An Advisors' Guide to Excess & Surplus Disability Insurance

How to Insure Professional Baseball Players

Written by Exceptional Risk Advisors | Apr 17, 2019 2:00:00 PM

A baseball player's greatest asset is their ability to play ball.  Given the compressed career lifespan - the average MLB player's career is roughly 5.6 years - Disability Insurance protection is the most critical form of insurance any player can own.  

The MLB team owns the players rights until they hit the number of years of service which makes them eligible for free agency, meaning the athlete cannot negotiate with another team for a better offer. Every year leading up to free agency, the athlete will need to sign a contract to play that season on that team. Once they have hit the required years of service, the athlete is available for free agency. While working towards free agency, players should protect themselves during the team-controlled years. Such coverage includes a Lloyd's of London policy on permanent total disability protection and/or accidental death.

For example, a rising MLB superstar was in the last year of team-controlled contract/arbitration year and entering free agency. If injured in the final year of his current contract, his future multi-million-dollar contract stood at risk. He was able to secure a $10 million personal disability policy that would pay him a lump sum payout in the event of a career ending injury.

Once a baseball player becomes a free agent and signs a multi-year contract for potentially over $100 million, the money is guaranteed regardless if they are seriously injured or become ill during the contract years. However, now the athlete is walking around with a target on their back when traveling overseas in the off-season. Luckily, there are insurance products available through Lloyd's of London to protect athletes against kidnap and ransom threats. Kidnapping of the affluent are on the rise worldwide, and highly-paid athletes are no exception. This policy will pay for reimbursements of paid ransom, but more importantly provides access to a team of specialized professional who specialize in getting people out safely. For foreign born players returning home for a visit, securing this coverage is paramount.

Download this case study on permanent total disability and loss of value of an outfielder and designated hitter.