Term Life Insurance History

Did you know that term life insurance is the original form of life insurance?  The entire story of life insurance begins in a coffee house in London…

Insurance had existed in the trading industry for millennia, and in England at the very end of the seventeenth century, there was no greater call for insurance than in the shipping industry.  It was aptly said of the time that “the sun never set upon the British Empire,” which stretched full round the globe.  On Tower Street in London stood Edward Lloyd’s Coffee House, which served as a place of exchange for business, for news from abroad, most importantly, for investors to underwrite insurance policies.  Their society was the primeval inception of the world-famous Lloyd’s of London.

Details of the first life insurance policy written are lost to history, but should the facts be known today, there would likely be some controversy over which piece of business actually constituted something to be considered genuine insurance, for the practice of gambling on the survival of third parties was positively rampant in England up until it was banned by Parliament in 1774.  More than likely, the earliest examples of life insurance amounted to some cross between a morbid wager and actual insurance.

The first products which incontrovertibly amounted to insurance were term life insurance policies.  More specifically, they were ART (annual renewable term life insurance) policies.  That is, they were contracts to last for only a year, but at the conclusion of the year’s coverage, the policies could be renewed.  If the person being insured were to expire while coverage was in force, the insurance policy’s beneficiary would receive a pre-determined death benefit.

Because many human lives were treated as property during the strong but sordid British slave trade in the seventeenth and eighteenth centuries, insuring those lives created a lot of business for early life insurers.