Pro Athletes’ Defense Against the Disabled List

Pro athletes need to be protected from serious, potentially career-ending injuries that can block their next big payday. Advisors can provide value by helping clients obtain the right sport-specific coverage.

By Chris Lack

Key Takeaways:

  • Professional athletes tend to have very short careers, but they can earn exceptionally high incomes during their prime playing days.
  • Pro athletes need to be protected in the event a serious, potentially career-ending injury interferes with their next big payday.
  • Disability coverage is for catastrophic injuries that could be career enders. The level of coverage varies by salary, sport and each player’s position and age.

There is probably no greater example of the term “human capital” than high-priced athletes. With the World Series just completed and the professional football, hockey and basketball seasons in full swing, you can’t turn on your TV these days without seeing these exceptionally gifted humans on full display.

A person who can throw a 95-mph fastball, toss a football 40 yards with pinpoint accuracy or put a ball nine inches in diameter through a hoop barely twice that size from 20 feet away is one of the most valuable assets on the planet. And befitting this status, that athlete needs to be protected should a serious, potentially career-ending injury interfere with his or her next big payday.

Take major league baseball. It is a high-stakes playing field in which the average annual salary in 2013 was just a tick over $3.2 million, and everybody plays for that next big contract. But at what risk?

A case in point is former Boston Red Sox outfielder Jacoby Ellsbury. In 2013, the young player was in his “free agent year” making $9 million per season, able to offer his services to any team that showed interest in signing him. After a slow start, his stats started to climb, leading even the usually acerbic Boston Globe writer Dan Shaughnessy to comment, “It’s looking more and more like (agent) Scott Boras will be able to get $100 million for Jacoby Ellsbury.” But Ellsbury had been injury plagued over the years, missing most of the 2010 and 2012 seasons due to serious injuries. Without a new contract or any other protection in place, Ellsbury was basically performing a financial high-wire act from the moment the 2013 season began.

Fortunately, Ellsbury emerged unscathed and put up impressive numbers in a postseason that culminated in a World Series championship for the Red Sox. Last December, his gamble paid off when he signed a seven-year, $153 million contract with the New York Yankees. If Ellsbury had gotten hurt—whether it was trying steal third base or during a pickup basketball game at his local gym—a lot of money would have been left on the table.

Taking less to earn more

Sometimes players forego their free-agency eligibility by signing a one-year “pillow contract” after a subpar season in the hope that they can earn more money after a better year. In 2009, Seattle Mariner third baseman Adrian Beltre was looking at free agency in 2010, but his paltry statistics—eight home runs, 44 RBIs and a .265 batting average—would have easily ruled out a big payday. Beltre wanted the security of a multiyear deal, but the Mariners weren’t offering him one, so he signed a one-year deal with the Boston Red Sox at $9 million—with the intent of putting up monster stats and inking a multiyear deal elsewhere. It was a risk. If Beltre blew out a knee, his prospects for a multiyear deal would have been gone. Beltre ended up having a huge year for the Red Sox—28 homers, 102 RBIs and a .321 batting average—and the next year, he inked a five-year, $85 million pact with the Texas Rangers. Nevertheless, he would have been wise to put a disability insurance protection plan in place to maintain a comfortable lifestyle if his season did not go according to plan.

Disability coverage for high-income athletes

Disability coverage is for catastrophic injuries that could be career-enders. The level of coverage varies by salary, sport, and each player’s position and age. Starting pitchers in baseball and quarterbacks in football are among the most highly compensated in their respective sports and thus have the most coverage. Coverage costs for an athlete earning $25 million per year can range from $350,000 to well over a million dollars a year. For the most part, coverage is a 24/7 umbrella—meaning the athlete is covered whether he blows out a knee driving for a layup in Madison Square Garden or driving for a layup in his neighbor’s driveway.

As with any successful professional, an athlete’s greatest asset is the ability to thrive in his or her chosen occupation—in this case, to play a sport. Given the compressed career lifespan, disability insurance protection can be critical, and each sport has unique characteristics to consider:

Baseball, basketball and hockey: MLB, NBA and NHL contracts are generally guaranteed for both death and disability risks. Disability insurance is critical for marquee players with considerable endorsement income and is usually purchased at maximum available levels when players are headed into free agency and expected to sign multiyear, multimillion dollar contracts. Collegiate athletes with first- or second-round draft pick expectations also need to secure protection against disabilities that would prevent them from signing professional contracts in their intended sports.

Football: Except for a few truly standout players, NFL contracts are generally not guaranteed. If they can’t play, they won’t get paid. The average NFL career lasts only three years, and most players will not achieve similar earnings outside the stadium after they hang up their cleats. So, advisors working with NFL players should secure disability income protection to protect their expected income.

Golf and Tennis: There are no guarantees in golf or tennis outside whatever might be negotiated with a sponsor. PGA and ATP professionals ranked in the top 100 are generally considered insurable by the underwriters in this space. Advisors working with athletes in these sports should seek as much coverage as each player’s income can support.


Every time an athlete steps on the field, the court or the ice, they could be one step closer to a career-ending injury. As a result, an insurance policy that covers them against the loss of potential earnings should be considered every bit as important to protecting their livelihood as a face mask or batting helmet.

See this video our firm created if you’d like to learn more about protecting entertainers.

About the Author

Chris Lack is director of business development for the sports and entertainment division of Mahwah, N.J.—based Exceptional Risk Advisors. He can be reached at Chris.Lack@exceptionalriskadvisors.com or (201) 335-5939