The product was perfectly legal. Many prominent clergymen endorsed it, including celebrity preacher Henry Ward Beecher, brother of Uncle Tom's Cabin author Harriet Beecher Stowe. The Pennsylvania House declared in 1811 that it "would be highly beneficial to many descriptions of citizens throughout the state." The need was clear, and the businesses that sold it were untainted by scandal, bankruptcy, or fraud. They delivered what they promised.
But in the early 19th century, Americans just wouldn't buy life insurance.
The problem wasn't mere procrastination. Many people deemed the very idea immoral. "Has a man the right to make the continuance of his life the basis of a bargain? Is it not turning a very solemn thing into a mere commercial transaction?" wrote a typical critic. Religious traditionalists believed they should trust in God's providence, not a financial contract, to care for their loved ones after death. Others, pointing to arson to collect fire insurance, worried that it might encourage murder.
Paternalists—and competitors—warned that beneficiaries wouldn't know how to manage a sudden windfall. The New York Times opined that life insurance eroded the work ethic and discouraged steady savings. It was, the paper editorialized, "calculated to encourage reliance upon something besides economy and industry and to lead accordingly to the relaxation and decay of those cardinal virtues of society." Taking a similar line, the president of a savings bank voiced concern that the "anodyne of security" defied God's plan, in which fear of poverty, which he called the "pressure of wants," encouraged thrift and hard work. (The right kind of thrift, of course, included a savings bank account.)
Then there were the women. Life insurance was supposed to protect widows from destitution if their husbands died, but wives were among its biggest opponents. "It is almost incredible that one of the obstacles to the universal practice of life insurance is found in the opposition of wives and mothers," complained a pro-insurance writer. Wives were often afraid that placing a bet on death would tempt fate. Many viewed a life insurance payout as untouchable "blood money."
Then something changed.
"Not until the 1840s did life insurance begin selling in any significant degree. Then, suddenly, in the span of a few years, its rate of growth became astonishingly high," writes the economic sociologist Viviana Zelizer in her landmark 1979 study of the shift, Morals and Markets, now out in a new edition. "In 1840 there were 15 life insurance companies in the United States and the estimated amount of total insurance in force was under $5 million," she notes. "By 1860, there were 43 companies and almost $205 million of insurance in force."
One reason was undoubtedly economic. As Americans left the countryside to work for wages in growing industrial cities, life insurance became more valuable. A farmer who died left his wife and children a means to earn a living, carrying on as before. The widows and orphans of urban wage earners, by contrast, had no way to replace the lost income.
Urban life tended to be more dangerous, with poorer nutrition and a greater chance of disease. In the years since Zelizer first published her book, careful research by the late Nobel laureate Robert Fogel and other economists has demonstrated that life expectancies for those who survived childhood were falling after about 1840, as were adult heights, an indicator of health and nutrition.
"Although the technological progress, industrialization, and urbanization of the nineteenth century laid the basis for a remarkable advance in health and nutritional status during the first half of the twentieth century," wrote Fogel, "their effects on the conditions of life of the lower classes were mixed at least until the 1870s or 1880s. In the U.S. the negative effects probably exceeded the positive ones through the 1870s."
Yet the economic benefits of life insurance weren't enough in themselves to overcome cultural resistance. Zelizer's research attacks the false dichotomy she calls "hostile worlds," in which economic activity and social relations are seen as opposites: "a world of rationality, efficiency, and impersonality, on one side; a world of self-expression, cultural richness, and intimacy on the other—with contact between the two worlds inevitably corrupting both of them." Rather, she argues, the two are inevitably intertwined. The economy itself is social. The story of life insurance illustrates how emotion, persuasion, and social attitudes shape consumer behavior.
Beginning in the 1830s, life insurance companies largely abandoned arguments about finances in favor of a rhetoric of piety, sentiment, altruism, and paternal responsibility. Both to themselves and to potential clients, they portrayed life insurance as an almost religious institution. "It can alleviate pangs of the bereaved, cheer the heart of the widow and dry the orphans' tears," went a typical pitch. "Yes, it will shed the halo of glory around the memory of him who has been gathered to the bosom of his Father and God."
To further their charitable image, many insurers constituted themselves as mutual corporations, owned by policy holders, the better to seem "free from all selfish principles." (Zelizer points out that founders and executives nonetheless profited from ample salaries.) Most important, they hired aggressive, in-person sales agents to get their message across to the people. "The distinctive role of the agent in life insurance was not simply an ingenious marketing device of the industry," writes Zelizer, "but a response to powerful client resistance."
Insurers countered moralistic opponents with moralism of their own. Unlike already widespread property insurance, they declared, their product represented the "pure, ripe fruit of absolute unselfishness," because the payer himself didn't receive the benefits. And they played the guilt card. Men who refused to buy insurance were demonstrating "their intense selfishness while living, as to leave helpless widows and destitute children to face alone the miseries of starvation."
Gradually, the persuasion worked. Life insurance ceased to be a topic for editorial pages and became instead a common ingredient in family budgets and popular culture. The insurance agent became a touchstone of American culture, from the reassuring Jim Anderson of Father Knows Best to the pesky Ned Ryerson in Groundhog Day. While many a murder mystery turns on an insurance scheme (though contrary to what you might remember, Double Indemnity isn't about life insurance), other works such as Raisin in the Sun use insurance proceeds to create hope for a new life. One of the earliest examples is Willa Cather's 1915 novel Song of the Lark, set in the 1890s. It highlights the interaction of life insurance, benevolent intentions, and dangerous new industries.
"The only men who are incurably nervous about railway travel are the railroad operatives. A railroad man never forgets that the next run may be his turn," Cather writes. Thea Kronborg, the novel's gifted protagonist, is able to escape her small town to study music in Chicago because one such railroad worker, long smitten with her, makes her the beneficiary of his $600 life insurance policy.
By the 1890s, such policies were normal; the posthumous gift marks Ray Kennedy not as a decadent gambler but as a good and discerning man.
This article originally appeared in print under the headline "Your Money or Your Life".
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