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 BC 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 do not 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.