Purchasing life insurance has ner been, and ner will be, fun, Nertheless, it is important-especially for the high-nel-worth individual who must provide liquidity for estate ning purposes. To put the purchasing decision in perspecti, the author presents a brief history of life insurance, explaining the delopments that ha led to today's array of products. Their variegated evolution means certain inevile compromise that an advisor can illuminate and some salesmen may obfuscate.

Brief History of Life Insurance

"[L]ife insurance as we know it began in the 19th century Industrialization-with its cities, factories, money economy, and an urban 'saving' class-set the stage for life insurance as a large-scale, national institution. Life insurance, it can truly be said, is a product of modern industrial society. [Davis W. Gregg and Vane B. Lucas, "A Brief History," Life and Health Insurance Handbook (1973)]

The first life insurance company in North America, the Presbyterian Ministers' Fund, was eslished in 1759. The Insurance Company of North America, chartered in 1794, was the first commercial enterprise to sell policies; it sold only six policies in fi years and discontinued operations in 1804.

The insurance business took off in the 1840s because of the confluence of the rapid growth of the US industrial economy, the start of mutual companies, and the delopment of the agency system of distribution. The in-force lel rose to $97.1 million by 1850, and $173.3 million by 1861. Numerous companies failed during the general depression of the mid-l870s, and by 1882, only 55 of 129 survid. By 1970 there were around 1800 companies, but today there are hundreds fewer, because of failures, consolidations, and mergers and acquisitions. Today, most life insurers are stock companies owned by shareholders. Fraternal companies make up a ry small piece of the total pie, and only a small number of the mutual companies remain as such. The primary allegiance to the policyowner is the most obvious competiti advantage that a mutual company has or a stock company.