Forty-five-year-old Martin Jordan of St. Charles died in August 2009 during a visit to the beach in South Haven, Michigan.
His family filed a lawsuit saying more safety measures should have been in place to warn swimmers about the conditions.
The settlement includes $400,000 and a beach safety program.
"You want to do something to help somebody else that I think is what helps us move forward as a family is that we're making it better for somebody else," said Maureen Jordan, Martin's wife.
The settlement will be paid by South Haven and the Michigan Municipal Risk Management Association.