Importance of Life Insurance

By Vicente González

A brief historyAccording to some authors, The Greeks and Romans

introduced the origins of health and life insurance c. 600 BCE when they created guilds called "benevolent societies" which cared for the families of deceased members, as well as paying funeral expenses of members.

Guilds in the Middle Ages served a similar purpose. The Talmud deals with several aspects of insuring

goods. Before insurance was established in the late 17th

century, "friendly societies" existed in England, in which people donated amounts of money to a general sum that could be used for emergencies.

Brief historyAs European civilization progressed, its social

institutions and welfare practices also got more and more refined.

With the discovery of new lands, sea routes and the consequent growth in trade, Medieval guilds took it upon themselves to protect their member traders from loss on account of fire, shipwrecks and the like

Brief historySince most of the trade took place by sea, there

was also the fear of pirates. So these guilds even offered ransom for members held captive by pirates. Burial expenses and support in times of sickness and poverty were other services offered. Essentially, all these revolved around the concept of insurance or risk coverage. That's how old these concepts are, really.

In 1347, in Genoa, European maritime nations entered into the earliest known insurance contract and decided to accept marine insurance as a practice.

Concept of life insuranceLife insurance is a contract between the insurer

and the policy owner. The insurer promises to pay a lump sum of money on the death of the insured person or persons. Or pay him the amount in case of critical or terminal illness. In return the policy owner pays a premium at regular intervals, such as monthly, quarterly, half yearly or annually.

This premium is different with different insurance companies and the period of payment of the premiums may vary and this is decided at the time of buying the insurance.

The father of life insuranceElizur Wright is considered the father of life

insurance. (12 February 1804–22 November 1885) was an American mathematician and abolicionist who was born in 1804 and died in 1885.

He has been considered the "father of life insurance" for his pioneering work on actuarial tables.

He is also sometimes called the "father of insurance regulation", as he campaigned that life insurance companies must keep reserves, and served as Massachusetts Insurance Commissioner.

Reasons for buying life insuranceTo safe our family in the event of any unforeseen

happenings. It is important for us to save our family in the event of any

unforeseen happenings such as death. We have to ask ourselves some questions concerning our family: If I were to die, would they be able to continue to live in the same house, and still be able to make the rent or mortgage payment? How can I be sure that I can provide for my family even after I’ve left this world?

Life insurance serves many practical purposes. Obviously paying off debts so your family is not overburdened in your absence is very important. However, life insurance is equally important for your family members in order to allow them grieving time, and provide them with a little time to heal.

Reasons for buying life insuranceTo replace the income that is lost due to

the policy holder´s deathFuneral expenditure nowadays is costly.

Paying for the services, at a time when we are still numb and reeling from the sudden loss of a loved one can be hard, to say the least. In such cases, a life insurance policy can come to our aid, by taking care of the funeral expenses.

Reasons for buying life insuranceTo pay off the mortgageWhen we purchase a term life insurance policy, we take

into account all the money our family will need in case we are not around to help out. This includes our mortgage payments.

To plan our children´s educationChildren are always asked what they want to be when

they grow up. Doctor, Lawyer, Astronaut. And as a parent, you want to make sure nothing stands in their way, especially something like finances. The cost of education is increasing at a rapid pace across all levels. In order to ensure that you can pay for your children’s educations we need to buy life insurance.

Reasons for buying life insuranceTo pay for the burial expenses of the

policy holder Death is a constant and no one can escape it.

After a person dies it is important to get solved the problem of the payment for the burial expenses of the late. Life insurance covers those expenses. Without life insurance, the family will have to find way to settle the death expenses such as burial, coffin, etc.

Panamanian law concerning insuranceIn 1996, the Republic of Panama adopted Law 59 (July 20, 1996)

Law 60 (July 29, 1996) and Law 63 (September 19, 1996) which regulate Insurance Companies and the Professional of Insurance Brokers & Producers, Captive Insurance Companies and Reinsurance Activities respectively.   

Under this legislation, all companies or enterprises who undertake insurance activities, of any nature including bond bailiffs, are regulated by the Superintendent of Insurance.  This also includes insurance brokers, adjusters and any person who is involved in insurance brokerage.   Furthermore, this legislation covers any entity who promotes health, pension or retirement funds, and investment or saving schemes which issue policies or contracts (other than those covered by other special legislation, such as the securities legislation or special creations of law).

The Insurance Superintendent's responsibilities Strengthen the growth of the insurance

industry; Inspect and investigate the commercial

operations and professional practices of the persons regulated by the law;

Review, process and investigate the applications made for licenses of any nature under the insurance laws; and

Enforce the insurance legislation.