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What Is Life Insurance?

Author: dcollins  |  Category: Insurance
Published: July 28, 2008

An early form of life insurance can be traced back to Roman times when, because of the high costs of funerals, clubs were formed, known as ‘burial clubs’. The guarantee of such an organisation for its members was that for a regular contribution they knew that upon death, their burial club would provide the necessary finance to cover the costs of their funeral and in some cases provide small lump sums for their dependants.

However, following the fall of Rome in the Fifth century, many of the financial disciplines and mechanisms that prevailed during the time of the Empire, such as life insurance, simply died out with the Romans; not to be revived until well into the Middle Ages almost a thousand years later. In the UK, today’s life insurance industry has its roots in the 17th century when a new form of entrepreneurs known as ‘underwriters’ gathered at fashionable coffee houses throughout London, including the famous Lloyds of London to insure other’s risks such as traders, ship owners and merchants.

Like the ancient Roman burial clubs modern day life insurance can be purchased simply to ensure that the costs of funeral expenses for the insured are covered. More likely, however, the sum insured will include an amount to pay off a mortgage and also provide a considerable lump sum for any dependants. Anyone who owns property that is mortgaged would be well-advised to take out life insurance for an amount at least equal to the cost of discharging the mortgage in the event of the mortgage payer’s death.

Even though contemplating one’s untimely demise can be distressing to many, it is far less so than leaving behind dependants that do not have adequate finances to continue to live in the family home. Life insurance allows families to not have to compound the loss of a loved one with the subsequent financial misery of losing a breadwinner.

There are different types of cover under life insurance policies. For example, some include critical illness cover that pays out a lump sum on the diagnosis of a number of critical illnesses or conditions, as well as upon death. Other types of life insurance policies include accidental death cover that provides a fixed sum to dependants should the worst happen to the insured. Unlike a more comprehensive life insurance policy, accidental death cover is usually available without having to undergo a medical, as it does not cover death through natural causes, but only covers death as a result of accidents.

Anyone wishing to cover themselves or their family should first seek advice from an insurance expert before they commit to a particular policy. Depending upon their individual circumstances it may transpire that all they actually require is just enough cover to pay for their funeral – exactly like the cover offered by the ancient Roman burial clubs.

Daniel Collins writes on a number of topics on behalf of a digital marketing agency and a variety of clients. As such, this article is to be considered a professional piece with business interests in mind.

Author: dcollins

The same type of video calling featured on popular sci-fi series Star Trek has become a reality to millions who regularly speak to each other over the internet for free, allowing families separated by the miles to keep in touch.

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