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As the salaries of professional athletes continue to rise exponentially, both
professional teams and athletes recognize the increasing importance of purchasing
insurance. From the team's perspective, insurance can protect their investment in a
starting player, a contractual obligation to a multi-million dollar player, and help to
maintain their competitive edge. From the player's point of view, he or she realizes
that a career is short and could be cut even shorter by an untimely accidental injury or
illness resulting in a disability. Therefore, the athlete needs to protect his or
her future earning power.
A multi-million dollar employment contract between a a professional athlete and a club
typically results in the purchase of some or all of the following insurance policies:
- Temporary Total Disability and /or Permanent Total Disability;
- Accidental Death & Dismemberment;
- Life Insurance;
- Performance Bonus Insurance.
The type of insurance, the amount of insurance and the beneficiary may depend upon the
specific guarantees in the employment contract. For example, a club that has
guaranteed to pay a player's salary during a period of disability as a result of an
employment related injury or illness may purchase coverage which is restricted to
employment-related incidents only, while the player in this situation may want to take
advantage of additional protection and purchase a policy under which he/she is the beneficiary
for incidents which are non-employment related, thereby effectuating 24-hour
protection. Further, if a player is young and at the start of his/her career, protection himself beyond the current contract may be elected by purchasing additional disability
coverage and/or accidental death or life insurance coverage. Likewise, clubs with
star, franchise players often feel the need to purchase 24 hour "asset value"
protection on these players to protect the loss of ticket sales and other revenue in the
event the players miss games or one or more seasons due to injury or illness.
Young athletes may feel invincible and therefore not protect themselves, but the sports
insurance world has witnessed the unfortunate shortening of the careers of many
professional athletes due to accidents in the past decade.
As each transaction is unique, the insurance products supporting each transaction can
be tailored specifically for the club and the athlete. Most club executives, player
agents and athletes realize that insurance is an integral part of the sports industry.
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