Athletes getting in business of protecting their assets

Insurance provides peace of mind for elite performers

1/28/2013
BY RACHEL LENZI
BLADE SPORTS WRITER
BGSU assistant coach Dennis Hopson, a Bowsher grad, took out an insurance policy prior to his senior year at Ohio State.
BGSU assistant coach Dennis Hopson, a Bowsher grad, took out an insurance policy prior to his senior year at Ohio State.

In 1986, Dennis Hopson realized he had the likely prospect of a career in professional basketball. Still, with one year of eligibility remaining with the Ohio State men’s basketball team, Hopson and his family made a decision to protect an investment.

Hopson’s parents took out a million-dollar policy from Lloyd’s of London — a British insurance market that has insured everything from Bruce Springsteen’s voice to Troy Polamalu’s curly, waist-length hair. But in this case, it would protect Hopson if he suffered an injury that would end his prospects as a professional basketball player.

Twenty-seven years later, Hopson cannot remember how much his family paid on the premium. But he remembered that he didn’t initially know about obtaining insurance until discussing it with teammate Brad Sellers, whom the Chicago Bulls selected in the first round of the 1986 NBA draft.

“You hear your name, and the NBA general managers start talking about you,” said Hopson, a Bowsher graduate who is an assistant coach with the Bowling Green State University men’s basketball team. “And once you start hearing about it, then you start hearing about different ways to make sure you’re protected.”

The policy never paid out. Hopson stayed healthy, and the New Jersey Nets drafted him third overall in the 1987 NBA draft.

Hopson played professional basketball from 1987 to 2000, including five NBA seasons. Yet his decision to secure an insurance policy signified the early start of a trend that’s become more and more common among college athletes who have strong chances at a lucrative future in professional sports.

Pearce
Pearce

When it comes to the prospect of turning pro, elite college athletes can and most likely will cover their assets. Because a blown-out knee, a shattered femur, or a series of concussions could cost a future NFL, NBA, or NHL player millions. The NCAA offers a disability insurance program for student-athletes who have professional prospects and involves an application and approval process. The Los Angeles Times reported in 2011 that about 100 athletes — about 80 percent football players — participated in the program. But some college athletes go a step further and secure private insurance policies.

The attitude toward turning pro and any liabilities that could come before then, Hopson said, was different in 1986 than it is today.

“We probably thought a little different than what the kids think today,” Hopson said. “I don’t think we paid attention the way the kids do today.”

After the Detroit Red Wings selected Justin Abdelkader in the second round of the 2005 NHL Entry Draft, he played at Michigan State for three seasons before turning pro — and he said he and his family secured an insurance policy that would pay out if he sustained a career-ending injury while with the Spartans.

Conversely, Jordan Pearce, a goalie in the Detroit Red Wings system, didn’t have an insurance policy in place when he played hockey at Notre Dame from 2005-09.

“I can understand having it in football, because it can be a violent sport,” said Pearce, who spent 20 games with the Toledo Walleye and was recently recalled to Grand Rapids of the American Hockey League. “And there’s a lot of money involved in professional football.”

But Pearce understands the necessity of holding an insurance policy.

“Our livelihood is our bodies,” Pearce said. “It’s a great idea.”

Supporting hand

In October, 1990, the NCAA instituted a disability insurance program for student-athletes in football and men’s basketball — a program that later expanded to include baseball, men’s ice hockey, and women’s basketball over the next eight years. The program allows what the NCAA terms as “qualifying student-athletes” to purchase disability insurance contracts with preapproved financing.

Student-athletes must apply through the NCAA for financing and on its Web site, ncaa.org, the NCAA states that the student-athlete is obliged to repay the loan in full when either he or she signs a professional contract, when the disability benefits become available because of a covered injury or illness, or when the coverage is no longer in effect and the loan note matures.

While the NCAA has an application process for its program, the Exceptional Student Athlete Disability Program, some college athletes and their families opt to secure insurance through private companies or agencies outside of the NCAA.

The practice of insuring elite college athletes isn’t a new one, but it’s one that’s picked up steam within the last 10 years. Herschel Walker made national news in 1981 when, as a running back at Georgia, he took out a $1 million insurance policy from Lloyd’s of London.

Lewan
Lewan

In 2006, ESPN.com reported that at least four of Southern California’s top players had secured insurance policies collectively worth at least $9 million, including running back Reggie Bush, who held insurance policies that would have provided up to $9 million in coverage in the event of a career-ending injury.

In January, hours after the start of classes at Michigan, offensive lineman Taylor Lewan declared his intentions to remain in Ann Arbor rather than forgo his final season of eligibility with the Wolverines to enter this year’s NFL draft. When asked if he planned to purchase an insurance policy prior to the 2013 season, Lewan didn’t hesitate to answer in the affirmative.

Athletic department spokesmen at Bowling Green and the University of Toledo said there are not any student-athletes who hold disability insurance policies. Spokesmen at Michigan and Ohio State would not disclose information on student-athletes who hold those policies, citing privacy issues.

Kent Bradford, the vice president of Rich and Cartmill Insurance and Bonds in Oklahoma City, took it upon himself to research and eventually secure an insurance policy for his son, Sam, who returned to the University of Oklahoma football team in 2009, despite being projected as a high NFL draft pick earlier that year.

While the younger Bradford injured his shoulder midway through the 2009 season, it was not deemed a career-ending injury, and the St. Louis Rams selected Bradford out of Oklahoma with the first pick of the 2010 NFL draft.

As an insurance professional, Kent Bradford justified the decision for any athlete with bona fide professional prospects to purchase an insurance policy.

“For a professional athlete, a healthy body is a business asset, an asset that will help the athlete earn money,” Bradford wrote in an email to The Blade. “A disability policy is a way for them to insure that asset.”

But, Bradford added, the amount of insurance offered to a prospective professional athlete varies. An NCAA administrator determines the amount of coverage available through the organization’s insurance program, and Bradford explained that a private insurance company dictates the coverage, typically based upon the assessment of an athlete and where he or she is projected to be drafted.

“Most early first-round draft picks qualify for $5 [million] to $10 million in coverage, while a fifth-round [draft pick] may only qualify for $500,000 coverage,” Bradford wrote, adding that premiums in the private market are typically between $8,000 and $10,000 per $1 million of coverage.

A fallback plan

Richard “Big Daddy” Salgado founded New York-based Coastal Advisors, LLC, and his company provides disability and life insurance policies to professional football players. Salgado said that in the last 10 years, he’s insured more than 35 first-round NFL draft picks, including five this year.

In the practice of providing coverage for college and professional athletes, Salgado said that only twice he has seen insured athletes suffer career-ending injuries, thus needing to cash in an insurance policy. Neither of them, Salgado said, were his clients.

Likewise, in 2011 an NCAA spokesman told the Los Angeles Times that less than 10 policyholders have received payouts in the history of the NCAA’s program.

That policy may not make up for the riches that are lost to a career-ending injury or illness but, Salgado explained, a payout could provide a nest egg for an athlete to take the next step in life.

“God forbid that something happens, but that doesn’t mean you can’t work or get a job,” Salgado said.

Salgado, who played football at Maryland in the late 1980s, has seen a change in the lifestyles and attitudes of today’s college athletes. They’re more aware of training methods, nutritional intake, social media etiquette, and the information regarding any potential future they may have in professional sports, whether it’s the amount of money they stand to make — or the opportunity to safeguard their future outside of professional sports.

“But once you get hurt and you can’t come back, that’s it,” Salgado said. “You only get one crack at it. That’s the advice I give people. You don’t want to wake up to the day where you get hurt, knocked out or blow out an Achilles [tendon]. Nowadays, the medical advances are so much greater than when I played college football, but when you look at it, it’s really such a small amount, a small number, to protect millions of dollars that could be in the future.”

Contact Rachel Lenzi at: rlenzi@theblade.com, 419-724-6510 or on Twitter @RLenziBlade.