Life insurance in the UK goes back more than three centuries: the Amicable Society, which Aviva calls the first life insurance office, was chartered in 1706, when cover for a year, a voyage or a fixed term was already familiar. Term life insurance started first: before Equitable Life opened in 1762 the usual policy ran for a short fixed period, typically one year, while whole of life cover priced by age followed in 1762 and critical illness cover reached the UK in 1985.

If you would rather talk through what each main kind of cover does today than read about its past, an FCA-authorised broker will ring for a free chat once you submit the details form on this page.

When was life insurance invented, and how long has it existed?

Aviva's heritage timeline, which traces the company back to the Amicable, says that in 1706 Queen Anne granted a charter to the Amicable Society for a Perpetual Assurance Office, and calls it "the very first life insurance office in the world". That is Aviva's own claim about its ancestor, so read it as the firm's account rather than a neutral ruling. The society was set up under the inspiration of a Fleet Street bookseller, John Hartley, and Aviva says its purpose was to provide for members' widows and children.

Insurance of one kind or another was older than that. Aviva's timeline says the Amicable "began to insure its members for a whole life, not just for a year, a voyage or a fixed term", which tells you that cover for a year, a voyage or a fixed term was already familiar.

What did cover look like before whole of life policies?

Craig Turnbull's A History of British Actuarial Thought (Palgrave Macmillan, 2017) describes the position in the mid-eighteenth century: "the only form of life assurance written was short-term (usually one-year) assurance", with demand that was small and largely limited to insuring the lives of business creditors and to speculative gambling on the lives of well-known people. In other words, the usual policy before 1762 was one-year term cover, and its premium was a flat rate that did not change with the buyer's age.

Parliament dealt with the gambling side in section 1 of the 1774 Act, which forbids insurance on someone's life where the person taking it out has no interest in it, or one made "by way of gaming or wagering", and declares any assurance made against that rule "null and void". Insurers still look for an insurable interest when one person covers another's life, as the page on getting life insurance on someone else explains.

When did whole of life cover start in the UK?

The same history credits the mathematician James Dodson, who in 1756 published a treatise setting out how a policy could last for the rest of the policyholder's life, with level regular premiums worked out from mortality tables and the buyer's age. His proposal, it says, was "to produce age-specific premium rates for life assurance" where a flat basis had been standard. Dodson died in 1757, and the project he began led to the founding of Equitable Life, which started business in 1762 and is described by London Remembers as the world's oldest mutual insurer.

The two accounts are less at odds than they look. Aviva says the Amicable insured its members for a whole life from 1706, but the same history records that in 1755 the Amicable was charging one flat 5% premium rate for annual life assurance at every age it accepted. What Dodson proposed, and Equitable put into practice from 1762, was cover for the rest of a person's life with a level premium set by age, and Equitable came to be regarded as the model for life assurance. So whole of life cover has existed in some form since 1706, and in its age-priced form since 1762. What a whole of life policy does today is covered on what is whole of life insurance.

How did term life insurance develop?

Term cover is the oldest shape of life insurance in this story: the one-year assurance described above is a term policy, and Dodson's premium calculations were compared with "a single-year term assurance contract". The multi-year level, decreasing and increasing term policies people buy now developed later. How a modern term policy works, and how the main versions differ, is on level term life insurance, decreasing versus level term and the types of life insurance explained.

If you want to know how long a particular insurer has offered the term cover you are looking at, a broker can ask that on your behalf during the free call-back.

When was critical illness cover introduced, and who invented it?

Critical illness cover is much younger. The Actuarial Post reported that the first modern critical illness policy was launched in South Africa on 6 August 1983, developed by the heart surgeon Dr Marius Barnard. It was first called Dread Disease, was brought to market by Crusader Life Insurance, and covered four conditions: heart attack, cancer, stroke and coronary artery surgery. The Chartered Insurance Institute's factsheet adds that policies for single conditions such as cancer existed some years earlier, and that critical illness cover "was introduced into the UK in 1985".

Definitions then differed from insurer to insurer. The ABI's own guide records that in 1998 the Office of Fair Trading concluded that the variety of technical definitions "was confusing and made it difficult for people to compare policies", which led the ABI and its members to develop a Statement of Best Practice in 1999. The CII factsheet says 23 model definitions were published in April 2006 and made mandatory for ABI member companies from April 2007. The statement was given its present name, Guide to Minimum Standards, in the 2018 review, and the current edition is dated 16 September 2022 and was updated in April 2023. It requires that cancer, heart attack and stroke are covered to at least its model definitions.

The ABI's rules are explained on the ABI minimum standards page; what critical illness cover pays for today is on critical illness cover, and life and critical illness cover together covers the combined policy.

A timeline of the main dates

DateWhat happened
1706The Amicable Society for a Perpetual Assurance Office is chartered by Queen Anne (Aviva's heritage timeline)
1756James Dodson publishes his treatise proposing age-based premiums and whole of life cover
1762Equitable Life starts business, pricing premiums by age and mortality
1774Parliament passes the Life Assurance Act, requiring an interest in the life insured
6 August 1983First modern critical illness policy launched in South Africa
1985Critical illness cover introduced into the UK (CII factsheet)
1999The ABI first publishes its Statement of Best Practice on critical illness
April 2007The ABI's model definitions become mandatory for its member companies

Which of these kinds of cover suits your family is a separate matter from their history, and a broker can go through it for nothing when you request a call-back via the enquiry form.

Frequently asked questions

When was term life insurance invented?

The earliest UK life cover was short-term, usually for one year, so a term policy is the oldest kind. Today's multi-year level and decreasing policies grew up later, and a broker can explain how each one works on a free call-back.

How long has whole life insurance been around?

Aviva says the Amicable Society was insuring members for a whole life from 1706. Equitable Life, which started business in 1762, is the office usually linked with premiums set by age.

Who invented critical illness insurance?

The Actuarial Post credits the South African heart surgeon Dr Marius Barnard with developing the first modern policy, launched on 6 August 1983. The Chartered Insurance Institute dates its arrival in the UK to 1985.

Sources