"It gives me peace of mind," Watson told ESPN without specifying the amount of the policy.
The policy covers a debilitating, career-ending injury while at Clemson. The source told ESPN that Watson also has a $5 million policy for an injury that causes loss of value in the NFL draft.
As allowed by the NCAA, Clemson is paying for the premiums, which typically run about $8,000 to $10,000 per $1 million in coverage. Loss of value insurance pays out if a player drastically falls in the NFL draft because of injury.
When purchased by the school, the NCAA allows up to $10 million coverage for a career-ending injury and $5 million for loss of value injury.
Watson said Clemson's coaching staff recommended the insurance policies, and Clemson coach Dabo Swinney said he discusses those options with his players each year.
"We have a process in place at Clemson," Swinney said. "First of all, they have to qualify. Certain guys qualify for that. Every year, that's one of my checklist items -- to make sure our guys (know about it). Sometimes they don't want it, but I want to make sure they understand what's available and what their opportunities are."
Swinney said it's rare to collect on the policies.
"Very seldom do those things pay off," Swinney said. "You have a better chance to get struck by lightning than have a career-ending injury, but there is loss of value insurance as well. All of that stuff is available. We educate them. I'm big on that."
LSU running back Leonard Fournette has two $10 million insurance policies for career-ending injury and loss of draft value, CBSSports.com reported. Fournette said his parents, and not LSU, purchased those policies.