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Are NFL Players Underinsured Against a Career-Ending Injury or Illness?

It has been estimated that only about 40 percent of players in the National Football League (NFL) purchase disability insurance coverage. This combined with the fact that a mere 50 percent of the compensation in the NFL is guaranteed and the extremely high risk of injury from playing professional football is a lethal combination, thwarting critical protection of future income of NFL players. If a disabling injury or illness occurs, and the football player's compensation is not guaranteed and he does not have disability insurance coverage, the result is financially devastating.  Just as it would be for any professional athlete dealing with a disability affecting future earnings in the sport.

Most of the contracts in Major League Baseball (MLB), the National Basketball Association (NBA), and National Hockey League (NHL) are guaranteed, meaning that if a player is injured or cut from the team, he is still paid the remaining value of the contract. But, while three of the "Big 4" guarantee the majority of player compensation, the NFL is estimated to guarantee not even 50 percent - whether this is due to the high injury rates or turnover of players, it is the reality. Guaranteed compensation shifts the burden and risk to the team to determine whether or not to take out an insurance policy to insure certain player's income in the event of an injury or cut. But, when compensation is not guaranteed and the risk of injury is so high, the burden and risk is on the player.

And even when there is a guaranteed contract remaining for an NFL, MLB, NBA or NHL player, what happens when the contract ends and the player has experienced a career-ending injury or illness? What about free agents who are an injury away from losing millions or even billions in future earnings? What about a college athlete on track to be a first round draft pick with the risk of injury or illness interfering with being drafted and playing professionally?

As in at least the MLB and NBA, in the NFL, there are league-administered disability benefits available to football players in case of line of duty ("LOD") or total and permanent ("T&P") disability under the Bert Bell/Pete Rozelle NFL Player Retirement Plan. There is also now supplemental coverage for neuro-cognitive disability available effective April 1, 2012 for qualifying players not receiving LOD or T&D disability benefits. However, both the NFL and the NFL Players Association (NFLPA) have been under intense scrutiny for years, as high profile cases involving disabled football players have illustrated the inadequacies of the NFL Disability Plan, and shown it to be inferior to other league disability plans such as those offered by the NBA and MLB. The NFL Disability Plan has left many retired/disabled players with insufficient coverage against disability and left them and their families financially destroyed while facing the emotional devastation of a severely impaired man who was once an invincible NFL player.

The NFL Disability Plan cases that have been litigated and resulted in court decisions (though few, as many are resolved outside of court) only further illustrate the difficulty of disabled football players receiving the compensation they understood that they would receive under the NFL Disability Plan when these unfortunate circumstances arise. The NFL Disability Plan is complex with many qualifying factors, exclusions, and complicated provisions which often result in the NFL Plan denying the disabled player any benefits at all, or paying only a nominal fraction of the money that the disabled player understood he would be paid. Questions have been raised about whether NFL players are even made aware of the benefits available, and the arduous nature of the required administrative process that NFL players must submit to in filing a claim for benefits, which is oft denied and leads to required levels of appeals, hearings before "the Board" and other requirements. This leads to some players simply throwing up their hands and walking away, and others facing lengthy disputes that they and their family are simply ill-equipped or unable to handle.

Private disability insurance coverage offered through organizations involved in the specialty sports insurance business, such as insurance companies affiliated with Lloyd's of London and HCC Insurance Holdings, is a critical consideration for professional and elite athletes, and in particular NFL players, to lower the risk of loss of future earnings. These private disability insurance policies available to qualifying athletes have different terms than those involved with the complicated league disability and pension plans (such as the NFL Disability Plan negotiated in part and offered by the NFL), and not only serve to supplement coverage or benefits under league plans, but can also serve as a complete replacement if all benefits under the league disability plan are denied to the player based on a technicality or challenge by the league plan. Specialty disability insurance coverage is also available for teams, leagues and other organizations to insure guaranteed income in the event of disability of a player.

That said, private disability insurance policies are still designed and drafted by savvy insurance company underwriters, attorneys and advisors under the employ of the disability insurance company at issue. Disability insurance claims involving professional athletes are highly scrutinized and challenged where possible, given the high value of the claims which risk a substantial financial hit to the disability carrier responsible if paid.

If you have questions about the disability insurance coverage that you, your player, your team, your league or organization has in place to protect against disabling injury or illness of a player which is career-ending, prevents participation temporarily, or causes loss of future earnings, contact our team of experienced team of attorneys for a free consultation. Likewise, if you or someone you represent is facing a denial of disability benefits by an insurance company, a league, association, or other organization, we can help. It is our pleasure to provide a complimentary initial consultation to best evaluate your situation and devise a proposal for representation that fits your needs and your unique situation. Contact us now.

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