It’s easy to assume that the rich and famous have enough money to last multiple lifetimes, and that they have access to some of the best financial advice on the planet.
But sometimes elite status, exorbitant amounts of wealth, and risky lifestyles can cause celebrities to either ignore the necessity of life insurance or fall prey to less-than-stellar advice.
Here are six celebrities who made unfortunate life insurance decisions.
|(AP Photo/Reed Saxon)|
1. Heath Ledger
On January 22, 2008, at the age of 27, actor Heath Ledger died from a drug overdose. Although he did have a will, it had been written three years prior to the birth of his and Michelle William’s daughter, Matilda, so his estate was left to his parents and sister. He also had a $10 million life insurance policy for Matilda, but the insurance company, ReliaStar, tried to deny a percentage of the benefits because of Ledger’s failure to disclose a speeding ticket, his recreational drug use, and the possibility that his death was a suicide.
Officials ruled that Ledger’s cause of death was accidental intoxication. In July 2008, attorney William Shernoff filed a lawsuit against ReliaStar Life Insurance Company on behalf of three-year-old beneficiary Matilda, and the parties reached a settlement out of court.
To his credit, Ledger had his estate and life insurance planning in place. Unfortunately, omitting information on his application, not updating his will to include his daughter, and mixing prescription drugs were not the best decisions.
|(AP Photo/Jae C. Hong)|
2. Larry King
In October of 2007, CNN talk show host Larry King filed suit against a Maryland-based insurance brokerage for poor advice. According to the lawsuit, The Meltzer Group persuaded King to invest in a series of “highly complex life insurance transactions,” which involved flipping insurance policies for profit.
In 2002, King purchased three policies with a total value of $10.5 million to protect his family. In 2004, King was advised on more than one occasion to purchase a life policy with a trust under his control, and then to resell his stake in that trust. In February of 2004, he used a trust to buy a $10 million life insurance policy and then sold it for $550,000. Later, in October 2004, he bought a $5 million policy and resold it for $850,000.
King profited $1.4 million on the policy sales, but gave up two life insurance policies, which totaled $15 million. King fell prey to questionable advice and says that the insurance agency should have warned him that his age and health might make buying replacement policies difficult.
|(AP Photo/Joel Ryan, File)|
3. Michael Jackson