Amusing things I learned about Insurance

To understand insurance, a common financial tool today, I took the Life and Health Insurance Test. I learned several interesting history and knowledge about insurance, tax law, personal finance, and state vs federal right. As an immigrant, it helps me to know more about the United States.?

Do you know the very first insurance policy is for marine cargo and it’s sold at Edward Lloyd’s coffee house in London opened in 1680s? And today, Lloyd’s of London is the marketplace for insurance and the corporate body to establish the standards and guidelines. Insurance business became popular and grew into different areas. In the 18th century, the first regulation governing life insurance is established in England. The history goes on:?

• 1868 Paul vs Virginia: Defined insurance is not interstate commerce, meaning insurance should be regulated by states (instead of federal)?
• 1933 Banking Act (During The Great Depression): Banned common ownership of bank, insurance, and security firms?
• 1935 Social Security Act (Part of Roosevelt’s New Deal): As known as OASDI (Old Age, Survivors, and Disability Insurance). It created a social safety net (by the federal government) against unemployment?
• 1944 US vs SEUA (During World War II): Shifted the power of regulatory control to the federal government (overturing Paul vs Virginia)?
• 1945 McCarran-Ferguson Act (Shortly after World War II): Made it clear that the states should regulate insurance (shifting the regulatory power back to states)?
• 1974 ERISA (During the Oil Crisis): Set standards for pension plans and group health insurance plans of private-sector companies. It established rules for the later introduced 401(k), 403(b), and IRA?
• 1982 TEFRA (Right after Reagan Tax Cut in 1981): Introduced MEC (Modified Endowment Contract) to add stricter rules to limit wealthy individuals using life insurance policies as a tax shelter?rather than its intended purposes.
• 1999 Financial Service Modernization Act: Reverted the ban from the 1933 Banking Act.?
• 2006 Pension Protection Act: Set new rules and strengthened PBGC to secure the financial stability of the pension plans (from 1974 ERISA)?

As you can see, insurance has an interesting history with The Great Discovery, the federal-state balance of power, The Great Depression, Roosevelt’s New Deal, World War II, The Oil Crisis, Reagan Tax Cuts, and it continues. Pension, Social Security, and Medicare are all forms of insurance. 401(k), 403(b), and IRA are the terms I heard every tax season, now I have better understandings of their historical context.?

I hope you find these things are interesting, too. Thanks for reading and stay tuned for the next article.?

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References:?

1. https://en.wikipedia.org/wiki/History_of_insurance?
2. https://en.wikipedia.org/wiki/Social_Security_(United_States)?
3. https://en.wikipedia.org/wiki/Paul_v._Virginia?
4. https://en.wikipedia.org/wiki/1933_Banking_Act?
5. https://en.wikipedia.org/wiki/United_States_v._South-Eastern_Underwriters_Ass'n?
6. https://en.wikipedia.org/wiki/Social_Security_Act?
7. https://en.wikipedia.org/wiki/McCarran%E2%80%93Ferguson_Act?
8. https://en.wikipedia.org/wiki/Employee_Retirement_Income_Security_Act_of_1974?
9. https://en.wikipedia.org/wiki/Tax_Reform_Act_of_1986?
10. https://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act?
11. https://en.wikipedia.org/wiki/Pension_Protection_Act_of_2006?
12. https://en.wikipedia.org/wiki/Pension_Benefit_Guaranty_Corporation