1757, first try to set up a life insurance company, but it didn’t pass.
Purpose: Replacement of earning for who bought insurance and lose the ability to
Reasons of getting a life insurance: 1. to insure we are able to protect family.
2. to focus on financial concern, help people manage money.
Primary financial concern: 1. manage the risk of the family who Die too soon
2. manage the risk of the family who Live too long
3. manage the risk of the family who become disable or seriously ill
Tools: 1. Life insurance
2. (GIC) General Insurance Council, retirement plan etc.
3. disability benefit, critical illness insurance etc.
1583, London England (1 life insurance contract in the history)
The reasons why only 174 years later, there comes life insurance companies.
1. lack of knowledge death rate for commercial purposes.
2. diseases, plague
the confusion on mind of general public and gambling.
1762, 1 insurance company was founded “The Old Equitable”
Premium = the consideration paid for contract of insurance
3 principles: 1. policies issued by the Old Equitable will be enforce whole life
2. level of premium of life
3. premium issued based on age of entry.
Hard to sell
If insurance company do not have enough money to pay insurance, temporary pay
part first, later pay full amount.
3 inputs: 1. get more clients
2. expect investment return
3. manage expense of the company
Eg $300,000 whole life insurance, with premium $1000 per month at 83 years old.
Commission $800 +,
Precautions for do not have enough money to pay:
1. in case of some epidemic, they will temporarily allow substantial reduction in
payment 2. have the right to raise the price if necessary
1800s 5000+ policies 4,000,000 pounds face amount