Feel the LOV

Specific types of disability insurance can protect a college athlete’s financial future in the wake of a devastating illness or injury that – even if a full recovery is expected – ultimately impacts their prestige, potential, and professional payday.

Ahead of big-ticket events like the NFL Draft in April, college athletes should look at how other players have used these unique insurance options. This will help them protect their legal and financial interests as they position themselves for a career in professional sports.

How a Loss of Value (LOV) Rider Benefits College Athletes

Despite their access to the most updated protective gear and equipment, an athlete always assumes the risk of a career-disrupting injury or chronic illness. The best protection for any collegiate athlete on or off the field is with a permanent total disability (PTD) coverage sold by private market insurers, with a “loss-of-value” (LOV) rider attached.

LOV is coverage purchased along with career-ending, permanent total disability coverage that protects an athlete who suffers a less-than-career-ending injury before the draft, or a sickness or injury in the year before a professional athlete is a free agent (and thereby losing the value of future expected earnings). An LOV rider for a college athlete could pay the player a fixed sum for each draft slot or spot the player drops because of a sickness or injury that impairs playing ability and, thus, the amount of signing money or contract a pro team might offer.

A similar contract for an athlete who is already a professional might offer this rider for an injury or sickness within a fixed time period before the athlete becomes eligible for the anticipated pay day that accompanies free agency. Essentially, the LOV rider offers financial loss coverage for an athlete who can still play after an injury, but for whom the hiring market consequently views as less valuable than before the injury or sickness occurred.

A Look at the Stats

Numbers and gains on the field will put a college player on the radar of a professional team. But anyone perceived to be a physical liability will inevitably move down the hype list. Before we dwell on the negative, let’s review four key positions in the first round of the 2022 NFL draft, ranging from top to bottom:

#1 - $41 million.

#10 - Nearly $22.6 million.

#20 - More than $15 million.

#30 – $12.9 million.

These are huge salaries, of course, but it’s also notable that there’s nearly $30 million difference between the #1 and #30 spots in the NFL draft. Also, note how the #10 draft pick will earn half of that of the top spot. All it takes is an injury or disabling sickness to cause a drop in the lineup, which an LOV rider attached to a permanent total disability policy could protect against.

Calculations of LOV rider insurance vary from player to player. Considering the salaries at stake for those projected to be selected early in the draft, underwriters might offer LOV riders ranging between $1 million and $10 million.

Policy thresholds are often in flux, but can include more than half of the new rookie’s contract. With so much at stake it’s not surprising that LOV claims are often hotly contested and heavily litigated.

Award Winners as Case Studies

The value of an LOV rider is intermittently brought to the forefront of sports media. One notable example was that of Jake Butt, a rising star in college football in 2015 and 2016 who suffered a torn ACL in the Orange Bowl while playing for the Michigan Wolverines during his final collegiate game. The Ozzie Newsome award-winning tight end was projected to be an early round pick by NFL draft analysts in 2017, but likely due to the injury, was drafted in the fifth round by the Denver Broncos. Furthermore, most first-round contracts are guaranteed, unlike those of the second round and beyond.

Butt had wisely purchased an LOV rider and a permanent total disability protection at a reported $25,000 prior to the injury, and collected nearly $150,000 for being drafted past the third round, according to published reports.

When added to the $300,000 signing bonus, Butt was recouping huge losses on the first day he became a professional athlete, which was fortuitous since his career lasted less than five years.

Rising stars should look to Jake Butt’s LOV rider purchase as a case study in good financial risk management. Even a current Heisman Trophy winner like Bryce Young should have an LOV rider attached to his permanent career-ending insurance on his risk radar.

While Young is expected to be named among the top spots for the 2023 NFL draft, the star quarterback for the Alabama Crimson Tide suffered a shoulder injury in 2022 that had many speculating on his long-term effectiveness and viability. Journalists then weighed in on Young’s physical stature and whether his body could withstand the impact of being tackled by bigger and faster players in the pros on a weekly basis.

Any further damage to Young’s shoulder – if he manages to fully recover from the injury – could cause a crucial and costly drop in his NFL 2023 draft. In such an event, valuable slotted LOV riders attached to a permanent, total career-ending policy protection would be ideal. A seasoned disability insurance lawyer who handles high stakes athletes’ insurance claims can help an athlete file an insurance claim based on LOV riders or permanent career-ending claims.

Unfortunately, coverage disputes have dogged private permanent total disability policies. Carriers have argued that players misrepresented their health, that pre-existing conditions preclude coverage, or that the player isn’t as sick or injured as they claim to be. But those disputes do not hold a candle to the volume and intensity of legal battles ignited by LOV and a drop in the draft or slot protection.

The link between injury and financial outcome, or even defining the nature and cause of the injury or sickness for purposes of a coverage determination, often prove much murkier.

Legal Options For College Athletes

The NCAA does not offer LOV riders to its permanent total disability coverage at this time, but this rider is available in the private market, and a more formal precedent may be set if and when a federal framework better defines a student-athlete’s employment status.

Furthermore, it is no surprise that insurance companies are traditionally not so quick to pay out on these multi-million dollar claims. College and amateur athletes with professional aspirations should consult with an experienced disability insurance lawyer who can make critical legal and financial plays that protect them on and off the field.