Life insurance is 98% more interesting than you think
What do they say is history’s oldest profession? Yep – that one. But selling life insurance can’t be far behind.
While it’s January, and many of us have some time on our hands, we thought we’d present the boring old topic of life insurance with a new spin and urge that you consider protecting the foundation of your financial life in 2024.
Most of us hear life insurance and tune out because a) who wants to think about any kind of insurance ever? And b) life insurance is a particular no-go for the brain as it forces us to think about our mortality.
But still and all, it’s a vital piece of the financial jigsaw. Stiller and aller, the history of life insurance is somewhat fascinating. So we invite you to please join us in the time machine as we set coordinates to protect. And with that, it’s off to ancient Babylonia …
If … then … Babylonia
The Ancient Babylonians lived from roughly the 19th to the 15th centuries BC. Located in what’s now more or less Iraq and Syria, this civilisation is famous for hanging gardens and for literally carving the first contractual life insurance policy into stone. So when we say that life insurance has some legacy, here it is.
The Babylonians’ Code of Hammurabi contains 282 edicts all written in if-then form. If X should happen then Y will happen. Cue edict 48:
‘If anyone owe a debt for a loan, and a storm prostrates the grain, or the harvest fail, or the grain does not grow for lack of water; in that year he need not give his creditor any grain, he washes his debt-tablet in water and pays no rent for this year.’
In other words, if you can’t work for reasons beyond your control then don’t worry ’bout it.
Rome, science and a big ship
From one civilisation to another, Roman military general Garius Marius is credited for conceiving what he called a burial club, and what we today might call group life insurance.
Marius thought that soldiers should pay for fallen comrades’ funeral expenses and urged colleagues to put a small percentage of their wages into a fund. The Romans gave us cheese and roads and irrigation, why not life insurance mutuals too?
The life expectancy of Roman soldiers in ~100BC probably exceeded that of Britons during the plague of the 17th century, when a little-known haberdasher called John Graunt picked up the task of recording births, deaths and marriages in a cohesive system as a way to organise and predict life expectancy. And so actuarial science began …
Lastly, did you know that the Titanic disaster was a watershed moment for life insurance? Some of the world’s richest people died in the tragedy and insurers paid out over £50,000,0000 to, among others, the family behind Macy’s department store and the next-of-kin to Waldorf Astoria owner John Astor.
Okay, good knowledge but …
The point is that life insurance didn’t begin with price comparison websites and cheesy TV ads. It’s an industry with a long, superlong-long legacy built up over millennia.
Okay, sure, classic films (Barton Fink, Weekend at Bernies, Groundhog Day, The Apartment) have depicted life insurance as sleazy and / or boring, but it’s a time-tested and viable way of adding security to your (and your family’s) financial health.
We protect our pets and our cars and our boilers and our stuff, but are generally more reluctant to think about doing the same with our (financial) health and lives.
Today, the UK body responsible for overseeing life insurance keeps track of industry payouts and, for the last few years, claims have been paid in roughly 98% of cases. Plus, life insurance isn’t just about life and death. The Babylonians were onto something …
Income protection
We often advocate that, at a minimum, people should explore income protection. For most of us, our income is the foundation of our financial life. The baselayer supporting everything else. So what’d you do if there’s a curveball?
Income protection will, should ill health strike, kick in to replace most of a person’s income. The replacement cash can, depending on your policy, keep coming indefinitely until you’re back on your feet. A lot of people ask whether mental ill health is treated by insurers the same way as physical ill health and invariably the answer is yes.
It’s a pertinent question given anxiety and depression rates are on the rise. As is, too many sufferers are, with economic pressures bearing down, forced to carry on working or return to the grind before they’re ready. Both are sure ways to make a bad a worse.
Further, most life insurers offer additional perks and benefits such as free private medical appointments, therapy, counselling, CBT and more. These benefits ensure customers can access solutions more swiftly than perhaps is possible in the public health system.
Yawn?
By the way, we don’t get payments or commissions etc for advocating you explore life insurance products. It’s a principle of financial planning we suggest come rain or shine.
Perhaps the factoids presented here make the subject slightly less dull. Maybe not. Either way it’s important and maybe the long, cold days of January are a good moment to dig around. Ready? Let us know how you go.