Insurance (in·sur·ance) [Noun] Pron.-(in shoorens)

Discussion in ' - Patriots Fan Forum' started by bigdgp, Mar 19, 2007.

  1. bigdgp

    bigdgp Practice Squad Player

    Someone pass the goddamn memo onto Briggs, Asante and any other frickin' athlete who doesn't feel like they have the financial security they want. I'm sure a policy isn't cheap but I'm certain their franchise tag salary will cover it and have a reasonable amount leftover to "feed their family". Enough of this bs already...

    Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium. Insurer, in economics, is the company that sells the insurance. Insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.
  2. solman

    solman Rotational Player and Threatening Starter's Job

    You would have to be insane to underwrite a policy of this nature. Not only is there the risk of injury, there is also the risk that the player simply won't live up to his currently perceived potential.

    Worse, you are selling the policy to the player. Once a player has locked in his future earnings, he has little incentive to live up to his potential and/or avoid getting hurt.

    The NFL in 2007 has become so demanding (i.e. painful) that players who love the game and are in their prime are walking away (witness Tiki Barber). A player thus insured would have little incentive to continue to endure the kind of torture that playing in today's NFL involves.

    Asante expects the kind of guaranteed money that Clement got ($22M) when this year is over.

    So tell me, how much would you charge for a $22M policy covering Asante against the risk of injury of diminished capacity? I'd charge close to his entire salary for this season.
  3. bigdgp

    bigdgp Practice Squad Player

    1st off Every team has an insurance policy on every player in every sport except in very rare situations. Even in cases where there are pre-existing conditions insurance policies are put in place albeit they'll exclude any losses stemming from the pre-existing condition(s).

    When a player gets injured the teams aren't paying their salary out of their pocket. It applies against the cap all the same but it's a rare situation when a player cannot get insured (I.e Pedro Martinez before signing with the Mets).

    As for a player locking in his future earnings and not having an incentive to live up to their potential-this statement is ridiculous because insurance companies utilize their doctors to evaluate the players and if someone tried to commit fraud then their policy wouldn't get paid and they'd be hurting their chances for the contract they'd be playing for which would guarantee the money and they wouldn't have to pay for the insurance anymore themselves, because the risk passes to the team.

    These types of policies are prevalent all throughout sports. The athletes are getting paid millions of dollars and have the means to pay for the policies.

    Here is a perfect example of McGahee who insured himself in college before the his bowl game injury. If a college athlete who is precluded from having practically any income can insure himself for $2.5M I would imagine an athlete making $7+M for a year can insure himself for $22.5.


    As for your question of how much would I charge for a $22M policy for Asante Samuel that's an unreasonable question since I'm neither an insurance adjuster for these types of policies or know anything about his medical condition but even then I would reasonably estimate it wouldn't be anywhere near this year's salary.

    PS-Your analogy with Tiki is absolutely ridiculous, Tiki left because he'll be getting a multi-year contract broadcasting for probably as much money as he was making playing football and in plotting a broadcasting career he's hoping it will be far more ludicruous that playing football for him has been and he'll be able to continue that career far longer than he could have ever played football for.
  4. Oswlek

    Oswlek Experienced Starter w/First Big Contract

    You are correct that most contracts are insured, but what you are ignoring is that tenders are one year contracts. No disability insurer is going to cover an income that may not even be applicable. They will just cover the contract that is in force at the time.

    Also, if you admit that the team is already insured, what is the purpose for the player to get supplemental coverage?
  5. DaBruinz

    DaBruinz Pats, B's, Sox Supporter

    #50 Jersey

    Actually, no, you don't have to be insane. And this goes to show you really don't know much about the insurance industry at all. In fact, Lloyd's of London has a personal injury insurance branch that REGULARLY writes policies on atheletes. Teams do it to protect themselves. Players do it to protect themselves.
  6. DaBruinz

    DaBruinz Pats, B's, Sox Supporter

    #50 Jersey

    Why is AFLAK still in business?

    Because there is money to be made there and because it does offer the PLAYER some security as well.
  7. Oswlek

    Oswlek Experienced Starter w/First Big Contract

    AFLAK's policies aren't of the long-term nature. They are typically only for 2 years (tops - usually only 6 months) and at less than half of what the person was earning. As I said before, no insurer is going to give a long-term DI policy to an individual that will not be making that money for a long time. If we were talking about an executive or professional that had skills that would apply into their later years, sure, DI is definitely a smart idea.

    But make no mistake, disability insurance is not applicable in this circumstance. It in no way shape or form will insurers give tagees the "long-term security" that they speak of.

    No offense, DaBruinz, but this is my field.

    Edit: The policies that I am referencing are the ones offered to municipal employees like fire fighters and police officers. Professional athletes are even harder to insure so I think I am being generous with the comparison.
    Last edited: Mar 19, 2007
  8. DaBruinz

    DaBruinz Pats, B's, Sox Supporter

    #50 Jersey

    As BigDGP pointed out 7.2 million should be more than enough to provide long term security. And as I pointed out in another thread, sound investments on 5 million of that can turn it into well over 10 million by the time their kids are going to school.

    Oh, and I suggest to go back and read his initial post. He mentioned NOTHING about longevity in it. It was Solman spewing the ignorance regarding what Samuel is supposedly expencting.

    BTW, the Bruins took an insurance policy out on Cam Neely when he signed his last contract with them because of the issues with his leg. That policy was done through Lloyd's of London. The policy covered the 2 years of the contract AND the option year if it was put into affect.
  9. thomas144

    thomas144 Practice Squad Player

    I agree that the idea is insane, from an underwriter's point of view.

    But regardless, why do people take management's side in salary disputes? I have never heard anyone complain when a team convinces a player to "restructure" their contract. Why complain if a player refuses to play under an existing contract? These guys are not slaves.
  10. Oswlek

    Oswlek Experienced Starter w/First Big Contract

    What I still don't understand is why the player should even concern themselves with the insurance. As both you and BigDGP have pointed out, the team does this. The player has not worries for the first year because once they sign the tender the team has to pay them (whether healthy or not) or let them go to another team (by trade or release - release is only an option if healthy).

    No only that, but if the team is already insuring the player, it is likely that the player cannot buy additional coverage, due to legal limits.

    Once all that is looked at, if the long-term benefits of DI are excluded, how is insurance beneficial to the player again? Sure, $8mm is a large amount of money, but whether that is *enough* is a totally different argument.

    BTW, I think that people overrate the ability of someone to live off of a lump sum of money. Assuming that you net out $4,500,000 from taxes and you can grow you money at 8% with inflation of 3%, you can live a lifestyle of $220,000 annually (before taxes) and run out of money at age 100.

    Yes that is a large income, but certainly not extraordinary. And the numbers drop significantly if you add in assumptions of education expenses, buying a home for mom, etc.

    I understand that to someone who is making $50,000, *only* living on $220,000 sounds ridiculous. But getting $8mm isn't as much money as it sounds if you have minimal earning capacity afterward. It definitely doesn't give the multigenerational benefits that some seem to think.
  11. solman

    solman Rotational Player and Threatening Starter's Job

    I'm not talking about injury insurance, and neither is Lance Briggs.

    I'm talking about lost opportunity.

    McGahee is a great example. He purchased insurance. He got injured. He lost millions. The insurance policy never paid him a dime.

    If Briggs or Asante play a year under the franchise tag and DO NOT suffer a career ending injury, there is still a very substantial possibility that they will miss out on the huge amount of guaranteed money that they are looking for.
  12. solman

    solman Rotational Player and Threatening Starter's Job

    McGahee purchased his policy from Lloyd's of London. It didn't pay. He would only have seen a penny if he had been out of football for a year following the injury.

    Its nice that a player can protect himself from a career ending injury, but is only a small part of the risk, and its one that can be effectively measured because the player has limited control over whether or not he gets injured, and a substantial incentive not to get injured.

    Lost opportunity and career diminishing injuries are hard to measure. And again, THE PLAYER HAS ENORMOUS CONTROL OVER THESE. We saw how well Asante played last year when millions of dollars were on the line. If, by playing well he can get a $22M contract, and by not playing well he can get a smaller contract and a huge insurance payout, he is going to have much less incentive to play well. That makes it more likely that Lloyd's will have to pay out, and therefore extremely unlikely that they would issue such a policy in the first place.
  13. Maroney TD

    Maroney TD On the Game Day Roster

    While I agree that the money earned in one season at $7.2M is more than enough to pay for the rest of his life if he spends and saves wisely, its not like he's taking home $5M for a $7.2M salary. Taxes at that salary level are going to run you around 50% of your salary and then you have to pay your agent as well. Its still a ton of money but he's not actually taking home $5M.
  14. DaBruinz

    DaBruinz Pats, B's, Sox Supporter

    #50 Jersey

    Its laughable how people just shoot from the hip on what someone's taxes would be. You do realize that the max tax bracket is 28%, right? You also realize that people like John Kerry only paid about 5.8% in taxes last year, right? John Kerry and his wife earned over $200 million last year. So, please don't tell me that a guy whose salary is 7.2 million is going to pay 50% in taxes on that. Its BS.

    Also, the Agent's take is a MAXIMUM of 3%. So, again, you don't know what you are talking about.
  15. Oswlek

    Oswlek Experienced Starter w/First Big Contract

    From the IRS' own website. It appears as if it is you who is shooting from the hip.

    What you also ignore is how the income appears on the 1040. Capital gains will be taxed much differently than earned income which is different from schedule C income.

    As an employee who has his nearly all of his expenses paid, a player will not have that many deductions available. Most of the options remaining invlove the removal of the assets from the estate (as in donating or setting up a private foundation) which only go against what you are saying.

    DaBruinz, you do realize that some of us actually do this for a living, right?
  16. PatsWickedPissah

    PatsWickedPissah Supporter Supporter

    Disable Jersey

    Max tax bracket is around 35%
    Theresa Heinz Kerry, the source of family income, is heavily invested in Municipal bonds which pay no federal tax

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