THE NEED FOR LIFE INSURANCE IN THE USA.

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On the need for protection and protection of life at the beginning of the 20th century, it was only enough to have means to eat (workforce), a doctor with a small first aid kit, a good dentist and a cleric.

Clinics as we understand them and know them today, did not exist. If the woman required to give birth, her husband should hire the midwife and receive her son at home.

If you wanted to remove a tooth you should go to the nearest apothecary that as a rule dominated the intrigues of the dental profession and was at the same time a pharmacist, internist and in some cases a psychologist. The pre-modern citizen was therefore, subject to the provisions of the man who practiced the medical profession almost intuitively within his community.



There was no medical profession, nor any protection from the governments of the day and the survival of the families were in “hands of God” in case the provider died. The legal statutes on the protection of life that should be protected above all as a fundamental right by the state were barely timidly emerged.

The average life expectancy for the average citizen was at that time close to 40 years and, although it certainly increased over time thanks to improvements in medical science, the concern for the livelihood of the family after death It only increased.

Having insurance in a developed country was no longer an optional matter for those who wanted to protect the survival of their family nucleus, especially when it came to obtaining improvements in medical care when the service was provided. For this, and many other reasons in the case of the US having life insurance literally became a matter of life or death.


With the arrival of the legislation of 1965 that opened the way to social security systems (Social Security Pension) translated into the MEDICARE program: applied to citizens who could not subsidize their expenses due to age (Elders) and MEDICAID: applied to low-income (poor) people, homeless children, among other cases; brought with it the appearance of private insurance companies that, although they were not the most popular because of their high costs, they were not rejected by American society either because, at that time when the economy of the great country of the north was in full expansion any citizen With a medium income he could afford to pay life insurance at a low cost and this allowed his family a second chance in case of death.



This is how the private insurance subsystem was born in the US, with its two basic aspects: Term Life Insurance Best known by its acronym in English: (Term Life Insurance) and Permanent Life Insurance (Whole Life Insurance).

And it makes sense that it has been so, because in the emergence of these subsystems the taxpayer who, not needed the social programs implemented by the government (MEDICARE and MEDICAID) that said incidentally only covered the basic hospital medical services; With a modest income, he could pay the premiums that were associated with each policy and thus protect the interests of the family in the event of an eventual death or physical disability.

Recall that in the northern country medical services are not free. The most elementary life insurance that derived from this reality and that, even today exists today is the (Term Life Insurance) ‘Permanent Life Insurance’; because, it allows the insured person a refund of the money given in the premium and subsequent installments, after he dies. As long as this occurs within the time established in the policy or also called: term of validity of the policy, which can range from 1 to 30 years.

However, the development of the medical industry and the growth of the economy resulted in the extension of postmortem insurance plans to the middle classes of the American people, giving a gap to the insurance companies to expand the margins according to the citizen -client that was immediately reflected in the type of payments that could be made in each policy to request.

What allowed later, the emergence of Level Term Life Insurance that allows the insured to receive the total amount of benefits agreed with the insurer for the duration of the policy without it varying in time. Later Life Insurance Decreasing term made its entrance, which, lends part of the benefits as the time of the policy expires.

That is, if the policy has half the time elapsed, the benefits received could be recalculated at 50% less than agreed. However, term policy services were not sufficient for the interests of the insurance industry and expanded their domains by creating permanent policy services or Permanent Life Insurance.

Which consisted, like the (Term Insurance) in the disbursement of benefits in case of death but regardless of the life of the insured person, of course with some variants.

In the case of Traditional Permanent Life Insurance known by its acronym in English: (Traditional Whole Life), it allows full coverage to beneficiaries (relatives of the insured) on the amount agreed by the policy after the death of the insured, since, the price of the monthly premium remained stable during the period that the policy was in force. Being able to receive other benefits as long as these were adjusted to a standard rate of return that does not vary during the term of the contract.



In the case of Variable Life Insurance (Variable Whole Life) – considered one of the most risky in the market – the rate of return for the payment of benefits to the survivors of the insured is very high because this is according to the increases of the stock index of the insurance companies.

Certainly this brings to the moment of collecting the benefits, high amounts of money due to the flow of variations in the financial speculative market. However, this volatility in the configuration of the offer has stimulated the perception of some instability that has finally permeated in an unfavorable opinion making it unattractive for the general public.

Since, if there are falls in the price of investment lines in the financial system, the value of the final benefits obtained as a result of market variations also falls.

As expected, this ends up directly affecting the value of the insured’s benefits, but not the premiums that are previously agreed upon and charged by the insurance company. However, the client is given the possibility of modifying it according to clauses that are contemplated within the contract, and the profits are matched according to indices established by the industry, which vary according to the political climate, which makes them extremely “uncertain ” The prize is greater because there is a high risk. Finally, there are Universal Life Insurance, which are according to experts on the subject, the most attractive service packages on the market. This is because, it is the strange but “perfect” combination between the traditional insurance system and the stock exchange system.

Which allows from the perspective of the market to adjust the amounts of premiums to be paid according to the investment plans of the insurance company but that, will not vary in time as long as the client complies with the payment of the exemptions agreed with the company.

If the client declares an improvement in their economic situation, they could, if they wish, increase their quota within the policy, prior agreement with the company, so that, in future, the client’s debts may receive a greater benefit at the time of his death This also implies a calculated and shared risk that results in more benefits for the client, such as: Withdrawing or borrowing money, having flexibility with the payment of premiums, earning interest on the redundant effective value of bonds and investment lines, etc.

In the case of Anglo-Saxon communities impacted by a regulation system governed by an exaggerated assessment of minimum survival costs, a harsh stationary climate that requires preparation to resist it in relatively long times, and a relentless social segregation that affects the acquisition of necessary means for life: it has made insurance policies become part of the everyday life of the modern citizen.  More than a simple procedure, it is the guarantee of security of many families that protect themselves on the basis of an eminently patriarchal society.

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