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Wednesday, August 06, 2014
Disability Insurance: College Edition

In 2011, on this blog, I posed the question whether a lack of disability insurance was driving college football players to the NFL early--link here. For decades now, the NCAA has permitted students to borrow off future earnings to cover the premiums on policies protecting themselves from permanent disability. It's known as the NCAA's Exceptional Student Disability Insurance (ESDI) program.

Where the NCAA has traditionally restricted the ability of college athletes to procure true protection is via "loss of value" insurance policies. For example, true "loss of value" coverage is offered by insurance carriers whereby a player projected to be a top ten pick suffers a debilitating, but not permanent injury. The player is able to continue playing at a slightly lower level than before the injury but still gets drafted in the fifth round. The player would collect on the sizable gap in compensation between their anticipated early first round and actual fifth round salaries.

Loss of value coverage was deemed permissible by the NCAA in 2010. Unfortunately, the NCAA deemed students who borrowed off future earnings to cover these premiums to be receiving impermissible extra benefits under their rules--thereby forcing students (and their families) to pay these expensive premiums for the policies out-of-pocket.

Good news, while the NCAA didn't come to their senses and change the rules, individual colleges found a loophole. Florida State quarterback Jameis Winston, the 2014 Heisman Trophy winner is predicted to be a top-10 pick in the NFL's 2015 draft. Using money from the school's Student Assistance Fund, Florida State recently paid the approximate $60,000 premium on Winston's loss of value policy to provide $10 million in disability and loss of value protection.

According to the NCAA, the Student Assistance Fund "shall be used to assist student-athletes in meeting financial needs that arise in conjunction with participation in intercollegiate athletics, enrollment in an academic curriculum or that recognize academic achievement." Responsibility for the oversight and administration of these funds occur at the conference level.

Thus, Florida State, with the ACC's blessing, recognizes the responsibility it has to protect the future earnings of its students. Well done Stan Wilcox, athletic director at Florida State!

For media coverage of this policy you can check out ESPN and SB Nation.


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