HISTORY OF LIFE INSURANCE

(1) EARLY DEVELOPMENTS: The early development of life insurance closely linked with that of marine  insurance. The first  life  insurers  were marine  insurance underwriters  , who started issuing  policies on the life of a merchants, master and the crew of the ship sailing along with the goods. . If a ship was captured, the insurer paid the ransom  needed to secure release of the captain  and the sailors . Life  insurance policies were granted during the reign of Queen Elizabeth. These early  contract took the form of temporary  assurance  covering  the life assured  for a short period only. These were issued by the private individual  known as underwriters who formed  Mutual assurance Associated  which were in a way, self- insurance  clubs. They issued annuities and pension and for a husbands.

The  first recorded life policy  was issued by on 18.6.1583 on the life of William Gibbons for 12 months  at the  rate of 8%  of 382,65.84 for which sum sixteen underwriters  were responsible. However this first policy was subject to a dispute  over payment because the policy holder died within 11 months of issuing  the policy. The underwriters  contended that the policy  period of 12 months  related to lunar months , which has expired. Happily the court ruled that the payment must be made. 

  (2)  LIFE INSURANCE IN 18TH CENTURY:  It was in the eighteen century the societies  began of the  to be formed with the object of granting life  assurances . The Amicable  Society (1705)  the equitable Life Assurance Society. (1762.,), the West Minister Society (1792) were some important societies  .The application of the mortality  tables in 1755 by the Dodson and the introductions  of actuarial  science revolutionized  the whole concept  of life  insurance. As the life  insurance became better known, a practice grew up of speculating in lives,  particularly  of well-known  people, like kings, national leaders or prisoners particularly , if charged  with an offence that would call for capital punishment  upon conviction . The premiums varied with their reputation  and state of health. If person of this  category fell seriously ill a huge amount of the insurance  was written. In order to put  an end to this speculation with the  its attendant  evils,  an Act called  the “Life Assurance Act” (commonly known as the Gambling Act), was passed in 1774. It prohibited all  insurance on lives expect those  satisfying  insurable interest requirements . 

  (3)  LIFE IN\SURANCE IN 19 TH CENTURY:  During the early years of the nineteen  century a large number of life  insurance companies were formed. A large number of companies  failed and many of them preferred  to amalgamate their business . In order to stabilise the business  further . Life Assurance companies Act 1870 was passed. Further Act was passed in 1871.   (4): LIFE INSURANCE IN 20TH CENTURY:  The above legislation  was repealed by the Assurance Companies Act 1909, which  was applied to all classes  of the  insurance business. Later on, various  acts were passed to meet the growing needs of the industry and to protect the insured. Some of these  acts are : Industrial Assurance  Act 1923,. Assurance Companies Act 1946, Insurance Companies Act 1956 and the Companies Act 1967

.  

(5)  LIFE INSURANCE IN INDIA:  In India an English  insurance company known as oriental Life Insurance Company started its operation in Calcutta in the year 1818. It insured the employees of East India Company  only. A good member of European  companies had entered the Indian scene by 1870, but mostly European  lives were insured by them. The first Indian company by the name of : Bombay Mutual Life Assurance Society” was set up in1870-71. Then came in 1874 the “ Oriental Government Security Life Assurance company”. Swedeshi  Movement started in the wake of freedom struggle  in India, gave birth to many Indian  insurance companies and some very important prominent Indian  names were associated with the life  insurance industry. In 1956, the life  insurance business was nationalized by taking over 245 companies and by forming one single  corporation  named as Life  insurance Corporation  (LIC) of India. Now Life  insurance Corporation of India and 12 private life  insurance companies are permitted to carry  on life  insurance business in India. 

IMPORTANCE/ ADVANTAGES OF INSURANCE

 The importance  of  insurance cannot be  neglected  in the presents day when  uncertainty  is prevailing  every where. In the words of Dinsdale, no one in the modern world can  afford to be without  insurance. The importance  of  insurance not only limited to an individual  or to a family. It has been spread over the entire  nervous system of business and over the country as a whole. As such it can be studied under the following headings:  

(1) PROVIDERS SECURITY AND SAFETY: Insurance offers financial  protections against large and uncertain losses  to the lives and properties of an individual in consideration  of a small amount of premium . In life  insurance payment is made , when the bread winner of a family dies or a the term of  insurance policy expires. Fire  insurance protects against losses  due to fire while  marine  insurance offers protection  against loss of ship cargo and freight . In other  insurances, relevant  policies offer necessary protection against loss of a given contingency. (2)  PROVIDES PEACE OF MIND: Every body is exposed  to various types of risks such as a of  accident, risk of a health hazards risk of loss of property due to theft and fire etc., thus, everybody is tensed about these risks. By offering  protection to these risks,  insurance eliminate there  all tensions and fear from the minds of insured and provides them a complete peace of mind.

   (3) ELIMINATES DEPENDENCY:  In case the bread-winner of a family dies, the family members  of the deceased  insured do not have to carry begging bowls for alms. As the life of the bread-winner of the family was already insured, the insurer will pay the agreed sum to his family members. With the funds provided by the insurer the family member  can be lead a decent life without seeking helping  hand of a others.  (4)  SOURCE OF SAVINGS: Life  insurance inculcates the habit  of savings  amount the general  public by compelling  them to pay premiums regularly  on the policies taken by them. When a man knows that he must pay the premium failing which his policy will lapse  he has to cut down the unnecessary expenses and save something to pay the premium. At the time of maturity of policy, the insured gets the accumulated money which can be utilized for building a house, marriage of daughter, education of children or for any capital expenditure.  

 (5)  SOUND INVESTMENT:  Some life policies  possess all the elements of investments I, e,  regular savings, capital formation  and return on the capital along with certain additional  returns. These elements  are found in policies like endowment policies, money back policies, unit linked  insurance plans etc.,   (6) PROTECT MORTGAGED PROPERTY:   Generally the middle class policy holder purchase assets or construct a building  by borrowing  money from  insurance companies . In case the insured dies before repaying  the loan, the legal representative of deceased  insured can pay off the unpaid  loan with the amount  provided by the insurer and keeps the assets of the family intact.  

(7) OTHER USES: Life insurer fulfils the needs of an individual person such as family needs,  old age needs, Re-adjustment needs, income for widow and widower, clean-up, funds and clean-up expenses  such as a for ritual ceremonies, payment of taxes, etc., The insurer also helps  to meet requirements  of funds  in emergencies and in the event of unwanted losses in the form of compensation