Imagine you're a college football star who turned down the chance to enter the NFL early in order to return to school. Your first calls should be to your parents and your coach. After that, you're probably calling to inquire about insurance. This is the typical timeline for a standout player purchasing a multimillion-dollar policy.
December 2008: After a great season, star quarterback Johnny Allstar has caught the eye of NFL scouts. He asks for a draft grade from the NFL's draft advisory council.
Early January 2009: After receiving a first-round grade, Allstar decides he still feels he has more to accomplish at Giant State U. Days before the deadline for underclassmen to declare, he announces his return.
Late January-February 2009: Allstar inquires about insurance policies. He fills out a one-page application for the NCAA's Exceptional Student-Athlete Disability Insurance program. He also calls an independent agent. Both the NCAA and the agent will consult NFL personnel officials and attempt to determine an accurate draft position for the player. Too high, and the player will have to buy too much coverage. Too low, and the player could wind up leaving money on the table. Accuracy within one round is critical.
Allstar must pay his premium immediately, but neither he nor his parents has enough cash lying around to pay. So he must secure a bank loan. If he chooses the NCAA policy, his financing is pre-arranged. If he chooses a private agent, he must secure his own loan, but he must be careful that his loan officer doesn't give him any special treatment because of Allstar's status as an elite football player. Taking any special discount could cost Allstar his elgibility. Allstar selects the private agent and buys a $5 million policy for $50,000. Even though the written policy takes more than a week to finalize, Allstar is covered immediately. So if Allstar suffers an injury in an offseason workout before he signs the final policy, he's still covered.
September 2009: During Giant State U's second game, Allstar breaks his leg. The injury may be career threatening, but that won't be known until it heals and Allstar undergoes several months of intense rehab.
If the injury isn't a career-ender...
April 2010: Allstar recovers from the injury well enough to run at his pro day, assuring NFL coaches he'll make a full recovery. He is selected in the middle of the first round. When he signs his contract, he pays the balance of the bank loan that covered his premium.
If the injury is a career-ender...
October 2010: After months of rehab, doctors declare Allstar unfit to return to football. Lloyd's of London cuts Allstar a check for $5 million, tax free. If he ever plays a down of professional football, he'll have to return the money.
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