The concept of insurance probably began in China over five
thousand years ago. Others will argue that insurance began
slightly later, in Babylonia. In any case, ancient peoples were
interested in protecting against loss. They devised insurance
systems to protect the investments underpinning trade efforts,
particularly with respect to goods shipped across the seas. It
was centuries after the first "insurance policies" were drafted
in efforts to aid commerce, that the concept of life insurance
took hold in ancient Rome.
The ancient Romans believed that anyone who was wrongly buried
would become "an unhappy ghost." This idea of a "forlorn and
shivering spirit in an agony of loneliness" so bothered the
Romans that they tended to invest large sums in elaborate
burials.
Although the belief in the importance of "correct" burial
reached through all levels of society, resources did not. Roman
society suffered a rather large gap between the rich and the
poor. Those on the lower socioeconomic strata, including many
soldiers, lacked the requisite resources for a proper Roman
burial.
These factors led to the creation of burial clubs. Groups of
individuals formed and all members were required to regularly
donate to a common fund that was used in the event of a member's
death to fund his funeral. A Roman military leader, Marius,
created a burial club among his troops in approximately 100 B.C.
and many similar organizations came into being in this era.
Eventually, the practice grew to include providing a stipend to
the survivors of the deceased.
The Roman burial clubs represent the beginning of life insurance
as we know it. A group of people enters into a voluntary
agreement to pay premiums that are used to provide benefits to
any paying member of the group who happens to die. Stripped to
its essence, life insurance today, in all of its complexity and
with all of its variations, still bears a remarkable resemblance
to the burial clubs of ancient Rome.
The idea of the Roman burial club was compelling then. The Roman
government was not fond of organizations of any sort
forming-perceiving them as potential breeding grounds for
challengers to the power structure. The burial clubs, however,
were allowed to exist. The sensibility of their plan was obvious
even to tyrants.
Today we may be more concerned with providing replacement income
for the family of the deceased than we are about funerary
expenses. We also tend to worry considerably less about whether
or not a funeral might produce a forlorn or shivering ghost. We
still do, however, embrace the principle that the financial
strength of many, when combined, can produce necessary results
for others in difficult times. Life insurance continues today
because those underlying principles remain unchanged.
We don't often see ourselves as being akin to Roman legionnaires
marching into battle, but those of us who pay our life insurance
premiums in an effort to protect ourselves and our family from
expense and difficulty do share a common trait with the ancients
who invented life insurance in the form of burial clubs.
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