Once upon a time, there was a little town called Potterville, population — well, big enough. Potterville had a bookie named Harry. Harry was a happy bookie, taking bets on horse races and football games, and paying off with a smile when he lost.
Harry was also a smart bookie, which is why he always paid off with a smile; he always made sure his bets were covered, and he was making a little extra money to pay his rent and keep him in sharkskin suits, snappy fedoras, and two-tone shoes.
One day George comes to Harry. George is 25 years old and just married, and he’s worried that if he dies, his new bride Mary will be impoverished and unable to bury him. So he wants to make a bet. If George dies, Harry will pay Mary $1000, which will pay for the funeral and leave enough for Mary to pay off the ramshackle old house they just bought on the edge of town.
Harry, as a smart bookie, knows that the odds of George dying in the next year are about 1000 to 1. So he takes the bet, asking George to give him $2 and promising to pay Mary $1000 if it turns out George’s number is up.
Now Harry, being a smart bookie, knows that he should put away $1000 for that year so he can pay off the bet if George should happen to jump off a bridge or something, but he hates to tie up that whole $1000 for a year. So Harry starts talking to other people; a lot of them are also worried what will happen to their families if they are run over by a milk truck or something, so they want to make a similar bet.
Now, Harry thinks this is a pretty cool business, and he has a lot more people who want to protect their families against bad things happening than who want to bet on Soap Factory in the 8th. Bert the cop comes in; he’s a little older, and he’s got a risky job, so Harry charges him $10. Ernie the taxi driver he charges $5. Old Man Potter comes in: he’s, like, 90, in a wheelchair, smokes cigars. Harry figures his odds aren’t great, so he charges Mr Potter $400 — figuring the good die young but Potter is still likely to die soon.
Now, this really is a good business — he’s giving people some sense of security. He changes the name from “Harry’s Betting Parlour” to “Potterville Life Assurance.” Pretty quick, he can build a brick building on Main Street and change from the sharkskin suits to good conservative gray flannel. Still the same business, but “insurance” sounds so much more respectable. And here’s the funny thing: the more people he insures, the less he has to charge. See, the more customers he has, the less likely it is that a run of bad luck is going to use up all his money. And it’s a good thing, because it’s such a good business that Giovanni around the corner has closed his bookie parlour and opened his own insurance company; pretty quick both of them are competing on prices and service. He needs to be able to reduce that price or Giovanni steals his customers.
Uh, clients. That sounds more respectable too.
Then Oscar Barry, candidate for mayor, has this wonderful idea. Sometimes people die who don’t have insurance, and Potterville ends up paying for their funerals; sometimes people end up taking a collection to help the widows and orphans. Wouldn’t it be great if everybody had life insurance?
Of course, everyone thought it would be great. Even Harry and Giovanni thought it’d be great — after all, they made a little bit on every policy; the more policies they sold, the better, right? And Oscar is elected mayor, and he makes it a law that everyone over the age of 25 has to have life insurance.