In return, the policy owner agrees to pay a stipulated amount (at regular intervals or in lump sums). There may be designs in some countries where bills and death expenses plus catering for after funeral expenses should be included in Policy Premium.

The value for the policyholder is derived, not from an actual claim event, rather it is the value derived from the 'peace of mind' experienced by the policyholder, due to the negating of adverse financial consequences caused by the death of the Life Assured.

Parties To Life Insurance Contract:

The parties to a life insurance policy are the following parties, the insured, the beneficiary, the owner and the insurer.

The Insured is the person on whom the life insurance is based.  Their life is the one that is insured.  If they die, or if anything happens to the person that is covered by the insurance then the policy pays out.

 The beneficiary is the person, or persons, who are paid the money if the event happens.  They are the people who will suffer otherwise if the person dies and the monetary compensation is designed to protect them.

The owner of the life insurance policy is the person who pays the premiums and is responsible for keeping up payment of the policies.  Usually this person is the insured, as they want to take care of the family for which they are the bread winner.

Life Insurance Premium and Bonus:

“Premium” is the name given to this consideration  that the policy holder  has to pay  in order to Secure  the benefits offered by  the insurance  contract .it can be looked upon as a  price of insurance policy , where ,In a  contract of insurance , the insurer promises  to pay to the policy holder   a specified sum of money ,in the  event of specified  happening.

Bonus usually refers to a non-guaranteed benefit added to life insurance policies. A company will usually have a lot of discretion over the level of bonuses it allocates to contracts. Once allocated, bonuses may or may not be reversed by the insurer in case the contract is terminated early. When a traditional life insurance product mentions ‘with profit policy’ or ‘participating policy’, it simply means the policy and thereby the policyholder is eligible to receive a bonus. A bonus is declared out of the surpluses determined after actuarial valuation of the assets and liabilities of the life insurance company. In other words, surpluses (bonus) reflect the profitability of the life insurance company.

Types Of Life Insurance Policies:

Endowment Policy: This policy combines risk cover with the savings and investment. If the policy holder dies during the policy time, he will get the assured amount. Even if he survives he will receive the assured amount.

Money Back Policy: Money Back Policy is to provide money on the occasions when the policy holder needs for his personal life. The occasions may be marriage, education, etc. Money will be paid back to the policy holder with the specified duration.

Whole Life Policy: As the name itself says, the policy holder has to pay the premium for whole life till his death. This policy doesn't address any other needs of the policy holder. The premium and death benefit you quoted at your policy's start remain the same throughout the policy's life.

Term Life Policy: It is a type of policy in which the benefits can be incurred only after the death of the insured, provided that the death occurs within a specified time period.If the insured dies during the term, the death benefit will be paid to the beneficiary.

Joint Life Policy: Joint life insurance policies are similar to endowment policies as they too offer maturity benefits to the policyholders, apart from covering risks like all life insurance policies.

Group Insurance Policy: Group insurance offers life insurance protection under group policies to various groups such as employers-employees, professionals, co-operatives.

Annuities: Annuities are just opposite to life insurance. A person entering into an annuity contract agrees to pay a specified sum of capital (lump sum or by instalments) to the insurer. The insurer in return promises to pay the insured a series of payments until insured's death. Generally, life annuity is opted by a person having surplus wealth and wants to use this money after his retirement.

Principles Of Life Insurance

Consideration: The insured’s consideration is the first payment of premium and then after that the continuing payment of premium. The insurer’s consideration is the offer to pay out the sum insured if the life insured was to die during the policy period.

Consensus of agreement: The parties basically must be in agreement about what they are contracting for at the time the agreement comes into force.

Insurable interest: The life insurance proposer, the person taking the policy out, must have an ‘insurable interest’ in the Life Insured.

Capacity to contract: Both parties must be able to contract. Minors under the age of 18 years are restricted by the Family law Reform Act 1969. Minors under the age of 18 can enter into a contract but subject to certain restrictions the contract cannot be enforced against them. That is why most insurers will not issue a policy to someone under the age of 18.

Offer and acceptance: One party makes an ‘offer’ and the other party accepts that offer without qualification. If the acceptance is qualified it simply becomes an alternative offer.

Understanding Life Insurance - Costs, Insurability and Underwriting:

The insurer (the life insurance company) calculates the policy prices with intent to fund claims to be paid and administrative costs, and to make a profit. The cost of insurance is determined using mortality tables calculated by actuaries. Actuaries are professionals who employ actuarial science, which is based in mathematics (primarily probability and statistics). Mortality tables are statistically-based tables showing expected annual mortality rates. It is possible to derive life expectancy estimates from these mortality assumptions.

The three main variables in a mortality table have been age, gender, and use of tobacco.

The insurance company receives the premiums from the policy owner and invests them to create a pool of money from which it can pay claims and finance the insurance company's operations. The majority of the money that insurance companies make comes directly from premiums paid, as money gained through investment of premiums can never, in even the most  ideal market conditions, vest enough money per year to pay out claims. Rates charged for life insurance increase with the insurer's age because, statistically, people are more likely to die as they get older.

Given that adverse selection can have a negative impact on the insurer's financial situation, the insurer investigates each proposed insured individual unless the policy is below a company-established minimum amount, beginning with the application process. Group Insurance policies are an exception.

This investigation and resulting evaluation of the risk is termed underwriting. Health and lifestyle questions are asked. Certain responses or information received may merit further investigation.Underwriters will determine the purpose of insurance. The most common is to protect the owner's family or financial interests in the event of the insured's demise. Other purposes include estate planning or, in the case of cash-value contracts, investment for retirement planning. Bank loans or buy-sell provisions of business agreements are another acceptable purpose.

Importance Of Life Insurance

Well, through life insurance, you can make sure your family is protected, even in the event of your death. Consider it your last act of love and kindness that you can perform.

Protecting Your Family: A life insurance policy would protect your loved ones financially and help them keep their present lifestyle without much interruption

Investment : If you decide to purchase an investment type of insurance, called a whole life insurance policy, part of your premium will go to an account that can be accessed later. This can be used as a savings instrument to accumulate substantial wealth or it can be used in an emergency, such as a serious illness or disabling injury.

Protecting Assets: You may have real and personal property that you would not want to go to ruins if you should pass away. With a life insurance policy, you can protect a home, or any other property for which you have an outstanding loan or tax bill or which requires significant upkeep.

Leaving A legacy: People who purchase a life insurance policy may also be interested in leaving a legacy behind by donating the proceeds of their policy to a particular school or an organization.

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HISTORY OF INSURANCE IN INDIA

(Ref: Ref: IRDA/GEN/06/2007)

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu ( Manusmrithi ), Yagnavalkya (Dharmasastra ) and Kautilya ( Arthasastra ). The writings talk in terms of pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor to modern day insurance. Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers’ contracts. Insurance in India has evolved over time heavily drawing from other countries, England in particular.

1818 saw the advent of life insurance business in India with the establishment of the Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency. This era, however, was dominated by foreign insurance offices which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies.

In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies. In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers.

The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies and the level of competition was high. There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize insurance business.

An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector.

The history of general insurance dates back to the Industrial Revolution in the west and the consequent growth

of sea-faring trade and commerce in the 17th century. It came to India as a legacy of British occupation. General Insurance in India has its roots in the establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd, was set up. This was the first company to transact all classes of general insurance business.

1957 saw the formation of the General Insurance Council, a wing of the Insurance Associaton of India. The General Insurance Council framed a code of conduct for ensuring fair conduct and sound business practices.

In 1968, the Insurance Act was amended to regulate investments and set minimum solvency margins. The Tariff Advisory Committee was also set up then.

In 1972 with the passing of the General Insurance Business (Nationalisation) Act, general insurance business was nationalized with effect from 1st January, 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on January 1sst 1973.

This millennium has seen insurance come a full circle in a journey extending to nearly 200 years. The process of re-opening of the sector had begun in the early 1990s and the last decade and more has seen it been opened up substantially. In 1993, the Government set up a committee under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations for reforms in the insurance sector.The objective was to complement the reforms initiated in the financial sector. The committee submitted its report in 1994 wherein , among other things, it recommended that the private sector be permitted to enter the insurance  industry. They stated that foreign companies be allowed to enter by floating Indian companies, preferably a joint venture with Indian partners.

Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market.

The IRDA opened up the market in August 2000 with the invitation for application for registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the power to frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders’ interests.

In December, 2000, the subsidiaries of the General Insurance Corporation of India were restructured as independent companies and at the same time GIC was converted into a national re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002.

Today there are 24 general insurance companies including the ECGC and Agriculture Insurance Corporation of India and 23 life insurance companies operating in the country.

The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together with banking services, insurance services add about 7% to the country’s GDP. A well-developed and evolved insurance sector is a boon for economic development as it provides long- term funds for infrastructure development at the same time strengthening the risk taking ability of the country.

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What's in it for Me?

The aim of this communication is to give you an elaborate idea about the outstanding career that LIC can provide you if you choose to represent LIC as a Life Insurance Advisor. If you are willing to meet people, build relationships, have a flair for marketing and have a desire to see your earnings grow, then this communication will be of great interest to you.

Insurance  Professionals who have taken up agency recently, know that Life Insurance selling is a very challenging profession, difficult to begin with, but very rewarding as you progress into it. It is indeed a joy when you start meeting success. You need to have that instinct to succeed. If you don't possess this quality, then too this is the best profession which would immensely help you in developing and sharpening these Set of Skills with time and experience.

• Why should I choose a Career in Insurance Agency?
• What is the job profile of an Life Insurance Agent?
• What's my income going to be?
• What benefits, other than the Commission will I get?
• Can I've other engagements also, apart from the Agency business?
• Why LIC only?
• Who is eligible for an  LIC Agency?
• How much do I've to invest?
• What are the Documents reqd., to become a licenced LIC Agent?
• What type of Pre-recruitment training do I get?

Why should I choose a Career in Insurance Agency?

• It's the only freelance profession which gives you unlimited earning potential as well as full freedom.
• It's the only profession where you keep getting paid for years, even after you quit.
• The need of the profession constantly keeps you in social touch.
• The profession sharpens your  public speaking, interpersonal relation skills.
• Gives you the liberty and scope to meet all kinds of people from all segments of the society.
• Helps you to set high standards of behavior and performance.
• It helps you to achieve your dreams goals and ambitions in your life, without adhering to the monotony of a 10AM to 5PM job.
• It gives you social status and identity that you can .

What is the job profile of an Life Insurance Agent?
The job profile of an Insurance Agent is that of a Financial Consultant and Advisor. An ideal Agent is expected to -

• - Meet Targets.
• - Sales Generation Activities.
• - Ensure complete Customer Satisfaction.
• - Regular customer Care calls.
• - Update on completion activities.
• - Daily Weekly monthly reporting of activities.
• - Discipline and compliance.

What's my income going to be?
There is no limit for your income, you can write your own cheques. Earnings will be directly proportionate to your smart work, however to know about it in full details- Please contact:
Mr. Shantanu Sen (Development Officer)
LIC Branch I, Jeevan Jyoti Building , Jalpaiguri
(+91) 94344-10817/ (03561) 22-5575 shantanulici@gmail.com

What benefits, other than the Commission will I get?
LIC offers various Club Memberships for Agents. According to the rank of Membership, you'll be provided facilities like-

• Reimbursements for Stationaries, Phone Charges, Office maintenance.
• Loans for 2-Wheeler and 4-Wheeler @ 0-5% interest.
• House Building Loan @ 5-9% interest.
• Family Insurance Coverage.
• Marriage and Festival Advances.
• Gifts
• Pension and Gratuity, so on and so forth.

Why LIC only?

• The only organisation covering lives from 1956.
• Number ONE amongst INDIA’s TOP 500 companies on the basis of Net Worth ( 15,47,951 million )
• Number TWO on the basis of Income ( Rs.4,47,296 million ).
• Largest network all over country and abroad.
• LIFE FUND of  366000 crores.
• Returns assured by Government Of India.
• Supports all 5 year Plans.

Who is eligible for an  LIC Agency?

How much do I've to invest?

What are the Documents that I've to produce, to become a licenced LIC Agent; and to whom?

What type of Pre-Recruitment training do I get?

Why is the Pre-Recruitment Training necessary?

After setting up of the statutory regulator-the IRDA (Insurance Regulatory and Development Authority), a lot of streamlining has taken place in agency work. A person needs to undergo compulsory 100 hours of training and Pass the Online test (Off line centers are being closed by IRDA) to take up the Agency. This is remarkably different from the past. The mandatory Training has really done a lot of good, and added an element of quality and credibility to the Professionals at the entry level.

1.Now the agent understand the work he is supposed to do.
2. He is mentally prepared for it and
3. He is ready to take a plunge head on.
Percentage wise more agents-nearly 70%-80% turn out to be successful in the profession from amongst the ‘New’ agents.
For those who have taken up Life Insurance Agency recently, know that Life Insurance selling is a very challenging profession, difficult to begin with, but very rewarding as one progress with time and effort. It is indeed a joy when one starts meeting success.
After setting up of the statutory regulator-the Insurance Regulatory and Development Authority, a lot of streamlining has taken place in agency work. A person needs to undergo compulsory 100 hours of training and pass the test to take up the Agency. This is remarkable change from the past. Training has really done a lot of good and added an element of credibility to the profession. Now-

1. He understands the work he is supposed to do.
2. He is mentally prepared for it and
3. He is ready to take a plunge head on.

Percentage wise more agents-nearly 70%-80% turn out to be successful in the profession from amongst the ‘New’ agents.

Why is the training essential?
Training is a mandatory requirement under IRDA norms. Any individual willing to take up insurance agency has to undergo

1. To sharpen his/her skill set.
2. To get updated with product knowledge of various plans of Insurance, rules for Medical Examination and
3. To develop expertise in understanding the rules for special reports depending upon the Sum Assured and Age of the Prospect.

Familiarity with various forms is very essential. This can be possible if the agent-

1. Visits his/her Branch regularly,
2. Meets his/her Development Officer on day-to-day basis and
3. Get clarifications from his/her Development Officer in understanding the various product concepts.
4. He must fully participate in any training sessions arranged at Branch level.

AGENT AS A FINANCIAL ADVISOR TO HIS CLIENTS:
When he meets any prospect, chances are that the client will discuss his investments in various instruments, his tax planning and future requirements.
This will certainly entail upon the agent that not only is he knowledgeable about LIC’s products but also- -Products of other Insurance companies.

- Other Avenues of Investments.

- Various Tax Provisions.

Such a good knowledge will give the agent a cutting edge over others in matter of selling insurance.

CLUB MEMBERSHIP:
The Agents’ Clubs were formed in 1971 with the motto of injecting professionalism in agents and to bring about the process by which individual could be integrated with the corporate objectives. Four clubs-Chairman’s club, Zonal manager’s club, Divisional manager’s club and Branch Manager’s club were formed.
The purpose of forming club was not merely to decorate but to sharpen the inner qualities to motivate oneself, and to generate greater productivity, greater business so that one can accept new challenges.
A very significant transformation has been taking place for the last few years in the profiles of the agents. It is the urge to qualify for the Million Dollar Round Table (MDRT) Meets. More and more agents are qualifying for it. Even new agents have qualified for it even in the first year of the agency. It is worth aiming for it.
An agent must establish one’s identity as a Professional Financial Advisor. This identity is achieved when he has his own office, where records of all his clients are chronologically maintained. One may have computers and other aids as and when necessary for a good office, depending on the volume of clients and cases he services.

AGENT BENEFITS:
TWO-WHELLER ADVANCE (0% interest)

Corporate Club Agent – Full Purchase Price

Chairman’s Club Agent - Full Purchase Price

Zonal Manager’s Club Agent- Full Purchase Price

Divisional Manager’s Club Agent- Full Purchase Price

Branch Manager’s Club Agent- Full Purchase Price

FOUR-WHELLER ADVANCE (0% interest)

Corporate Club Agent – Upto Rs.20 lacs

Chairman’s Club Agent - Upto 6 lacs

Zonal Manager’s Club Agent- 5 lacs

Divisional Manager’s Club Agent- 5 lacs (@9% INTEREST)

ADVANCE FOR PURCHASE FURNITURE: (0% interest)

For All Club Member Agents,

Maximum Eligibility= Last Year’s Renewal Commission (Deduction in 36 Installments)

HOUSING LOAN:

Chairman’s Club Agent - Upto 4 lakhs (@ 5% Interest), Next  5 lacs (@ 7.5% Interest)

Zonal Manager’s Club Agent-       Upto 3.65 lacs(@ 5% Interest)

Next 4.35 lacs(@ 7.5% Interest)

Divisional Manager’s Club Agent- Upto 3 lacs(@ 5% Interest)

Next 5 lacs(@ 7.5% Interest)

TELEPHONE BILL REIMBURSEMENT:

Chairman’s Club Agent - 2700 Calls + Rent (Including Free Calls)

Zonal Manager’s Club Agent- 2700 Calls

GROUP INSURANCE:

Chairman’s Club Agent - 2,40,000/-

Zonal Manager’s Club Agent - 1,20,000/-

Divisional Manager’s Club Agent- 60,000/-

Branch Manager’s Club Agent- 30,000/-

MEDICLAIM:

Chairman’s Club Agent - 1,00,000/-

Zonal Manager’s Club Agent - 60,000/-

Divisional Manager’s Club Agent- 40,000/-

Branch Manager’s Club Agent- 25,000/-

OFFICE ALLOWANCES:

Corporate Club Agent –  45000/-

Chairman’s Club Agent - 30000/-

Zonal Manager’s Club Agent - 17000/-

Divisional Manager’s Club Agent - 8500/-

Branch Manager’s Club Agent -  1000/-, (plus additional for lapsation)

FREE GIFT ITEMS:

Chairman’s Club Agent - 3000/-

Zonal Manager’s Club Agent- 2000/-

Divisional Manager’s Club Agent- 1000/-

Branch Manager’s Club Agent- 500/-

LETTER HEADS & ENVELOPS:

Chairman’s Club Agent - 1000 nos.

Zonal Manager’s Club Agent - 750 nos.

Divisional Manager’s Club Agent - 500 nos.

Branch Manager’s Club Agent - 300 nos.

OUT POCKET EXPENCES:

Chairman’s Club Agent - Rs.2500.00

Zonal Manager’s Club Agent - Rs.1400.00

Divisional Manager’s Club Agent - Rs.400.00

Branch Manager’s Club Agent - Rs.200.00

FLOOD/CYCLONE/DROUGHT ADVANCES:

For all affected areas- Maximum Eligibility- Rs.25,000.00 (@ 0% Interest)

MARRIAGE ADVANCES:

For all Club Member Agents-

Maximum Eligibility:        Last Year’s Renewal Commission (@ 9% Interest).

Deduction in 36 Installments

ADVANCE FOR MEDICAL TREATMENT:

For all Club Member Agents- Maximum Eligibility- Rs.25,000.00

CONDUCT OF AN IDEAL AGENT TOWARDS HIS/HER CLIENTS:
Friendliness: An agent must have a friendly and comforting disposure. To achieve this trait one has to be flexible and open to feedbacks and critics.
Confidence in Gesture: A Successful Agent is not necessarily a Confident Agent. But a Confident Agent is always invariably a Successful One. It’s only a matter of time and effort.
Unbiased Professionalism: An agent should show an urge to offer The Right Choice to the prospect purely judging the prospect’s best interest. This would develop trust and loyalty among his clients, and eventually bring him business also.
Maintain Decent Ambience: Though the first impression isn’t always the last one, but it surely is a lasting one. A neat and decent ambience and attire would help facilitate the confidence and rapport building process with fresh clients.
Discipline Punctuality: It is the hall mark of a successful sales person whatever may be his constraints; he would always meet or reach the client at least five minutes before the appointed time.

BASIC TRAITS OF A GOOD AGENT:
Patience and Perseverance are the basic traits which an agent must cultivate. It is a profession where you will meet with more ‘NOs’ than the ‘YES’. Very seldom a client agrees to sign the proposal on the first visit. In most cases the prospect will say ‘No’ when approached for insurance.
The agent has to learn not to be disheartened in such situations but take this as a challenge to convert every ‘No’ into ‘Yes’ by seeking future dates to meet and influence the prospect to take positive decision. These professional competencies build up confidence and provide the experience to sustain the market challenges and march ahead with hope.
Selling Experience: Selling every single policy is a new experience. Approach will vary in every case. Customer’s reactions will be different in each case. Therefore, each sale adds to one’s experience, confidence, knowledge and brings a new awareness.
Agent has to be ambitious and cannot afford to be complacent. He has to reach greater and greater heights year after year.
Work Culture: One of the most important aspects of an agent’s work culture is to be a regular producer. There is no lean season in Insurance Selling.

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THE HISTORY OF LIFE INSURANCE

(Ref: Article by Kathy Smith)

 Risk protection has been a primary goal of humans and institutions throughout history.  Protecting against risk is what insurance is all about.

Over 5000 years ago, in China, insurance was seen as a preventative measure against piracy on the sea.  Piracy, in fact, was so prevalent, that as a way of spreading the risk, a number of ships would carry a portion of another ship's cargo so that if one ship was captured, the entire shipment would not be lost.  

In another part of the world, nearly 4,500 years ago, in the ancient land of Babylonia, traders used to bear risk of the caravan trade by giving loans that had to be later repaid with interest when the goods arrived safely.  In 2100 BC, the Code of Hammurabi granted legal status to the practice.  It formalized concepts of “bottomry” referring to vessel bottoms and “respondentia” referring to cargo. These provided the underpinning for marine insurance contracts. Such contracts contained three elements: a loan on the vessel, cargo, or freight; an interest rate; and a surcharge to cover the possibility of loss.  In effect, ship owners were the insured and lenders were the underwriters.

Life insurance came about a little later in ancient Rome, where burial clubs were formed to cover the funeral expenses of its members, as well as help survivors monetarily.  With Rome's fall, around 450 A.D., most of the concepts of insurance were abandoned, but aspects of it did continue through the Middle Ages, particularly with merchant and artisan guilds. These provided forms of member insurance covering risks like fire, flood, theft, disability, death, and even imprisonment.  

During the feudal period, early forms of insurance ebbed with the decline of  travel and long-distance trade.  But during the 14th to 16th centuries, transportation, commerce, and insurance would again reemerge.

Insurance in India can be traced back to the Vedas. For instance, yogakshema, the name of Life Insurance Corporation of India's corporate headquarters, is derived from the Rig Veda. The term suggests that a form of "community insurance" was prevalent around 1000 BC and practiced by the Aryans.

And similar to ancient Rome, burial societies were formed in the Buddhist period to help families build houses, and to protect widows and children. 

Modern Insurance: 

Illegal almost everywhere else in Europe, life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688. The type of insurance we see today owes it's roots to 17th century England.  Lloyd's of London, or as they were known then, Lloyd's Coffee House, was the location where merchants, ship owners and underwriters met to discuss and transact business deals.  

While serving as a means of  risk-avoidance, life insurance also appealed strongly to the gambling instincts of England's burgeoning middle class. Gambling was so rampant, in fact, that when newspapers published names of prominent people who were seriously ill, bets were placed at Lloyd’s on their anticipated dates of death. Reacting against such practices, 79 merchant underwriters broke away in 1769 and two years later formed a “New Lloyd’s Coffee House” that became known as the “real Lloyd’s.”  Making wagers on people's deaths ceased in 1774 when parliament forbade the practice.

Insurance moves to America:

The U.S. insurance industry was built on the British model. The year 1735 saw the birth of the first insurance company in the American colonies in Charleston, SC. The Presbyterian Synod of Philadelphia in 1759, sponsored the first life insurance corporation in America for the benefit of ministers and their dependents.  And the first life insurance policy for the general public in the United States was issued, in Philadelphia, on May 22, 1761.

But it wasn't until 80 years later (after 1840), that life insurance really took off in a big way.  The key to it's success was reducing the opposition from religious groups.

In 1835, the infamous New York fire drew people's attention to the need to provide for sudden and large losses. Two years later, Massachusetts became the first state to require companies by law to maintain such reserves. The great Chicago fire of 1871 further emphasized how fires can cause huge losses in densely populated modern cities. The practice of reinsurance, wherein the risks are spread among several companies, was devised specifically for such situations.

With the creation of the automobile, public liability insurance, which first made its appearance in the 1880s, gained importance and acceptance.

More advancements were made to insurance during the process of industrialization. In 1897, the British government passed the Workmen's Compensation Act, which made it mandatory for a company to insure its employees against industrial accidents.

During the 19th century, many societies were founded to insure the life and health of their members, while fraternal orders provided low-cost, members-only insurance. Even today, such fraternal orders continue to provide insurance coverage to members as do most labor organizations. Many employers sponsor group insurance policies for their employees, providing not just life insurance, but sickness and accident benefits and old-age pensions. Employees contribute a certain percentage of the premium for these policies.

Final Thoughts:

Even though the American insurance industry was greatly influenced by Britain, the US market developed somewhat differently from that of the United Kingdom.  Contributing to that was America's size, land diversity and the overwhelming desire to be independent.  As America moved from a colonial outpost to an independent force, from a farming country to an industrial nation, the insurance business developed from a small number of companies to a large industry. 

Insurance became more sophisticated, offering new types of coverage and diversified services for an increasingly complex country.

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