How to Make Yourself Save Money

Most advisors and financial experts will tell you that the only way to become wealthy is to save. The problem with saving is that most people get more value and joy from spending their extra money than they get from saving it. If you fall into this category, when faced with the choice of getting immediate joy from buying something right now versus saving for some distant time in the future, buying something today is a much more attractive choice.

Why is Saving Money So Difficult?

Imagine you and I were going to meet a week from today. For our meeting, I want to offer you a snack. You can choose a fruit or chocolate. Which one do you want?

When researchers did this experiment, they found that 74% of participants said they wanted fruit a week before the meeting but on the day of the meeting, 70% decided they wanted chocolate. Why did so many people say they wanted fruit only to change their mind to chocolate? It’s the same reason why it’s so painful to save for the future when instead we could spend the money today. (For more, see: Why Saving Money is Important.)
Those who chose the fruit were trying to make a healthy decision. Since the snack was a week away, it was easier to make a smarter choice. But when it came down to actually eating the snack, most of them changed their minds and decided to go for the less healthy snack instead. We put a large amount of value on right now and very little value on the future.
Here is another example: Would you prefer a 15-minute massage now, or a 30-minute massage in one day? If you are like most people, you said you wanted the massage right now. But if I ask you if you want a 15-minute massage in seven days or a 30-minute massage in eight days, what would your answer be?
Did you choose the 30-minute massage in eight days this time? The massage times are the same and the time between each option is the same as the last example. What’s going on here? The same effect is at work. We want it now, whether it is chocolate, massages, spending money, etc. Having a little piece of goodness right now is so much more appealing than having a whole lot more goodness in the future.
This can heavily impact our desire and motivation to save. We are told to save our money today so we can have a great retirement, but what we hear is, “deprive yourself of something you want right now because in forty years it might help you.”
Does this mean we are destined to spend a lot and save a little? If the choice is between guaranteed enjoyment now versus the possibility of enjoyment a few decades from now, then yes, possibly.
So, what’s the solution to the issue with saving money? Flip the script by eliminating your choices to not save. This is done by creating a systematic savings strategy. Rather thanput yourself in a situation where you have to decide between now or later, it’s better to avoid the decision altogether. The solution is generate enough willpower to set up your systematic savings strategy once and then you can forget about it. Here’s how you can do it:

Contribute to Your 401(k)

This is an easy way to save because you set it up once and then it runs automatically without any effort or decisions from you in the future. Every time you get paid, a small piece of your paycheck gets split off and put into your 401(k). The advantage of this approach is that the money doesn’t reach your bank account for you to spend. It also has the benefits of potentially saving you money in taxes. You may even get free money from your company - which is called a company match. If you pay little or no income tax, there may be better strategies but for most people, it’s a great way to save. (For more, see: 10 Ways to Effectively Save for the Future.)

Use Direct Deposit

Direct deposit is also an easy way to save effortlessly. The advantage is that you only have to make the decision to save once. After it is set up, it will run behind the scenes automatically. Instead of receiving a check that you have to bring to the bank to deposit (this takes way too much time and willpower), your paycheck can be automatically and directly deposited into a bank or investment account for you.

Take Advantage of Automatic Transfers

If your employer doesn’t offer direct deposit, you can still create a systematic savings strategy. Use automatic transfers through your bank to transfer money from your checking to a savings or investment account.

For example, you can tell your bank that you want to schedule an automatic transfer of $200 on the first of every month from your checking account to your investment account. These automatic bank transfers are slightly more time consuming to set up. But once they are set up, they run automatically without any other effort or action on your part.

Technology Can Help You Save

There are quite a few apps available that can make saving easier. They range from unobtrusive (rounding up on purchases and saving the difference) to extreme (pulling money out of your bank account based on the application’s algorithm). Because apps and technology change so quickly, the best bet is to search “apps to automatically save money.”

Most people experience the difficulty of choosing to save money that they would much rather spend, so it is best to employ some of these strategies to avoid the dilemma in the first place. (For more from this author, see: The 6 Biggest Sudden Wealth Mistakes.)

How to Make Yourself Save Money

Most advisors and financial experts will tell you that the only way to become wealthy is to save. The problem with saving is that most people get more value and joy from spending their extra money than they get from saving it. If you fall into this category, when faced with the choice of getting immediate joy from buying something right now versus saving for some distant time in the future, buying something today is a much more attractive choice.

Why is Saving Money So Difficult?

Imagine you and I were going to meet a week from today. For our meeting, I want to offer you a snack. You can choose a fruit or chocolate. Which one do you want?

When researchers did this experiment, they found that 74% of participants said they wanted fruit a week before the meeting but on the day of the meeting, 70% decided they wanted chocolate. Why did so many people say they wanted fruit only to change their mind to chocolate? It’s the same reason why it’s so painful to save for the future when instead we could spend the money today. (For more, see: Why Saving Money is Important.)
Those who chose the fruit were trying to make a healthy decision. Since the snack was a week away, it was easier to make a smarter choice. But when it came down to actually eating the snack, most of them changed their minds and decided to go for the less healthy snack instead. We put a large amount of value on right now and very little value on the future.
Here is another example: Would you prefer a 15-minute massage now, or a 30-minute massage in one day? If you are like most people, you said you wanted the massage right now. But if I ask you if you want a 15-minute massage in seven days or a 30-minute massage in eight days, what would your answer be?
Did you choose the 30-minute massage in eight days this time? The massage times are the same and the time between each option is the same as the last example. What’s going on here? The same effect is at work. We want it now, whether it is chocolate, massages, spending money, etc. Having a little piece of goodness right now is so much more appealing than having a whole lot more goodness in the future.
This can heavily impact our desire and motivation to save. We are told to save our money today so we can have a great retirement, but what we hear is, “deprive yourself of something you want right now because in forty years it might help you.”
Does this mean we are destined to spend a lot and save a little? If the choice is between guaranteed enjoyment now versus the possibility of enjoyment a few decades from now, then yes, possibly.
So, what’s the solution to the issue with saving money? Flip the script by eliminating your choices to not save. This is done by creating a systematic savings strategy. Rather thanput yourself in a situation where you have to decide between now or later, it’s better to avoid the decision altogether. The solution is generate enough willpower to set up your systematic savings strategy once and then you can forget about it. Here’s how you can do it:

Contribute to Your 401(k)

This is an easy way to save because you set it up once and then it runs automatically without any effort or decisions from you in the future. Every time you get paid, a small piece of your paycheck gets split off and put into your 401(k). The advantage of this approach is that the money doesn’t reach your bank account for you to spend. It also has the benefits of potentially saving you money in taxes. You may even get free money from your company - which is called a company match. If you pay little or no income tax, there may be better strategies but for most people, it’s a great way to save. (For more, see: 10 Ways to Effectively Save for the Future.)

Use Direct Deposit

Direct deposit is also an easy way to save effortlessly. The advantage is that you only have to make the decision to save once. After it is set up, it will run behind the scenes automatically. Instead of receiving a check that you have to bring to the bank to deposit (this takes way too much time and willpower), your paycheck can be automatically and directly deposited into a bank or investment account for you.

Take Advantage of Automatic Transfers

If your employer doesn’t offer direct deposit, you can still create a systematic savings strategy. Use automatic transfers through your bank to transfer money from your checking to a savings or investment account.

For example, you can tell your bank that you want to schedule an automatic transfer of $200 on the first of every month from your checking account to your investment account. These automatic bank transfers are slightly more time consuming to set up. But once they are set up, they run automatically without any other effort or action on your part.

Technology Can Help You Save

There are quite a few apps available that can make saving easier. They range from unobtrusive (rounding up on purchases and saving the difference) to extreme (pulling money out of your bank account based on the application’s algorithm). Because apps and technology change so quickly, the best bet is to search “apps to automatically save money.”

Most people experience the difficulty of choosing to save money that they would much rather spend, so it is best to employ some of these strategies to avoid the dilemma in the first place. (For more from this author, see: The 6 Biggest Sudden Wealth Mistakes.)

How to Make Yourself Save Money

Most advisors and financial experts will tell you that the only way to become wealthy is to save. The problem with saving is that most people get more value and joy from spending their extra money than they get from saving it. If you fall into this category, when faced with the choice of getting immediate joy from buying something right now versus saving for some distant time in the future, buying something today is a much more attractive choice.

Why is Saving Money So Difficult?

Imagine you and I were going to meet a week from today. For our meeting, I want to offer you a snack. You can choose a fruit or chocolate. Which one do you want?

When researchers did this experiment, they found that 74% of participants said they wanted fruit a week before the meeting but on the day of the meeting, 70% decided they wanted chocolate. Why did so many people say they wanted fruit only to change their mind to chocolate? It’s the same reason why it’s so painful to save for the future when instead we could spend the money today. (For more, see: Why Saving Money is Important.)
Those who chose the fruit were trying to make a healthy decision. Since the snack was a week away, it was easier to make a smarter choice. But when it came down to actually eating the snack, most of them changed their minds and decided to go for the less healthy snack instead. We put a large amount of value on right now and very little value on the future.
Here is another example: Would you prefer a 15-minute massage now, or a 30-minute massage in one day? If you are like most people, you said you wanted the massage right now. But if I ask you if you want a 15-minute massage in seven days or a 30-minute massage in eight days, what would your answer be?
Did you choose the 30-minute massage in eight days this time? The massage times are the same and the time between each option is the same as the last example. What’s going on here? The same effect is at work. We want it now, whether it is chocolate, massages, spending money, etc. Having a little piece of goodness right now is so much more appealing than having a whole lot more goodness in the future.
This can heavily impact our desire and motivation to save. We are told to save our money today so we can have a great retirement, but what we hear is, “deprive yourself of something you want right now because in forty years it might help you.”
Does this mean we are destined to spend a lot and save a little? If the choice is between guaranteed enjoyment now versus the possibility of enjoyment a few decades from now, then yes, possibly.
So, what’s the solution to the issue with saving money? Flip the script by eliminating your choices to not save. This is done by creating a systematic savings strategy. Rather thanput yourself in a situation where you have to decide between now or later, it’s better to avoid the decision altogether. The solution is generate enough willpower to set up your systematic savings strategy once and then you can forget about it. Here’s how you can do it:

Contribute to Your 401(k)

This is an easy way to save because you set it up once and then it runs automatically without any effort or decisions from you in the future. Every time you get paid, a small piece of your paycheck gets split off and put into your 401(k). The advantage of this approach is that the money doesn’t reach your bank account for you to spend. It also has the benefits of potentially saving you money in taxes. You may even get free money from your company - which is called a company match. If you pay little or no income tax, there may be better strategies but for most people, it’s a great way to save. (For more, see: 10 Ways to Effectively Save for the Future.)

Use Direct Deposit

Direct deposit is also an easy way to save effortlessly. The advantage is that you only have to make the decision to save once. After it is set up, it will run behind the scenes automatically. Instead of receiving a check that you have to bring to the bank to deposit (this takes way too much time and willpower), your paycheck can be automatically and directly deposited into a bank or investment account for you.

Take Advantage of Automatic Transfers

If your employer doesn’t offer direct deposit, you can still create a systematic savings strategy. Use automatic transfers through your bank to transfer money from your checking to a savings or investment account.

For example, you can tell your bank that you want to schedule an automatic transfer of $200 on the first of every month from your checking account to your investment account. These automatic bank transfers are slightly more time consuming to set up. But once they are set up, they run automatically without any other effort or action on your part.

Technology Can Help You Save

There are quite a few apps available that can make saving easier. They range from unobtrusive (rounding up on purchases and saving the difference) to extreme (pulling money out of your bank account based on the application’s algorithm). Because apps and technology change so quickly, the best bet is to search “apps to automatically save money.”

Most people experience the difficulty of choosing to save money that they would much rather spend, so it is best to employ some of these strategies to avoid the dilemma in the first place. (For more from this author, see: The 6 Biggest Sudden Wealth Mistakes.)

How to Make Yourself Save Money

Most advisors and financial experts will tell you that the only way to become wealthy is to save. The problem with saving is that most people get more value and joy from spending their extra money than they get from saving it. If you fall into this category, when faced with the choice of getting immediate joy from buying something right now versus saving for some distant time in the future, buying something today is a much more attractive choice.

Why is Saving Money So Difficult?

Imagine you and I were going to meet a week from today. For our meeting, I want to offer you a snack. You can choose a fruit or chocolate. Which one do you want?

When researchers did this experiment, they found that 74% of participants said they wanted fruit a week before the meeting but on the day of the meeting, 70% decided they wanted chocolate. Why did so many people say they wanted fruit only to change their mind to chocolate? It’s the same reason why it’s so painful to save for the future when instead we could spend the money today. (For more, see: Why Saving Money is Important.)
Those who chose the fruit were trying to make a healthy decision. Since the snack was a week away, it was easier to make a smarter choice. But when it came down to actually eating the snack, most of them changed their minds and decided to go for the less healthy snack instead. We put a large amount of value on right now and very little value on the future.
Here is another example: Would you prefer a 15-minute massage now, or a 30-minute massage in one day? If you are like most people, you said you wanted the massage right now. But if I ask you if you want a 15-minute massage in seven days or a 30-minute massage in eight days, what would your answer be?
Did you choose the 30-minute massage in eight days this time? The massage times are the same and the time between each option is the same as the last example. What’s going on here? The same effect is at work. We want it now, whether it is chocolate, massages, spending money, etc. Having a little piece of goodness right now is so much more appealing than having a whole lot more goodness in the future.
This can heavily impact our desire and motivation to save. We are told to save our money today so we can have a great retirement, but what we hear is, “deprive yourself of something you want right now because in forty years it might help you.”
Does this mean we are destined to spend a lot and save a little? If the choice is between guaranteed enjoyment now versus the possibility of enjoyment a few decades from now, then yes, possibly.
So, what’s the solution to the issue with saving money? Flip the script by eliminating your choices to not save. This is done by creating a systematic savings strategy. Rather thanput yourself in a situation where you have to decide between now or later, it’s better to avoid the decision altogether. The solution is generate enough willpower to set up your systematic savings strategy once and then you can forget about it. Here’s how you can do it:

Contribute to Your 401(k)

This is an easy way to save because you set it up once and then it runs automatically without any effort or decisions from you in the future. Every time you get paid, a small piece of your paycheck gets split off and put into your 401(k). The advantage of this approach is that the money doesn’t reach your bank account for you to spend. It also has the benefits of potentially saving you money in taxes. You may even get free money from your company - which is called a company match. If you pay little or no income tax, there may be better strategies but for most people, it’s a great way to save. (For more, see: 10 Ways to Effectively Save for the Future.)

Use Direct Deposit

Direct deposit is also an easy way to save effortlessly. The advantage is that you only have to make the decision to save once. After it is set up, it will run behind the scenes automatically. Instead of receiving a check that you have to bring to the bank to deposit (this takes way too much time and willpower), your paycheck can be automatically and directly deposited into a bank or investment account for you.

Take Advantage of Automatic Transfers

If your employer doesn’t offer direct deposit, you can still create a systematic savings strategy. Use automatic transfers through your bank to transfer money from your checking to a savings or investment account.

For example, you can tell your bank that you want to schedule an automatic transfer of $200 on the first of every month from your checking account to your investment account. These automatic bank transfers are slightly more time consuming to set up. But once they are set up, they run automatically without any other effort or action on your part.

Technology Can Help You Save

There are quite a few apps available that can make saving easier. They range from unobtrusive (rounding up on purchases and saving the difference) to extreme (pulling money out of your bank account based on the application’s algorithm). Because apps and technology change so quickly, the best bet is to search “apps to automatically save money.”

Most people experience the difficulty of choosing to save money that they would much rather spend, so it is best to employ some of these strategies to avoid the dilemma in the first place. (For more from this author, see: The 6 Biggest Sudden Wealth Mistakes.)

How to Make Yourself Save Money

Most advisors and financial experts will tell you that the only way to become wealthy is to save. The problem with saving is that most people get more value and joy from spending their extra money than they get from saving it. If you fall into this category, when faced with the choice of getting immediate joy from buying something right now versus saving for some distant time in the future, buying something today is a much more attractive choice.

Why is Saving Money So Difficult?

Imagine you and I were going to meet a week from today. For our meeting, I want to offer you a snack. You can choose a fruit or chocolate. Which one do you want?

When researchers did this experiment, they found that 74% of participants said they wanted fruit a week before the meeting but on the day of the meeting, 70% decided they wanted chocolate. Why did so many people say they wanted fruit only to change their mind to chocolate? It’s the same reason why it’s so painful to save for the future when instead we could spend the money today. (For more, see: Why Saving Money is Important.)
Those who chose the fruit were trying to make a healthy decision. Since the snack was a week away, it was easier to make a smarter choice. But when it came down to actually eating the snack, most of them changed their minds and decided to go for the less healthy snack instead. We put a large amount of value on right now and very little value on the future.
Here is another example: Would you prefer a 15-minute massage now, or a 30-minute massage in one day? If you are like most people, you said you wanted the massage right now. But if I ask you if you want a 15-minute massage in seven days or a 30-minute massage in eight days, what would your answer be?
Did you choose the 30-minute massage in eight days this time? The massage times are the same and the time between each option is the same as the last example. What’s going on here? The same effect is at work. We want it now, whether it is chocolate, massages, spending money, etc. Having a little piece of goodness right now is so much more appealing than having a whole lot more goodness in the future.
This can heavily impact our desire and motivation to save. We are told to save our money today so we can have a great retirement, but what we hear is, “deprive yourself of something you want right now because in forty years it might help you.”
Does this mean we are destined to spend a lot and save a little? If the choice is between guaranteed enjoyment now versus the possibility of enjoyment a few decades from now, then yes, possibly.
So, what’s the solution to the issue with saving money? Flip the script by eliminating your choices to not save. This is done by creating a systematic savings strategy. Rather thanput yourself in a situation where you have to decide between now or later, it’s better to avoid the decision altogether. The solution is generate enough willpower to set up your systematic savings strategy once and then you can forget about it. Here’s how you can do it:

Contribute to Your 401(k)

This is an easy way to save because you set it up once and then it runs automatically without any effort or decisions from you in the future. Every time you get paid, a small piece of your paycheck gets split off and put into your 401(k). The advantage of this approach is that the money doesn’t reach your bank account for you to spend. It also has the benefits of potentially saving you money in taxes. You may even get free money from your company - which is called a company match. If you pay little or no income tax, there may be better strategies but for most people, it’s a great way to save. (For more, see: 10 Ways to Effectively Save for the Future.)

Use Direct Deposit

Direct deposit is also an easy way to save effortlessly. The advantage is that you only have to make the decision to save once. After it is set up, it will run behind the scenes automatically. Instead of receiving a check that you have to bring to the bank to deposit (this takes way too much time and willpower), your paycheck can be automatically and directly deposited into a bank or investment account for you.

Take Advantage of Automatic Transfers

If your employer doesn’t offer direct deposit, you can still create a systematic savings strategy. Use automatic transfers through your bank to transfer money from your checking to a savings or investment account.

For example, you can tell your bank that you want to schedule an automatic transfer of $200 on the first of every month from your checking account to your investment account. These automatic bank transfers are slightly more time consuming to set up. But once they are set up, they run automatically without any other effort or action on your part.

Technology Can Help You Save

There are quite a few apps available that can make saving easier. They range from unobtrusive (rounding up on purchases and saving the difference) to extreme (pulling money out of your bank account based on the application’s algorithm). Because apps and technology change so quickly, the best bet is to search “apps to automatically save money.”

Most people experience the difficulty of choosing to save money that they would much rather spend, so it is best to employ some of these strategies to avoid the dilemma in the first place. (For more from this author, see: The 6 Biggest Sudden Wealth Mistakes.)

The History of Insurance in America

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Insurance was a latecomer to the American landscape, largely because there were just too many known risks, and even more unknown ones. When it finally did make it over, it was supported by one of the most famous Americans in history. Let's take a look at the history of insurance in the U.S.

Benjamin Franklin and American Insurance

Not content with the titles of statesman, scientist, inventor or author, Benjamin Franklin added insurer to his collection. In 1752, the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire became the first mutual fire insurance company in America. Much like London in the 1600s, houses at this time were made almost entirely out of wood. Worse yet, the settlements that grew into cities were built close together. This was originally done for security reasons, but as cities grew, developers built homes very close to each other for the same reasons they do today—to fit as many homes as possible on their development plots.

Home and Life Insurance

The Philadelphia Contributionship for the Insurance of Houses from Loss by Fire set new standards for building houses because it refused to insure houses they considered fire hazards. The criteria they used to evaluate buildings would one day be reworked into both building codes and zoning laws. Seven years later, Franklin was also instrumental in getting the first life insurance company, the Presbyterian Ministers' Fund, off the ground. (For more, see: How Much Life Insurance Should You Carry?)
The various religious authorities at the time were outraged at the practice of putting a value on human life, but criticism cooled when it was seen that insurance worked to protect widows and orphans. The Industrial Revolution then brought the necessity of both business insurance and disability insurance to the forefront.
Throughout history, the types of insurance offered have been expanded in reaction to new risks. 1864 saw the Travelers Insurance Company sell its first accident policy. 1889 saw the first auto insurance policy. As time progressed, new types of insurance were being offered to keep up with the risks of an increasingly modern life. (For related reading, see: Five Insurance Policies Everyone Should Have.)

Scandal, Fraud and Regulation

With the explosion in insurance products and companies issuing them, the young industry was fraught with fraud and scandal. These ranged from issuing companies without the actual capital to pay claims running instead like fragile Ponzi schemes, to insurers demanding unfairly high premiums or forcing out competitors in an attempt to create a monopoly. Many state laws were passed to try and curb the problems, but in the early 1900s things were still unsettled. (For related reading, see: What Is a Pyramid Scheme?)
In 1935, the Social Security Act came into effect, providing unemployment compensation and retirement benefits. This took away some of the insurance companies' territory and it sent a clear signal that encouraged the industry to begin regulating itself for fear of more government involvement. World War II brought a wage freeze, and companies, desperate to attract the workers still in the country, started offering group life and health insurance. These big policies went to companies large enough to handle them. This swelled the big guys and starved out the little guys, along with most of the fly-by-night rabble. In 1944, the Supreme Court ruled insurance should be federally regulated, but Congress passed the McCarran-Ferguson Act in 1945, returning control to the state level.
The control remains mainly at the state level to this day, but after many insurance companies have been called to task over basing rates on gender, race and other factors, the insurance industry has become more egalitarian and affordable for the public. It has also become more complex to respond to the needs of the business. The size of insurance companies continues to increase as they merge with one another and other giants in the financial industry. Now insurance policies can be found at institutions offering a range of financial services.

Investing in Insurance

Insurance is always in demand because people and businesses are always looking for ways to minimize risk. The demand and range of coverage available has caused insurance policies to increasingly become investments in and of themselves. Because the level of insurance concentrated in urban centers could lead to huge losses and chaos in the insurance industry if a mega-disaster or succession of regular disasters occurred, the insurance industry has begun to repackage its risk in catastrophe-linked securities that trade on the market and mitigate insurers' risk. (For related reading, see: The Financial Effects of a Natural Disaster.)

Insurance Today

The internet changed the insurance industry by blowing the field wide open. Now people can go online to find the cheapest rate, even as companies shop internationally for the right coverage. This is one source of motivation for companies to merge with other financial services—the increase in size gives them a global market, and the integration of services gives them a domestic advantage with customers who are more concerned with convenience than price.

The History of Insurance in America

          

Insurance was a latecomer to the American landscape, largely because there were just too many known risks, and even more unknown ones. When it finally did make it over, it was supported by one of the most famous Americans in history. Let's take a look at the history of insurance in the U.S.

Benjamin Franklin and American Insurance

Not content with the titles of statesman, scientist, inventor or author, Benjamin Franklin added insurer to his collection. In 1752, the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire became the first mutual fire insurance company in America. Much like London in the 1600s, houses at this time were made almost entirely out of wood. Worse yet, the settlements that grew into cities were built close together. This was originally done for security reasons, but as cities grew, developers built homes very close to each other for the same reasons they do today—to fit as many homes as possible on their development plots.

Home and Life Insurance

The Philadelphia Contributionship for the Insurance of Houses from Loss by Fire set new standards for building houses because it refused to insure houses they considered fire hazards. The criteria they used to evaluate buildings would one day be reworked into both building codes and zoning laws. Seven years later, Franklin was also instrumental in getting the first life insurance company, the Presbyterian Ministers' Fund, off the ground. (For more, see: How Much Life Insurance Should You Carry?)
The various religious authorities at the time were outraged at the practice of putting a value on human life, but criticism cooled when it was seen that insurance worked to protect widows and orphans. The Industrial Revolution then brought the necessity of both business insurance and disability insurance to the forefront.
Throughout history, the types of insurance offered have been expanded in reaction to new risks. 1864 saw the Travelers Insurance Company sell its first accident policy. 1889 saw the first auto insurance policy. As time progressed, new types of insurance were being offered to keep up with the risks of an increasingly modern life. (For related reading, see: Five Insurance Policies Everyone Should Have.)

Scandal, Fraud and Regulation

With the explosion in insurance products and companies issuing them, the young industry was fraught with fraud and scandal. These ranged from issuing companies without the actual capital to pay claims running instead like fragile Ponzi schemes, to insurers demanding unfairly high premiums or forcing out competitors in an attempt to create a monopoly. Many state laws were passed to try and curb the problems, but in the early 1900s things were still unsettled. (For related reading, see: What Is a Pyramid Scheme?)
In 1935, the Social Security Act came into effect, providing unemployment compensation and retirement benefits. This took away some of the insurance companies' territory and it sent a clear signal that encouraged the industry to begin regulating itself for fear of more government involvement. World War II brought a wage freeze, and companies, desperate to attract the workers still in the country, started offering group life and health insurance. These big policies went to companies large enough to handle them. This swelled the big guys and starved out the little guys, along with most of the fly-by-night rabble. In 1944, the Supreme Court ruled insurance should be federally regulated, but Congress passed the McCarran-Ferguson Act in 1945, returning control to the state level.
The control remains mainly at the state level to this day, but after many insurance companies have been called to task over basing rates on gender, race and other factors, the insurance industry has become more egalitarian and affordable for the public. It has also become more complex to respond to the needs of the business. The size of insurance companies continues to increase as they merge with one another and other giants in the financial industry. Now insurance policies can be found at institutions offering a range of financial services.

Investing in Insurance

Insurance is always in demand because people and businesses are always looking for ways to minimize risk. The demand and range of coverage available has caused insurance policies to increasingly become investments in and of themselves. Because the level of insurance concentrated in urban centers could lead to huge losses and chaos in the insurance industry if a mega-disaster or succession of regular disasters occurred, the insurance industry has begun to repackage its risk in catastrophe-linked securities that trade on the market and mitigate insurers' risk. (For related reading, see: The Financial Effects of a Natural Disaster.)

Insurance Today

The internet changed the insurance industry by blowing the field wide open. Now people can go online to find the cheapest rate, even as companies shop internationally for the right coverage. This is one source of motivation for companies to merge with other financial services—the increase in size gives them a global market, and the integration of services gives them a domestic advantage with customers who are more concerned with convenience than price.