College football has become such a big business for the large colleges and universities across the United States. People come out by the droves as their teams begin to embark this season on winning a college football championship, and we’ll know in about five months who emerges victorious. With the importance of key stars on each of the teams, there is a new ‘tricky’ business of buying insurance on the superstars of these college football teams.
Recently, it was revealed that top ranked Clemson quarterback DeShaun Watson took out two very important insurance policies against a career ending injury. The first was a $5 million dollar total disability policy and the other was a $5 million loss of value policy.
When it comes to total disability, think about this in the genre of you buying an own occupation disability policy. When you buy disability insurance, you can purchase a policy to cover your own particular occupation or any occupation at all. The reason you want to buy an own occupation policy is that the goal of the disability insurance should be to protect your family in case you cannot do your job. In this case, the players who purchase a total disability policy, can collect if they sustain an injury on or off the field that allows them no ability to play football again. There are ways you can attempt to come back from an injury and still collect, but once you play more than four games the policy will cease to pay them anymore.
A loss of value policy is still associated with injury, but it is designed to protect the player from future earnings if they end up slipping in the draft due to an injury. Think about a player who sustains a major knee or back injury and because of that particular injury they may not earn as much as expected. Imagine a player who is expected to go in the first round, but then slips to the sixth round due to the uncertainty of the injury.
What’s tricky about this in my mind is that players aren’t supposed to receive compensation for being an amateur athlete at the college level. The premiums on these policies are typically $10,000 for every $1 million of coverage and now the schools are allowed to pay them for the athlete. Isn’t that really a form of compensation? Or is it just part of the big old business we call college football?
Too many quarterback sacks might just be costly for one organization…. The insurance company.
Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.
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