The 5 Largest Life Insurance Payouts in History

An offshore earthquake in Japan caused one of the biggest insurance payout events in history

For many, life insurance policies offer peace of mind in knowing that their families and loved ones will be taken care of in the event of their untimely passing. The motivation behind purchasing life insurance is to guard the owner of the policy's from any financial obligations in the event that something happens to them. The six detailed here are among the largest and highly publicized life insurance payouts in history.

The King of Pop - $3 Million

Michael Jackson died unexpectedly on June 25, 2009, leaving the world to wonder what would have come out of his massive comeback tour This is It. Though the latter part of his career had been shrouded by controversy and legal woes, his extensive career had cemented his name in the history books as the forever-reigning king of pop. Reportedly, the policy was originally for $20 million, but was ultimately reduced to $3 million in the aftermath of the autopsy and surrounding legal matters pertaining to Jackson's cause of death.

While much of the money will go to his children, Paris and Blanket, the estate's executors continue to seek legal action in the matter of his untimely death.

Racing Legend Dale Earnhardt - $3.7 Million

When NASCAR legend Dale Earnhardt died in a tragic accident during the last lap of the 2001 Daytona 500 at Daytona International Speedway, it shook the racing community. There was some controversy between his racing company, Richard Childress Racing, and the company who issued the $3.7 million policy. Reports showed that the insurance company had refused to pay on the grounds that the driver had not taken a required physical.

Ultimately, the courts sided with Earnhardt's racing team, and an agreement was struck. The racing industry lost a legend, but his family found solace in knowing their financial obligations would be taken care of.

Japanese Earthquake and Tsunami - $25 Billion

In a matter of moments, the coast of Japan was devastated by a massive earthquake that struck offshore. The tsunami that resulted wiped out dozens of villages and claimed more than 15,000 lives, leaving families and communities devastated. Hundreds of thousands of people were uprooted from their homes and remain displaced today.

The oceanic earthquake that caused it all was a magnitude 9.0 undersea megathrust earthquake, and was the largest ever to hit the coast of Japan. Furthermore, it was the fifth largest earthquake in the world since the scientific community began recording such occurrences in 1900. The earthquake shifted the entire island of Japan eight feet east, and shifted the earth on its axis by up to 25 centimeters. It was so significant that it produced sound waves detected by the GOCE satellite.

As the death toll rose, so did insurance claims across the country. It's reported that an estimated $25 billion was collected in life insurance claims by families of the victims.

In a matter of a few hours, an offshore earthquake in Japan resulted in the second highest level of insurance claims ever made. Tens of thousands of people were displaced, entire villages were leveled, and a nuclear reactor was damaged to the point of becoming completely unstable. It will still be years before the final total is available, but there is little doubt that this natural disaster will take its place in the history of insurance claims.

Hurricane Katrina - $104 Million

When Hurricane Katrina hit the gulf coast on August 23, 2005, it quickly became one of the most devastating natural disasters in American history. The massive storm hit land as a category 3 hurricane, and pelted the Louisiana coast for seven days. When all was said and done, more than 2,000 people were killed, and the hurricane caused more than $81 billion in property damage.

As if the storm wasn't enough, levees failed and floodwaters engulfed more than 80 percent of the city, which remained under water for weeks in the storm's aftermath. All in all, the insurance tally came to around $45 billion dollars, $104 million of which was on account of life insurance.

9/11 Victims - $38 Billion

The U.S. was attacked on Sept. 11, 2001, taking the lives of 2,975 people. Until a natural disaster struck four years later, the largest attack on American soil represented the biggest insurance payout event in history, with a collective nearly $40 billion being paid to families of the victims.

Each of these events triggered major payouts on the part of life insurance companies, and illustrate how important it is to plan for the worst. Life insurance policies exist to offer peace of mind to those who have the fortitude to plan for it.

Posted by James Fried on Sunday December 15 2013, 10:33 AM EDT. All trademarks acknowledged. Filed under Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0