ELITE ADVISOR BEST PRACTICES
Can Anyone Cover That Speedy Wide Receiver?
What advisors need to know about protecting professional athletes and entertainers—and those who employ them
By Ted Tefaro
- Having high-profile professional athletes and entertainers on your client roster can be a major coup—just make sure you understand the career risks they face.
- The physical nature of professional sports coupled with a compressed earnings career places disability insurance in the center of a solid wealth management plan.
- Contract coverage is also available for teams or sponsors looking to protect their most valued players and for concert promoters protecting their top-billing performers.
As we go to press with this article, a memorable World Series has just been completed, the National Football League regular season is at its midpoint, and professional hockey and basketball are under way.
For sports fans, it’s that magic time of year when all four major professional team sports, plus college football and the Major League soccer playoffs, are all in swing. But rarely a day goes by without reports of another high-profile athlete in trouble with the law or suffering from a serious, potentially career-ending injury.
Chances are you have high-earning professional athletes or entertainers on your client roster. They’re high up on the stat rankings, draft board, leader board or pop charts. But strenuous demands on their bodies require unique insurance coverage to protect their affluent lifestyles.
There’s also a good chance that there are serious holes in their game plan for protecting potential future earnings or non-guaranteed contracts. Contract coverage is also available for teams or sponsors looking to protect their most valued players and for concert promoters protecting their top-billing performers.
- A young baseball player in the last year of his first professional contract was soon to become one of the league’s top free agents. If injured in the final year of his current contract, his future multimillion-dollar contract is at risk. Does he have a personal disability policy that will pay him a lump sum payout in the event of a career-ending injury?
- A professional basketball team was looking to protect the guaranteed contract made to a key player. Since the team’s obligation to the player was effective immediately upon signing the contract, Interim Life Protection was required. By working with the right insurance specialist, you can have an additional $20 million of “Contract Performance Indemnity” coverage for 90 days while the life underwriting is completed.
The physical nature of professional sports coupled with a compressed earnings career places disability insurance in the center of a solid wealth management plan. With average annual salaries exceeding $3 million a year for the four major professional team sports, it’s obvious the stakes are very high. After all, an athlete’s greatest asset is the ability to perform. Therefore, it’s imperative that advisors protect against the risk of disability cutting a sports career even shorter.
Insuring high-profile entertainers
Like professional athletes, entertainers are unique and not easily replaced. Whether protecting a major record label against the loss of a marquee artist or a motion picture production against the loss of a key star who pilots his plane to and from the set each day, one thing is sure: the show must go on. Insurance is critical. Clearly, in the world of concerts and multi-city tours, Non-Appearance Insurance is the cornerstone of tour insurance.
Top entertainers from film, television and music all earn tremendous incomes. Disability insurance should sit at the heart of their financial plan. Make sure you consult with a high-risk insurance specialist who can develop and deploy a unique policy geared to the specific nature of their occupations. They should have the expertise to provide these and other specialized policies:
- High-Limit Disability and Key Person Coverage
- Catastrophic Accidental Death
- Contractual Indemnification
- Failure-to-Sign Coverage
- Interim Life Insurance
- Coverage for risks that may void guaranteed contracts
When you cater to elite athletes and entertainers, you’re also catering to exceptional risks. Make sure you are working with the right partner to ensure a long-term relationship with your high-profile clients. There’s no substitute for word-of-mouth referrals. Think about the multiplier effect of a celebrity’s endorsement of your practice.
This brief video has more.