A concept introduced by the Wealthy, for the Wealthy to stay rich.
Once Upon a time….
The concept of putting a dollar value on human life was formally introduced in the early 18th century, when the first life insurance company was founded with some 2,000 wealthy members in London. It’s policy ensured that dependents of the members would be given maintenance out of the contributed pool of premiums collected, according to the shares the heirs own.
Although premiums were fixed and due annually, it was too expensive for the masses (back then, the annual premium was equivalent to the cost of a horse). In addition, only individuals who were under the age of 45 could be insured. As such, it made insurance limited to only the selected few, while relying on speculation on how much premiums should be charged.
A mathematical solution was eventually adopted in the mid 18th century, to form a more equitable base upon which to calculate premiums as a percentage of life expectancy. With that, anybody could be insured and admitted regardless of their state of health, age and occupation.
The birth of modern insurance and global expansion
With the Age of Reason or Enlightenment in the 18th century, actuarial science was finally accepted as a rational means to assess risks and price insurance. What came after was the collection of information and use of underwriting to transform insurance into quantifiable costs.
Although the series of wars in the 19th century allowed insurance to spread on a broader scale beyond Europe and the USA, it remained a privilege of European descendants to insure themselves and their businesses.
The start of insurance in Singapore
It was not until the 1950s that insurance started to gain some traction in Singapore. But with policies costing 5-figures, and death being a morbid topic that people did not like to discuss, people were only interested in life insurance as investments rather than what it should be used for - protection.
Things only began to change in the 1960s and 1970s amidst the rapid industrialization. Companies were beginning to provide health insurance for their employees, allowing lower-level employees to enjoy better ward facilities in government hospitals, and managers and executives being able to opt to stay in private hospitals for treatments.
By the early 1980s, with Singapore being a thriving regional financial centre, with the economy growing at a faster pace, with increasing personal incomes and a steady increase in employment rate, Singaporeans started becoming wealthier. With that came improved living standards and improved access to medical care, which helped spur the demand for health insurance. Consequently, as a result of our increased wealth, people started accumulating more possessions, increasing insurance ownership, particularly for home and vehicles.
Evolving from a rich man’s privilege to everyone’s must-have
The idea of Insurance was initially created by the wealthy, for the wealthy, because they understood the importance of protecting their wealth.
Yet, there are still a surprising number of people today who do not realise that they can leverage on insurance to not only protect their wealth, but even create more wealth for their family and their future generations.
Economies will prosper and falter, investment markets will experience slumps and booms. But insurance provides an absolutely pivotal opportunity to significantly improve the future of your family. Because one thing guaranteed is that no one lives forever. Hence an insurance death payout is inevitable for everyone. The only question is, how much do you wish to leave behind?
“You have no control over whether you are born rich or poor. But you get to decide whether you die rich or poor.”
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