The First Million-Dollar Policy, And Other Stories From The 1890s
A million-dollar life insurance policy is not a big deal now but until 120 years ago it was unheard of. In Britain, the banker Lord Rothschild was said to be insured for about £250,000 or $1.2 million, but not with one company. “He has, in fact, practically filled up all the London and most of the provincial offices,” says a report in The Liverpool Herald of November 5, 1898.
The million-dollar record for “a single life held by a single company” was set a year earlier when Mutual Life Insurance Company of New York insured American multi-millionaire George W Vanderbilt just before he embarked on his world tour on December 8, 1897.
It was a “twenty-payment life contract, with a yearly premium of $35,000,” said The New York Times of December 9. “At the end of twenty years the payments cease, and the principal becomes due at his death.”
At the time it was said, “Mr Vanderbilt is a man of sturdy constitution, of regular habits, and only about thirty five years of age.” But he died in 1914, before the 20 premiums were paid.
Did Mutual Life lose money on its million-dollar risk? Probably not, judging by this comment in the paper Barbour County Index on February 23, 1898. While other papers gushed over the value of Vanderbilt’s policy, this paper remarked:
“It is dollars to doughnuts that this large insurance costs Mr Vanderbilt but little. A Philadelphia insurance solicitor once told the writer that he had been informed by John Wanamaker that he never pays anything for insurance — that giving a company the right to say he is insured by it for $100,000, more or less, is worth more as an advertisement than the amount of the premium.”
Insuring Vanderbilt was probably the best advertisement and endorsement Mutual Life could have hoped for 120 years ago. Insurers were hardly the kind to throw away their money. In Britain, it was said Lord Rothschild’s insurers watched over their ‘risk’ intently.
“The great financier is in the habit of travelling to town every day, by a certain train, from his country residence, Tring Park, Hertfordshire. And every day, by the same train, there journeys with him a young, alert, keen-visaged man, whose business is a mystery to everyone — to everyone, that is, save the insurance companies whose confidential agent he is. It is his duty to watch over — in the interest of his employers, of course — the safety of the emperor of the financial world.”
Although Nathan Rothschild was the most heavily insured man at the time and George Vanderbilt held the biggest insurance policy issued by a company, American businessman Theodore Havemeyer, ‘the greatest sugar refiner in the world’, was said to have paid the single largest premium of more than half a million dollars to insure five members of his family in 1889. “The exact sum for which the cheque was drawn was £115,659,” says The Liverpool Herald.
Prince Henry of Prussia also bought an enormous insurance policy just before he took command of the German navy in Chinese waters. The Herald says it was worth “about £180,000 in our money” or roughly $875,000, but it only covered death by assassination.
“The risk was particularly specified to death by the hand of an assassin only. It would be interesting to know exactly what was passing in the royal insurer’s mind when he entered into this strange compact. It may have been that he was thinking of the fate which so nearly overtook the present czar of Russia when in the same quarter of the globe some years back.”