Ncaa Player Insurance: What's Covered For Life?

The NCAA does not provide life insurance to its players. However, it does require every student-athlete to have personal insurance, which can be held by the student, their parents, guardians, or their school. The NCAA also provides a Catastrophic Injury Insurance Program with a $90,000 deductible, but it does not mandate colleges to provide insurance coverage for the deductible.

The NCAA's Catastrophic Insurance Program

The program defines a "covered event" as:

• A Qualifying Intercollegiate Sport competition scheduled by the Insured Person's Participating School
• Official team activities
• Conditioning
• Practice sessions

Any injury that results in $90,000 worth of medical bills will be covered by the Catastrophic Insurance Program. It is not about the severity of the injury, but rather the cost. Therefore, an injury will only be covered by the program if the cost of the injury exceeds $90,000. The program is designed to pay for the one-time treatment of an athlete following a "catastrophic" injury and does not cover medical expenses that a student-athlete may need for future treatment.

The program provides true catastrophic injury benefits for individuals who are totally or partially disabled as defined in the policy. These benefits include special benefits for home and vehicle modifications, family counseling, rehabilitation, and college or vocational education. The policy defines "total disability" as the insured person suffering an irrecoverable loss of use of both arms, both legs, or one arm and one leg within two years of the date of a covered accident and as a result of that covered accident. The policy also defines what is meant by "partial disability".

The NCAA's Exceptional Student-Athlete Disability Insurance Program

The Exceptional Student-Athlete Disability Insurance (ESDI) program is an insurance coverage offered by the NCAA to a select group of elite athletes. The program was instituted to protect student-athletes from injury concerns and attempts by agents to lure them away from school and into professional leagues. The program initially only covered football and men's basketball but has since expanded to include other sports.

To be eligible for the ESDI program, a student-athlete must have remaining athletic eligibility and demonstrate professional potential, which is often determined with the help of professional scouting services. The program is not limited to specific sports, and other student-athletes may be eligible for coverage on a case-by-case basis.

The ESDI program provides disability insurance coverage for permanent total disability and presumptive disability. The policy is paid for by the student-athlete or their family, and they are automatically eligible for a loan to cover the premiums. The premiums are relatively affordable due to the group nature of the program, which allows the insurer to share administrative costs and spread the risk. The maximum policy term is 24 months, and it pays out in a single lump sum after the elimination period, which is typically 12 months from the date of total disability determination.

The ESDI program has seen high participation, with between 100 and 120 student-athletes enrolling per season. However, there have been very few successful claims, with fewer than half a dozen claims made in the past 15 years. The low number of claims can be attributed to modern medicine's ability to repair most sporting injuries.

While the ESDI program provides valuable protection for elite student-athletes, it has been criticised for benefiting member institutions more than the athletes themselves. The program incentivises student-athletes to stay in college, potentially earning the NCAA and its member institutions more money, while the athletes pay for insurance that rarely pays out.

Loss of Value Insurance

Loss of Value (LOV) insurance is intended to protect elite student-athletes against the risk that their draft stock will slip because of an injury or illness, which could result in a smaller signing bonus and pro contract than they would have earned before the illness or injury. It is typically purchased for the year leading up to the top athlete’s draft eligibility.

LOV insurance is not provided by the NCAA. Instead, it is purchased through a private insurance company, with premiums ranging from $4,000 to $25,000 per $1 million of insurance coverage. The insurance is only recommended for athletes projected to be top-round draft picks.

LOV insurance covers the difference if a student-athlete’s future contract value decreases below a predetermined amount due to a significant injury or illness suffered during the policy’s designated coverage period. The coverage period typically lasts for the athlete's college career.

There are limitations and exclusions to LOV insurance. These include pre-existing injuries, illnesses, and other performance-related realities, such as drug and alcohol use, criminal acts, off-field issues and injuries, as well as poor performance during the season or at pre-draft events.

The NCAA does offer permanent, temporary disability (PTD) insurance through the Exceptional Student-Athlete Disability Insurance Program.

Permanent Total Disability Insurance

Permanent Total Disability (PTD) insurance is a type of insurance that protects athletes against career-ending injuries or illnesses. It provides a financial safety net and helps cover medical and rehabilitation costs, as well as living expenses for the athlete and their family. PTD insurance is especially important for athletes in high-risk sports, where the likelihood of a career-ending injury is higher.

In the context of the NCAA, the organisation does offer some disability insurance through its Catastrophic Injury Program. This program provides medical, true catastrophic injury, and death benefits. However, there are certain limitations and flaws in the program. For example, there is a time limitation for reporting and assessing injuries, and it may not adequately cover long-term or future medical expenses for injuries such as concussions.

Additionally, the NCAA offers the Exceptional Student-Athlete Disability Insurance (ESDI) program, which is available to a select group of elite athletes with professional potential. This program provides disability insurance coverage in the event of a career-ending injury but has been criticised for its low claims rate and the fact that it is paid for by the student-athlete or their family.

While the NCAA does provide some disability insurance options, there have been calls for the organisation to take a more comprehensive approach to student-athlete healthcare and protect their athletes for the long-term effects of injuries.

Loss of Value Insurance Riders

Loss of Value (LOV) insurance is intended to protect elite student-athletes against the risk that their draft stock will slip because of an injury or illness, which could result in a smaller signing bonus and pro contract than they would have earned before the illness or injury. It is typically purchased for the year leading up to the top athlete’s draft eligibility.

LOV insurance covers the difference if a student-athlete’s future contract value decreases below a predetermined amount due to a significant injury or illness suffered during that time. It requires medical underwriting, and, like other types of insurance, includes limitations or exclusions for certain pre-existing injuries, illnesses, or other performance-related realities. These could include:

• Osteoarthritis or degenerative conditions
• Drug and alcohol use
• Mental, nervous, or psychological disorders
• Off-field issues and injuries, including team morality clauses
• Poor performance during the season
• Poor performance at pre-draft events, including combines
• A rise in the draft value of other athletes due to superior performances, etc.

LOV insurance coverage is available as a rider on a permanent total disability policy. The NCAA does not offer LOV insurance, so student-athletes or universities who view LOV insurance as a viable option must purchase coverage through a private insurance company that specializes in this coverage, such as International Specialty Insurance or Lloyd’s of London.

The NCAA recommends that only projected top draft picks purchase LOV insurance. Athletes with lower projections may have a hard time proving their projected values if they need to file an LOV insurance claim, and may see their claims rejected as a result.

When high school or college athletes or universities opt to purchase loss of value insurance riders, their premiums can increase by an estimated $4,000 per every $1 million of insurance coverage. This amount is added onto the existing $7,500 (or more) premium per $1 million of permanent total disability insurance that the NCAA offers.

For example, Jake Butt, a Michigan tight end, took out a $2 million LOV rider on his $2 million permanent total disability insurance policy before suffering an ACL injury in Michigan’s Orange Bowl loss to Florida State. After his injury, the Denver Broncos picked him up in the fifth round of the NFL draft, and his policy—which took effect in the middle of the NFL draft’s third round—paid out about $543,000 tax-free.

Frequently asked questions