It wasn’t the first time an injury threatened the professional career of a star college player.
It was just that Willis McGahee’s injury in the 2003 Fiesta Bowl appeared so catastrophic, it put the health of exceptional college players directly in the spotlight.
For McGahee, billed as a can’t-miss, first-round NFL draft selection and the overall top pick by some scouts, it might have been the $2.5 million insurance policy that was his biggest ace in the hole that night.
Injury insurance is a top prospect’s security blanket and McGahee’s injury helped show a new generation of players and families why they need it.
The NCAA’s Exceptional Student-Athlete Disability Insurance Program is one option that players can turn to while others might choose to go a private route. The NCAA policy is available to athletes in football, men’s and women’s basketball, baseball and men’s ice hockey.
Players such as McGahee, Andrew Luck, Matthew Stafford, Jarvis Jones and Jermaine Gresham played their final college seasons with total disability insurance.
This season, Heisman Trophy winner Johnny Manziel of Texas A&M and potential No. 1 overall pick Jadeveon Clowney of South Carolina have purchased the same protection.
When Luck decided to stick around at Stanford for his senior season in 2011, he was already considered by many draft experts as the best quarterback prospect and perhaps the first overall pick after his junior year.
He also was in the unique position of having his father, Oliver Luck, close to the situation.
“Some kids build some incredible bonds with their teammates and really they feel like they want to finish something they started,” said Luck, who is West Virginia’s athletic director. “The critics are right in that it doesn’t make much financial sense to stick around for a year. But there’s something beyond the big contract and for Andrew, it was also the chance to get his degree from Stanford.”
A policy’s cost has been reported to be as much as $75,000 for total coverage.
Keith Lerner said that number seems excessive within the industry standards and the general number is more likely to be $9,000 for every $1 million of coverage annually.
The NCAA’s policy is capped with a collection value of $5 million.
In most cases, the NCAA allows the premiums or payments to be deferred, meaning they’ll be paid under a pre-stated schedule after a player signs a first professional contract.
“What this kind of insurance really does is help parents sleep at night,” Luck said. “What I do is talk to the parents of my athletes and obviously I have firsthand knowledge that the NCAA program is a very good program. They can make a decision without having to worry about getting hurt and having nothing.”
According to the NCAA, its program has a 24-month maximum policy term.
The policy provides 24-hour accident and sickness coverage, which includes playing and practicing in the student-athlete’s respective sport.
The policy also includes presumptive disability coverage, which means the insured athlete’s disability has been medically determined to be the result of (a) entire and irrecoverable loss of sight of both eyes or hearing in both ears, or (b) total and irrecoverable loss of use of one hand or one foot, or (c) quadriplegia, or (d) paraplegia; thus preventing him or her from participating in his or her sporting activity at the professional level.
The program administrator determines the amount of coverage available for each student-athlete based upon his or her prospective status in the upcoming draft.
HCC Life Insurance Company, U.S. Specialty Insurance Company or Avemco Insurance Company underwrite coverage, according to the NCAA.
One high-ankle sprain or broken leg could mean a lost career or the loss of millions in NFL draft position.
It’s a question of risk and the reason Total Planning’s Keith Lerner incorporated disability insurance into his company’s strategy long ago.
“These players are getting close to a big pay day, it’s that simple,” he said. “They need to protect themselves. Yes, they’ll have a degree, but it doesn’t compare to the kind of salary they would earn professionally.”
Lerner’s been writing athletic insurance policies in private practice and orchestrating overall financial planning for 25 years.
He’s written policies for many of the game’s top draft picks, including McGahee’s $2.5 million policy.
“The thing about all of us is that we look to bowl games and national title games when something like this happens, but the fact is, injuries happen every year,” Lerner said. “Look at what happened to Marcus Lattimore last season. He’s the perfect example of someone that should have had a loss of value policy.”
Unlike the NCAA’s policy, every policy is engineered for the specific player and case on the private side, but in general, they all have common denominators.
In the NCAA program and the private market, a player can generally collect when he or she is disabled either on the field or off during a stated period of coverage.
The NCAA’s program has evolved over time, although a glaring limitation to the standard policy was showcased in February when Kentucky basketball player Nerlens Noel tore the anterior cruciate ligament in his left knee against Florida.
Noel is expected to recover and his injury is not considered career-ending, thus he would not be able to collect on the policy.
That’s where private insurance, such as the kind Lerner’s Total Planning offers, differentiates with the inclusion of value loss.
Noel’s draft stock took a hit and he slid from a projected first or second overall pick to sixth overall.
The NCAA doesn’t pay for lost value. Private insurance can.
In Noel’s case, he was in good position regardless.
Kentucky coach John Calipari confirmed in February that Noel had already taken out an injury insurance policy before he played a game in Lexington. Published reports had the private policy at $10 million. The Lexington Herald-Leader reported that Noel also had an NCAA policy.
The NCAA’s capped system is routinely adjusted for the current salary market.
McGahee’s policy was for $2.5 million in 2003, whereas Luck’s, just eight years later, was for $5 million.
As for Clowney, considered the top defensive line prospect for 2014’s draft, Lerner said insurance companies can’t write him enough coverage.
“For him, there’s no financial incentive to stay, but there are rules and regulations in the NFL to consider, not to mention what the player wants to do,” he said. “We’re able to offer a player like him almost twice what the NCAA can offer and include loss of value. Companies just don’t want to place that much risk on one player, they want to spread it out.”
When is it time to turn pro?
“I told my wife and a reporter that this is really a question of how you feel about higher education,” Oliver Luck said. “There’s nothing wrong with asking and answering that, it’s a very American thing to do.”
Andrew Luck was looking squarely at a contract worth a total of $20 million in 2011.
By making the choice to stick around and potentially compete for a national title at Stanford, there was absolutely no upside financially.
Luck couldn’t improve his draft position nor negotiate for a dramatically larger contract as the latter is determined by the NFL’s collective bargaining agreement.
“Disability insurance is one area that the NCAA deserves some credit,” Oliver Luck said. “The NCAA gets hammered for some things they do and rightfully so, but this is one area that they really stand behind the student-athletes.”
Clowney finds himself in the same position. Had he declared for this past April’s draft, Clowney was projected as a consensus top five pick and the overall No. 1 by several.
By taking out a policy that should have a payout of around $5 million to $10 million, clearly he can’t recover the dollars he might have already earned if he’d declared early for the draft.
McGahee’s situation was a little bit different in that he was in his third-year sophomore season but was also projected as a top five pick. He needed about 13 more minutes to potentially cap his college career and start a professional one.
However, things changed in an instant when early in the fourth quarter of the national title game with Ohio State, Miami moved the ball to the Buckeyes 35-yard line.
McGahee floated into the flat on play-action with two Miami linemen in front of him.
Flying up the seam was Ohio State cornerback and current Dallas Cowboys safety Will Allen.
After catching the screen pass from Ken Dorsey, McGahee turned upfield to meet Allen’s shoulder barreling into his knee.
The resulting injury was the exact disability that his policy provided for and one that was thought devastating enough to keep McGahee off the field perhaps permanently.
Moreover, McGahee was going to be out for an extended amount of time and Miami had upstarts Clinton Portis and Edgerrin James on the depth chart.
“It’s hard to remember exactly what his options were, but with him entering the draft and then ultimately signing an NFL deal, that essentially voided any claim at that point,” Lerner said.
The fine print
There are a number of concerns about player health in college football, most notably concussions and head trauma.
The language or fine print in a general policy is written in the definition and on the private side is tailored to the specific player’s needs.
As far as the NCAA, something such as head trauma that ended a player’s career would be an actionable claim.
McGahee’s considerable injury also threatened his career because it was initially believed that he would not be able to sign and play not only in the short term, but perhaps at all.
McGahee entered the draft and the All-American was taken in the first round just a couple of months later by Buffalo.
Although he fell to the 23rd pick and the knee injury kept him from playing in his first season, McGahee gained 1,000 yards in 2004 and 2005 before going to Baltimore and signing a $40 million deal.
Despite the slide, McGahee’s policy stated and covered nothing around draft position.
And his call to enter the draft also proved that, medically speaking, it’s now much less probable that an athlete will suffer a permanent disability in any sport.
“Knee surgeries now are not only faster than ever, but in years past, that kind of injury might have been considered career-ending,” Oliver Luck said.
The sliding scale
The more likely concern is a non-disabling injury that causes a player to slide from his original projected draft position.
“This is where loss of value is important,” Lerner said. “We can put value on a player really in the first two rounds of the NFL Draft and then insure them as to loss of draft position by injury on or off the field.”
The general practice of the NCAA’s program is that policies don’t account for this.
But choosing to play another year of college football does bring the risk and the potential to lose millions.
Luck said when he evaluated these policies for son Andrew, he took note of the overall expense and language.
“What I found in my research was that kind of insurance wasn’t worth it,” Oliver Luck said. “Despite the cost, it looked extremely hard to collect on and there seemed to be language in it that could be determined in a number of ways.”
The NCAA has no involvement in policies that cover draft position.
“Basically it’s done on a sliding scale,” Luck said. “It’s a unique policy that not a lot of people would buy. It has a lot of exceptions but in all fairness, some of the exceptions don’t cover things like laziness, not going to class or smoking pot. It is based around injuries.”
Lerner’s approach includes value loss, which he determines through four to five sources in coming up with a potential athlete’s draft position.
Lerner’s son David, who played football at Florida and is now part of his dad’s company, said most of today’s players are starting to realize the importance of insurance for value loss.
“Obviously for Andrew, it worked out because he wasn’t injured,” David Lerner said. “But whereas 20 years ago, salaries and revenue didn’t dictate the market as much as they do now. If you’re playing today, a player knows he can lose drastically on any kind of injury. I think when you put the numbers on paper, the cost of a policy is a drop in the bucket for a player that goes No. 1 overall.”