Coach gets “extraordinary” benefit as well as another $2M signing bonus

University football coach to get $2M life insurance policy – and that’s just the annual premium

The University of Michigan has agreed to pay a $2 million annual life insurance premium for Jim Harbaugh, effectively increasing the football coach's pay to $7 million a year.

In a contract addendum that went into effect June 3, Harbaugh is the owner of the policy, meaning he can take withdrawals or loans from the policy. He also picked the beneficiary.

Michigan will make the payment each year from 2016 through 2021 if Harbaugh is coaching the Wolverines on Dec. 6 of those years. Because an initial $2 million payment was made in June, and another payment is due in December, Harbaugh actually will earn $9 million this year.

The university would get its money back, without interest, when Harbaugh dies, with the beneficiary receiving the money that remains after Michigan is paid.

Two other circumstances would allow for Michigan to get its money back. The university would receive the amount it paid for premiums, plus any remaining cash value, if the policy is surrendered or cancelled before Harbaugh's death, or the money would come from Harbaugh if he exercises his option to terminate the insurance arrangement if his employment contract is terminated.

The policy's death benefit is not stated in the contract addendum.

Andrew Zimbalist, a Smith College professor specializing in sports economics, said he knew of no other insurance arrangement similar to Harbaugh's.

“I'm sure there have been death benefits, but this is extraordinary,'' Zimbalist said.

Harbaugh is in the second year of a seven-year contract that began in December 2014. His base pay is scheduled to increase 10 per cent after the third year.

The Wolverines went 10-3 in his first season and are predicted by some to challenge Ohio State for the Big Ten East title this year.

Harbaugh received a $2 million signing bonus that raised his compensation to $7 million for 2015, ranking second to the $7.1 million earned by Alabama's Nick Saban.

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