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- [00:12]
A
All right, so today we are joined by David Brookbank. David, you are the co founder of Income Protection Consultants. I believe you, you refer to that as ipc. The way I would describe you, you know, getting to know you obviously is you're somebody who is highly coveted for his opinion and advice on a various amount of things, one of which is disability insurance policies.
- [00:38]
B
Right.
- [00:38]
A
And in this, in this conversation, particularly for athletes, anything that you would add to that?
- [00:44]
B
Yeah, we just to give you a little bit of background, I started my career 33 years ago selling disability insurance, which I don't sell it now, I consult on it. But we actually just formed a consulting company that breaks down and analyzes disability policies on all different levels from, from, you know, collegiate high school athletes, collegiate athletes, pro athletes, and we even do it for the white collar market as well.
- [01:12]
A
Very nice. And you also are a, a board member, an advisory board member for the Bud Cig, I guess, School of Law Management program at asu. I wanted to get that in there because I think from a parents perspective, you know, if they're asking themselves, why should I listen to David, you're somebody who not only is well versed obviously in the insurance space, but you have a background in sports law as well and have, you know, certain opinions obviously from, from that 30 years of experience, but also from your time as a board member also.
- [01:45]
B
Sure. What I did was like, I, I just, I used to keep asking the, the ACC commissioners, do I, do I need to get a master's degree in sports administration? He's like, not if you want to, not unless you want to be a sports administrator and ad. And I didn't, I didn't want to do that. I wanted to find our niche and, and stay in our lane. So one of the things that I did was I went back to law school, went to Arizona State and got a Master's in legal studies with concentration in sports law, contract law. So after I did that, we were just really plugged in, into the, into the school and started teaching as an adjunct professor out there. I teach a couple of classes a year on site at Arizona Stage. As a matter of fact, I'll be going out in February doing that this year and then was asked to be very honored to be part of the advisory board of the Sports law business program that's out there. So we're definitely plugged into not only just, you know, our, our business of consulting, but you know, we sit around the table with people from the NFL, Major League Baseball, NHL, NBA, those type of people that you get in the room with. To get very valuable opinions and a lot of context about what their challenges are, what they're seeing, what they're thinking, along with some. A lot of other people who are also heavily involved in sports behind the scenes, like somebody from the US Olympic Committee, a lot of. A lot of attorneys for sports organizations, that kind of thing.
- [03:24]
A
Yeah. What's important about that, too, and it, I guess it speaks to this podcast as well, is it's not that we're just people out there in the world that just have opinions on the subject matter or people who are involved in, you know, the daily. The. The industry as a whole on a daily basis. You know, for me, it's in representing the players from the draft all the way through professional baseball and even beyond. And then for you, it's from the standpoint, as you just described, but also from the insurance side, too. So I think when you have the ability to interact with all these different individuals in the actual space who are practicing in the space, I think it's more than just, hey, these are opinions based on our thoughts or beliefs. It's more, hey, these are opinions based on our experience, having dealt with it. And so I do think that that's an important component to this conversation. So as I think about what I think, what I would like this episode to be for everybody, I think a lot of families are probably thinking, all right, I want to know what happens if my kid is going to be drafted, you know, has an opportunity to be drafted. What happens if he gets hurt? Right. So that's not a question that I'm posing to you right now, but that's one that I hope that these families could ultimately answer at the end of this podcast. So, like, level set for everybody. Talking about disability insurance. Right. What is it and why does it exist in the sports space?
- [04:42]
B
Sure, that's a great question. Disability insurance. I guess I'd have to relate it back. The big move of this was in the 1990s when the NCAA allowed for the elite student athlete program, Elite student athlete disability Program to be put into play. That program initially allowed for student athletes to borrow against future earnings if they had pro potential to ensure against disabling injury or an illness that prevented them from ever playing their sport. Since then, it has grown and. And morphed into something that's. That's a lot bigger than just that. So, you know, it's. It's more or less now we're seeing it being negotiated as part of nil deals. We're seeing it being negotiated as part of or rev share deals, however you want to put it. But disability in its purest form is if somebody. Getting back to your question. If somebody suffers an accident that causes bodily injury while the policy is in force and due to that accident that causes bodily injury, they can never play their sport again. That's the catastrophic component of it. Also, it covers illness. So if somebody has an illness that's diagnosed in the policy period and due to that illness they can never play again. As a matter of fact, two of the biggest claims that we've ever seen have been on illness related sickness claims versus injury claims, which a lot of people don't think about that. And coverage typically runs 24,7 for the policy period. So most people have this misconception of disability being only covering somebody while they're playing or participating in their sport, that it's not. The contracts that we really look at are the ones that cover 24, seven on and off the field as well.
- [06:34]
A
Got it. So I think a lot of families, when they, when they think about disability insurance, let's just say if they're thinking about their son who's a pitcher, right. I think a lot of times what people think about is what we know to be loss of value insurance, right? Like, oh well, my son was going to sign for 10 million, he gets hurt, now he only signs for 1 million. I want to take out a policy that gives us the delta between those two numbers. Like that's just generally I think what people think. But as you just described, like there's actually, there's various different types of policies. The loss of value that I just referenced, we've actually talked about this. That's actually it's, it's, it's so rare, if not almost obsolete in the amateur draft space right now. But what are the other policies? Like what are they called? And go into each one if you could, just so you can describe, describe for the listener.
- [07:21]
B
So I want you to think about it this way. The base foundation of any policy, and there are some exceptions, but 90% of the policies out there, the base foundation is that permanent and total disability piece that we talked about. From that you can stack on things such as critical injury or temporary total disability. Critical injury is one of these things. It's kind of like athlete for athletes. It lists a certain number of injuries. So for instance, pitcher UCL tear, let's say they have a UCL tear that they're required to have surgery on. And all these contracts say something different. But for just this purpose of this conversation, we're going to say somebody tears a ucl, they have to have surgery due to that tear they can collect. And I've seen it anywhere. You know, the starting amount is normally about 250,000. All the way up to now I'm seeing $2 million for a collegiate player who suffers one of those injuries. Now that in itself has nothing to do with where the individual's drafted. It's kind of like an if then statement in computer language. So if somebody has the injury, they have a surgery. Sometimes they'll recommend that. There's sometimes the requirement is that they'll have the surgery within a certain number of time, certain number of days after the injury occurs. But you know, just for the 30,000 foot view, somebody tears a UCL whether it's on or off the field, and they have this critical injury policy, they can earn up to upwards of $2 million depending on what their offer and valuation is. And here's the other great thing about that. We've had individuals who've collected significant critical injury claims in baseball for UCLS and we're still top 10 picks in the Major League Baseball draft. So it has nothing to do with where you fall in the draft. It is if you have this injury and you have the surgery and you meet the criteria, the policy it pays out. That's stacked on top of the permanent and total disability as a layer. And then there's other thing called temporary total disability that says this for the most part, any other accidental bodily injury that occurs that's not listed in the CI sheet, that keeps the individual from playing a certain number of days that can be 120 regular season days or total days, 240 regular season or total days or more than one calendar year. Those could pay different levels. So again, having nothing to do with where the individual falls in the draft in the upcoming draft, it is all based on if you hit this, these certain benefit triggers, then this policy would pay out the stated amount of what it says here. And there's no requirement that says that you've got to fall into draft to be able to collect that benefit. And that's where a lot of people get thrown off. The media has done. And when I say media, the sports writers out there, they call disability insurance loss of value. And that's not what it is. Loss of value is an add on to a policy that is reserved for and typically that year of arbitration or that second big contract. The pros as an example on that, with loss of value salted on Major League baseball player this past year who was projected to sign 100 to $200 million contract. That's what it's really reserved for.
- [11:00]
A
Yeah, that makes perfect sense. And I'm glad you, you added that distinction because, yeah, maybe it's just because, yeah, these writers have, have articulated it in a certain way. But that's certainly from my conversations with families and with players who really don't have any context. The assumption is, oh, well, like everybody should want this. That's like, that's the one that I want. You brought up something interesting. So you brought up obviously the critical component. So if a player, let's just say, has critical disability insurance and he is insured for, let's just say a Tommy John surgery. Right. What is the process? Because I think everybody's just probably assumes, oh yeah, I had Tommy John. So like, I'll get my money. Like, what is that process? Like if a player actually is insured for it, what are all the different things that he just needs to be aware of?
- [11:54]
B
Good, good point. Because all contracts are not created equal. So let me give you a breakdown between three critical injury benefits that are out there. I'll give it, I'll give you four. And we're talking about Tommy John surgery. So teraby ucl in one contract it says this, it says a tear. The UCL that requires surgery doesn't put any day restriction on there as far as how many days does the injury and the surgery have to be within each other. Just basically says a complete tear or total tear of the ucl. And again, it has to be a total tear under that contract. Second contract would say high grade tear of the UCL that requires surgery to be performed within 30 days of the accidental bodily injury. Okay. Third example would be high grade tear of the UCL that requires, requires the surgery to be performed within 30 days of the bodily injury. Now if you listen to those two things, it's very similar. One says required and performed within 30 days. The other one says required within 30 days. That is a big difference when you're talking about policy language. Is it really? And we get it. We can get into the weeds here. Just because somebody requires surgery, does it mean necessarily that it has to be performed? And that's an argument that's going on right now in a case that's out there. Also, what is the definition of a high grade tear? First instance that I gave you, it said it had to be a total tear. Well, it's how the individual companies define high grade tears. The first example that I'm giving you, where it Says it has to be a high grade tear is 50% or more of the ligament, muscle or tendon. In the second example that I gave you, where it says a high grade tear, it has to be more than 50% of the thickness of the muscle, tendon or ligament. So that could be a huge difference right there. Just in that, in those little bitty details. The fourth example would be complete tear of the UCL requiring surgery in 30 days. There's an asterisk out beside of that. You got to look and see what that asterisk says. The asterisk says in the footnotes that in order to collect that claim, that individual has to miss 25% of the regular season. So if somebody's in college, college World Series, they're pitching, they tear their UCL, guess what, they have surgery in 30 days. They're expecting a claim. But, oh, we, we didn't read the fine print down there that said you got to miss 25% of the regular season. No claim is pay. Okay, so we go from total tear requiring surgery with no time limit on it to high grade tear with some definitions of specificities in there, to another high grade tear to total tear requiring surgery. But if you miss, don't miss 25% of the collegiate season, that payout. So it gets very complex when you're looking at analyzing those. And so just because somebody says, I have a, I have a $500,000 benefit for my UCL if it gets torn, really need to know what the contract says inside of that before you, before you pull the trigger on it.
- [15:16]
A
Yeah. So obviously, and I want to come back to this because I do have a follow up question, but I want to give them a little bit more context as far as kind of like your involvement in a lot of this stuff. So you are somebody who is a consultant, you oftentimes are hired by a university. Right. To help, to help the player ultimately understand what his options are and help them kind of answer specific questions. Right. So how has your involvement increased with universities as a byproduct of like the, the NIL and the world we're now living in with college sports. Have you found that it's gone up in the last, call it, you know, a couple years.
- [15:59]
B
Yeah, our volume has definitely increased, not only on the collegiate side. And I'll put this out there, we do not have a marketing department. We're a very small consulting firm. We don't have a marketing department that goes out and solicits schools. If we do a good enough job at a university. There's enough movement within intercollege athletics that some will move from one school to the next and say, hey, yeah, we worked with a consultant over here. They did a good job for us. They weren't selling us a policy, and they did a really good job from the standpoint of educating our student athletes all the way through for claims paid, walking them through how to get that paid, explaining the taxation of that. Now that the House settlement has come into full effect, it's been a really good thing, in my opinion, because prior to the house settlement, agents were kind of some of these individuals over here who we never really got to interact with. But most agents now really understand contracts. So that was a really good thing for us. And now we have a ton of agents that are reaching out and asking about, okay, I've got this situation here with this individual, you know, and they understand how exactly a Major League Baseball contract and NHL contract, the NFL contract works. And you're speaking my language when you talk about that, because we can actually hone in and talk about, okay, let's talk about the contract that they've signed or they're getting ready to sign, and then how do you integrate a benefit into that so that if they suffer a loss, they would get paid out on it.
- [17:41]
A
Yeah. So I want to follow up now and talk to you about the process. So let's assume for a second we have a player. We'll just use college as an example. So college athlete who is going to a school and let's say the university, as part of, you know, his package is saying, you know what, we will pay for a certain amount of disability insurance. Right. You then get involved because the school can't tell the player, this is the policy that you should choose.
- [18:09]
B
Right. They don't want to either because there's a major lawsuit with, With. With. With the university a number of years ago, by only giving one option and directing them what they should go with.
- [18:20]
A
Right.
- [18:21]
B
And every one of these deals, you make a good point because with agents being involved, every single one of these deals are going to be negotiated and going forward, and it's going to be, you know, general manager of baseball is going to help negotiate what these deals are when they come on, when they come on campus. And just to digress just a little bit, high school students, student athletes, and their parents are using this. So we'll typically get a call in the spring from a number of agents or a number of parents that will say, hey, we. If we don't hit our number in the major League Baseball draft. We want to know, we've already committed to this school. We want to know how much disability insurance they're going to qualify for and will the school pay for it. So they're using that as a, as a lever or a decision making tool to say, okay, if I don't have my number, I'm going to commit to this school over here for X number of years. We're going to sign an nil deal and I'm going to play baseball over here and try to play my way up to where I'm in a better draft position than I was coming out of high school. And disability is one of those things, excuse me, that is used to be able to attract and retain those athletes into those programs. Not all programs, you know, not all programs adopt that. But for the most part it's being talked about now with these players who don't hit their numbers and they come directly into, into college. Does that, does that help?
- [20:00]
A
No, it makes perfect sense. And I think about it from the standpoint of a college. If you're trying to entice a player to come to school, obviously, and a guy has a legitimate chance to sign for a decent amount of money, one of the components that you can use is obviously this disability policy. So that's why I bring it up. And then to talk more again about your involvement, you are now consulting and you're helping the player just kind of just understand the options, what everything kind of means. So I want to talk a little bit about that process though. So you go through the various shops, various options with the player. The player ultimately decides, okay, let's say this is the policy that I want to choose. Walk me through the series of steps, then that happen after that to make sure that everything's done properly.
- [20:44]
B
So what we do is we really look to have these initial conversations as I do when I teach a class. So it's. I love to teach. So I look at this as an educational workshop or educational class that we have where we have every offer, you know, that that or the majority of offers that the student athletes been, been offered, we lay those out, you know, and offers can change from minute to minute over time. For instance, if a broker says, hey, goes out to a company and says, hey, can you give me more coverage? Because I think I can write this. We stay out of that. What we try to do is go to the marketplace and get a good sampling of what the offers are and then educate on every single one of those contracts. In my opinion, it doesn't matter what the numbers are when we start educating that they get an understanding of what pays out, what doesn't pay out, how it works, how it's not intended to work, those type of things. From there, after the student athlete makes their decision and they've decided on how much coverage they want, we hand that off to the insurance company. The insurance company then decides who wants to write that coverage. They name a broker. The broker will end up taking and completing an application after the individual's had medical exam done. And then one of the key things that we recommend is having all of the athletic training records submitted to the insurance carrier along with the medical exam and the application. Once that's done, the insurance company is going to get that, they're going to underwrite it. They may end up excluding a body part, may not exclude a body part. If a body part's excluded, then we can go back and ask after a certain number of games, would you consider removing this exclusion? Some of them are easier to work with than others in that arena in being able to do that. And then the policy is good for whatever the stated term is. Typically, if we're looking at someone who is coming into baseball right now, college, their policy may end August 1st of 2026 and renew at that point if they, if they come back in now with NIL being on the scene, a lot of these contracts are going to match up to what NIL contract dates are going to be. We see that moving forward. For someone who's coming out of high school, we typically see, you know, a two year contract because they can't go pro for that time period. And then they'll do a reevaluation in the third year. At that point we end up helping review the contract wording after it gets issued, seeing if there's any exclusions in there. And if there's a claim, you know, heaven forbid there's a claim, we help walk through that process with that individual. I'll just tell you this, we consult with between 4 and 500 athletes per year on disability advice. A lot of them, some of them don't buy insurance, some of them do. Out of that number, we typically see four individuals who will have career ending claims. We'll see 25 to 35 individuals who have critical injury or temporary total disability claims. So the chance of incidence is a lot higher there. But from start to finish, it's an educational process. Getting back to your question, and then once they decide it's handed off to the insurance company, and that's for the insurance company and the Broker to do their job, to make sure policy is underwritten appropriately.
- [24:36]
A
So I want to go back to one of the things that you were talking about earlier with the particular player who, let's just say, had Tommy John surgery. Right. And you were referencing certain language that was in these, in these, written in these policies. That language. Is that negotiable? Is that, well, this particular insurance company has this language, and if you want to choose them, this is the acceptable language. I want to bring that up because I think a lot of parents would say, oh, we'll just get that taken out or we would just change that. And I know even that alone is rare, a family thinking that way. But again, I think it's an important point to bring up because I think a lot of families without the context just assume. And so I'd rather get clear with them so that they have a better sense.
- [25:22]
B
I'll say this. The bigger the case, the more leverage that you have. So as an example, if I'm working with a Major League baseball player who's going to write a check for $2 million for their disability policy, and that's probably just blown half your audience's mind right there. If somebody would write a policy, write a premium for a policy that big, that happens, they have more leverage than somebody who's going to pay $5,000 for a permanent total disability policy, which makes sense. You know, that's right. Is the, you know, is the insurance company going to change their language to put them more at risk for a million dollars when somebody's paying 5,000 or $7,500 for a million dollars worth of coverage? Or are they going to be more easier to get along with and change the policy, wording a condition here or there. If you're writing a check for 2 million, the obvious answer is they're probably going to be able to be more negotiable on that $2 million premium than they would that $5,000 premium or $7,500 premium?
- [26:41]
A
Yeah, it makes perfect sense. So now let's assume that player has chosen a policy.
- [26:48]
B
He's.
- [26:48]
A
He's got critical injury. It protects him against having this Tommy John and then he gets injured. Right. What is the process from that point forward that these families generally need to understand?
- [27:02]
B
Yeah. So we're involved in every step of the way. So it's interesting that you say that. I. After this call, we actually have a call with an individual and sport administrator on a claim that just got approved and paid out on an individual for, for football. So we want to make sure that they understand how they, how what the taxation is going to be like, if there's taxes due or what their CPA can do in order to help mitigate that tax risk. But you know, it's, I take this very seriously from the standpoint of I want to make sure that when that individual files the claim, first of all, we're going to have a meeting with the family and the agent to talk about, you know, okay, understand you've had this injury. Let's go through the policy and read exactly how this policy works so that the expectations are set so that we know whether we have a claim or whether we don't have a claim. So if we have a policy that says, okay, you've got to have a complete tear of the UCL in order to receive a benefit, and the UCL might only be 75% tornado, not all hope is lost in that. And I'll tell you why. Because that particular contract also has a provision in it that says if you miss 120 days, not regular season days, but 120 days due to your injury, you get a certain level of a payout. If you miss 240 days, you get a certain level of payout. So all hope is not lost if it's a partial tear. Because that contract says any other accidental bodily injury that causes you to miss 12240 or more than one calendar year. So they need to understand that, they need to understand that, figure out, okay, how are we going to handle this on our team if they have another policy that says, hey, we've got a, you know, it's a, it's a high grade tear, they've got a 75% tear in the UCL and they've got 30 days to have the surgery. And we make sure that they know that. We go over the policy wording with that. So the open lines of communication and one of the things that we do when we do the interview is anytime you have an injury that's listed in this policy or anytime you have an injury that's going to keep you from missing any type of your playing time or sport, make sure you contact us. Make sure you let your sport admin know so that we can go ahead and put this on the radar. Because claim notification, potential notifications need to be filed with the insurance company in a timely manner in order to let them know a claim may be coming.
- [29:46]
A
Got it. So I imagine a lot of, a lot of kids and families hear what you do. And everybody I would at least hope is interested In. Well, yeah, I mean, this all makes sense, right? Like, I, my son is really this good. I want to make sure that he's as protected as possible. Right. So I would say the majority of people hear this conversation and think, absolutely, I want to look into this. And I know you can't get specific with like, well, what do premiums, like, how much are we talking about here? But can you give everybody a general idea of what, you know, hypothetical premiums look like just to shed some light on really what are we talking about?
- [30:30]
B
And I'm going to keep this geared towards the baseball audience right here for, for premiums. And you know, general rule of thumb, pitchers are the most expensive player in, in all of athletics. And, and it goes, it has to go back to do with the number of claims that are, that pitchers have in general. Specifically in, you know, the UCL area. Permanent total disability for a collegiate picture is going to run somewhere around 7,500 per million of coverage for permanent total disability. Now, critical injury on top of that, you know, that can be anywhere from, depending on what the benefit ranges are, anywhere from 15 to 18,000 per $300,000 worth of critical injury coverage. So it wouldn't be uncommon to see $1 million policy exceeding, you know, $1 million critical injury benefit, you know, exceeding 80 or $90,000.
- [31:35]
A
Right? Yeah, I, you know, I hear these numbers and I think you have to logically try to connect the dots for, for players and families, right? If I'm a player and let's just say I have a high likelihood to be drafted in the top two rounds, right? And I, when I say high likelihood, I don't mean flip a coin. I mean like, no, it's, it's. If you look at every publication, if you talk to any scout like you are a guy that is a, what I would kind of consider like a can't miss guy who everybody is on the same page agreeing that you're going to sign in the top hunter picks, you could look at roughly what the signing bonus figures are and then you can kind of like reverse engineer it. All right, so if I were to insure against one of these injuries from happening, yeah, it may cost me tens of thousands of dollars, but at the end of the day, if I have a, you know, the, the Tommy John procedure or an ACL or a shoulder or whatever it is, at least I know I'm protected against it. And God willing, I don't have to have the surgery and I may be out of pocket the tens of thousands. At least. I now know, I'm getting my money out of the draft. And so there's that, there's kind of both, both end of the ends of the spectrum, rather. And I, I do feel like it does make so much logical sense to protect these players. I just find it fascinating that, and look, I, I know on some level when players ultimately are, you know, being insured, like there's documents you're signing, people aren't, you know, there's NDAs involved. So it's not like you're sharing a lot of this information, which is one of the reasons why I wanted to do this podcast, just to give these families so much insight, because I, I do it. It's the whole, like, financial advisor conversation I do believe is overwhelming for families. And I would put this conversation kind of right up there with it. It's so overwhelming that instead of families are not wanting to have it at all. And I think that's unfortunately not a good thing for, for these, these kids and these parents.
- [33:34]
B
Well, disability is intended to do one thing, and that is to replace your income if you can never do. And what we're talking about an own occupation, type of arrangement. So if, for instance, I carry disability on me, if I can't be a consultant, I get paid a disability. I get paid out on my disability. Heart surgeons, neurosurgeons, they'll carry disability that's specific to their occupation, that says if I develop a tremor and can't do surgery anymore, but I can teach, you know, or I can be a real estate agent or whatever, I'm going to get paid out my benefit. Same way in a disability policy for an athlete, if it's designed to say, okay, if you get hurt and you can never play again. One of the main conversations that, one of the main questions that I'll ask a family is this what you need to worry about? What I would start thinking about is this worst case scenario, if something happened today and I could never play my sport again, how much money would I be happy with starting the next phase of what I'm going to do as a career? And if you can get that settled down and you can get a family to understand that, to say, okay, is $2 million tax free going to be enough for us to get a really good head start on starting a business? And I've got story after story after story of individuals who've received multimillion dollars, who've started their businesses and are extremely successful now, anywhere from receiving $2 million and taking that money invested in real estate or some sort Of a franchise, a combine a couple of franchises of different types of things and then they're set. They've gotten so much of a head start. I think the key is to really understand on disability what it's for. It protects that occupation. If you can never play that sport again, how can we protect it in such a way to give you a cushion to start your next level and then you can do all the add ons that you want to from that standpoint.
- [35:55]
A
Why do you think the loss of value policy, I mean I obviously have my hypothesis, but why do you think the loss of value policies have I guess, ceased to existed in, or ceased to exist in the amateur phase, at least for baseball, is my understanding.
- [36:12]
B
Two reasons. Number one, litigation, because the policy wording was so subjective that it was very hard to collect. Let me give you an example of this. With loss of value, you would have to hit a number of benefit triggers in order for that injury to cause you to drop in a draft. So let's say this, we're looking at a loss of value contract. Let's say you and I are looking at an lob contract. I'm going to have to let you know a number of things. Number one, it's not as just simple as hey, I had a bad season, I fell in the draft, so I'm going to get this money. No, you have to have an accident that causes bodily injury. Do that accident that causes bodily injury. It has to be a sole and direct reason that you drop in the draft. You have to get an offer, which means that if you are hurt so bad or perform so bad due to that injury that you don't even get an offer. Guess what? No benefit paid out, right? A lot of people didn't understand that. So if you get no offer or no benefit, it may be a PTD claim in that scenario. Another scenario would be there are, you know, if you have a loss of a loss of value claim, you don't have the opportunity to be able to get the permanent total disability piece of that. Or there could be an aggregate offset, which is pretty complex. But let's go back to it and let's say that we go back to 2016 and we're looking at a pitcher who is really high value target and they offer him, let's say a threshold of $5 million. Now what a threshold is, it means this is the, is the bar that somebody has to sign under in order to start accumulating a loss of value benefits. So let's say that individual suffered an accident that Caused bodily injury due to that accident. Caused bodily injury, they sign for a contract of $4 million. Right. And what they're going to look at is it has to be solely and directly the reason that they fell in the draft. That very language in itself is subjective.
- [38:34]
A
Sure.
- [38:34]
B
Because if somebody had off the field issues or they had a terrible season prior to having the injury, that allowed the insurance company to say that wasn't the reason that they fell in the draft. These off the field issues or this poor performance was really the reason they fell in the draft. That created lawsuits, litigation. The other thing that came on the scene that really stopped loss of value was the critical injury. So if I know that I can get a million dollars for a UCL tear, right. And let's say that I dropped and I signed and met all the criteria, the loss of value benefit triggers, such as, you know, it was solely, indirectly, it was one of the injuries that was listed on the policy and I missed 25% of the season. You know, those are some of the triggers that you had to trigger. Well, if I have a UCL tear and it's a total tear or a partial tear, I meet the policy definition, I have the surgery, I'm going to get $1 million, and guess what? I can still be the 10th pick in the, in the Major League baseball draft and it doesn't penalize me at all. They're not going to take any of that money away whatsoever. So with, with critical injury coming onto the scene, it really has pushed loss of value to be up to that level of what we were talking about with the pro. Very high value contract, high cost, you know, contract premiums and intended for that.
- [40:14]
A
I imagine the subjective issue that arises out of the draft also still is at play in the pro contract though too. Right. Because if a guy gets injured, I'm imagining that they have to defend the fact that like that was the reason why he didn't ultimately get his contract. Well, what happens if prior to the injury, he was having the worst season of his career?
- [40:35]
B
Yeah. So there are some contract wordings out there that benefit the athlete and the pro side that are not available to the, to the student athlete side yet. Just to give you an example, in the pros we may see a clause or a contract that says somebody suffers an accident that causes bodily injury and due to that accident that causes bodily injury, they miss X number of competitions or 60 days. Right. There's still a little bit of subjectivity inside of that. There's another loss of value contract out there that says you got to have one of these 30 injuries and miss 25% of the regular season or fail the X physical if it occurs in the last 25% of the regular season or miss 25% of the next regular season. So in the pro space, it is, it's a lot more defined than it is. You know, hey, somebody got hurt, they had a terrible season and they ended up, you know, filing a claim. It's gotta be solely indirectly, for the most part, as the reason that that individual fell in the draft. Excuse me, signed a con, got either draft frozen, signed a contract for less than what the threshold is. But keep, always keep this in mind. Insurance companies are always going to make money. They're going to occasionally pay claims. That's what we tell everybody. Right. And that's the reason that they've been in business for hundreds of years. Yeah, but it's there when you need it. Some of the other things, and this just one of the things that I wanted to touch on, the litigation that led to a lot of this, the lawsuits and loss of value. A lot of people don't realize that if you provide a material misrepresentation on an insurance application that is considered insurance fraud. And in some states, or in most states, a felony, depends on which class of felony that could be. Could be either Class 6 felony or Class 2 felony, which covers, I mean, which carries significant penalties as well as potential prison time. So, you know, one of the things that we want to, we always make sure that we tell the client that we're advising, make sure that you are totally honest on your applications.
- [43:20]
A
Yeah, I could see, I could see a kid almost innocently or not feeling like, oh, I don't want to let them know that this happened and it was a minor thing and they walk themselves into hot water.
- [43:33]
B
Yeah, that's a major thing when it comes back to be something you're trying to file a claim on. The other thing is always the fail safe. In most, there's nothing that's 100%, but the fail safe is sending in all of your athletic training records. Because if it's documented in the training records or the medical records, it's going to give the insurance company everything they need in order to, to appropriately underwrite the policy. And I see this as a problem a lot of times in the industry where you'll get somebody who, a broker or an insurance agent that just takes the application, maybe uses the most recent medical exam and sends in no medical records. You're asking for problems whenever you do that. Right.
- [44:23]
A
Okay, let's play a quick little game because I feel like this would be really helpful for the listener. So assume that you have a 17 year old kid who's a pitcher and you are in your line of work. Can you walk us through, I guess, designing the perfect policy and how knowing your expertise, how you would create something that protected him the most in your eyes.
- [44:56]
B
So in this game, is he deciding on whether to go to the Major League Baseball draft or whether to go to college?
- [45:04]
A
Yeah. So he's a senior right now. He's about to start his senior spring season. He definitely has an opportunity to sign in the draft. You know, I think probably looks at it like, look, I, you know, I'll, I'll go to college if I don't get offered a substantial amount of money, call it over a million dollars. If, you know, if I get that money, great, I'll sign. If not, I'm totally fine going to an SEC school.
- [45:31]
B
Right. So what would happen is either it's a conversation with the parents or a conversation with the school, the coach saying, hey, we've got this kid that's committed to us that if he doesn't hit his number, we're going to sign him and we want to know what the insurance offers are. So at that point in time, what we do is we go out to the marketplace, excuse me, we go out to the marketplace and we are able to get, you know, proposals to present back to their advisor. And I guess it'll be their advisor, their agent, and then share with them. Okay. If he doesn't hit his number, this is what the insurance companies have agreed to, this is what the school has agreed to as far as being able to pay for that. Go ahead.
- [46:16]
A
So, so if you were his dad designing the right policy, what would you again, if it was a pitcher, what would be the things in your mind weighing everything that you would, that you would like look at?
- [46:33]
B
Number one would be, if something happened to my son and he could never play baseball again, how much would he, how much would we feel comfortable with, with him being able to start his career? The second thing would be, is he available? Is he eligible for critical injury? Because if he tears that UCL his freshman year, then how long is it going to take for him, you know, if he recovers? Let's say 300,000, half a million, is that going to help offset any type of fall that he may incur in the draft later on? So I think critical injury is extremely important. So that is one of the things that in addition to the permanent total Stability that we look at.
- [47:17]
A
Got it. And then it sounded like earlier what you were saying was you would go to the university to see again, get a gauge from them as far as. Yeah. Would you guys offset the premium risk for us if we end up coming to college versus signing?
- [47:37]
B
Yes. And that is we're asked to do that probably 40, 50 times during the spring with high school baseball athletes that are making the decision on whether to go to the league or whether to come to college. And so that's one of the conversations we have is, okay, how much money would you be with?
- [48:01]
A
Got it. Okay. Yeah, that makes sense, I guess. Other than that, I had a question that I just forgot of. Oh, well, I do have three rapid fire questions, if I may. Oh, I know what I was going to ask you. Obviously you consult for these colleges.
- [48:22]
B
Right.
- [48:22]
A
If I'm a parent listening to this and I say, you know, David is really informative and I, I'd love to hire him as a consultant for us with my son. Is that something that they can do? What is that process like and what can you share about that?
- [48:37]
B
Yeah, so we do individual consults as well, as long as it doesn't interfere with our preexisting contract with the university. So if we have, you know, one of the, you know, 40 some universities that we work with, if they're, if they want to hire us, typically we don't charge for high school from that because what they're going to do is they're looking to see, okay, am I going to college or am I going to the. So if they want to see what that number is, we're more than happy to consult with them to show them what those numbers would look like. Where we really charge is we charge at the collegiate level for the colleges and then at the pro level, we engage with them in a letter of engagement as well. So at the high school level, it's more of a, we're going to try to help you figure this out. And if you go to the pros, that's great. And whenever you sign another contract, get ready to sign your second big deal. You know, remember us and the work that we did. I can't tell you how many times that's come back to, to us to be able to help somebody who we worked with seven, eight years ago who's like, oh, well, you did a good job for us here and we really appreciate everything. We're getting ready to sign a massive deal. Would you look at this for us? That's a conversation we have all the time.
- [50:06]
A
Yeah, I mean, look, that's a byproduct of doing things for the right reasons.
- [50:10]
B
Right.
- [50:11]
A
Doing good work and truly caring about. And that's why I love that you came on this podcast, really just educating these families and take something that is otherwise seems really complex and breaking it down into making it a lot more palatable for them to truly analyze and just make the best decision for their son. Truly. So.
- [50:29]
B
Right.
- [50:30]
A
Yeah, I mean, that's, that's kind of the goal. So I, I do have some rapid fire questions. Some of these we've kind of touched on already throughout, but just give me like the first thing that comes to mind. Doesn't have to be one word. It could be a sentence if you want, but just quick answers. So, number one, the single biggest mistake families make when buying disability insurance for.
- [50:48]
B
Their son, listening to one broker or the individual who's going to make money on the policy, who's selling you a policy, rather than listening to an independent voice who is not going to make any money from the insurance company.
- [51:03]
A
Amazing. I love that answer. Number two, if a family can only afford one type of coverage, what should they prioritize and why permanent total disability?
- [51:12]
B
Because if I walk out in front, if I'm that athlete and I walk out in front of a car and I'm hit and I can never play my sport again, I would rather, I would much rather collect $5 million than, you know, being able to play my sport and, and, and say, okay, I've got a minor setback because I've got an injury and you know what, I'm going to make it up later on in the league. But if it's catastrophic, career ending, I want enough cushion to where I can have my investment portfolio to perform for me. I can be a custom home builder, I can be some sort of business owner. So the number one thing that we take away from that is where are the biggest dollars in the event and what's the likelihood of that happening? So that would be the catastrophic injury.
- [51:58]
A
Got it. Great answer as well. And then the last question I have for you is, is what is the most important thing, the one thing that parents should remember from this conversation?
- [52:09]
B
Yeah, I mean, it's, I can't hone in on one particular thing. It's, it's a jerk. Well, it's like this. It's a journey and it's a relationship. Right. So it is when this is not a binary, transactional, one sided type of thing, when we engage, it is for a journey of time. And that journey of time May be, you know, six months until the kid signs a contract, and then that journey may pick up again if they go to college for another three years. And then there might be a gap in that journey until they sign their second big deal, and then we get involved on that and start educating them as well. So I think to look at it as. It's not a transaction, it's a relationship, more so than just being very transactional in the space. That's. That's the thing that I would want them to understand.
- [53:08]
A
That's great. And I'll even add, from my perspective, what I think is so valuable about what you've shared today is that I would want these families to remember is these. These insurance policies exist for a reason, right? At the end of the day, it does not hurt you to educate yourself. So no one is telling you that this is something that you have to do no matter what. But if you're truly looking out for the best interest of your son, which I know that everybody listening to this podcast is doing, it doesn't hurt just to educate yourself and ask yourself the question, what would it look like if we were to get our son protected in this way? What's the cost? You know? And then should we do it? Right? I think that would be the thing that I would want families to kind of take away from this also, because, you know, what you do is so valuable for a lot of reasons. And I think if you were to go to any single travel, baseball game, watch any one of these kids, there's a lot of families there that have invested so much money into that experience that, you know, they don't want to walk away for whatever reason, whether they're doing it because they want to watch their kid enjoy the sport they love, whether they're doing it because they think down the road there's a payoff in the draft or. Or maybe through college, whatever. The answer is, protecting themselves is, you know, again, something that is. Is wise. And. And so I appreciate you coming on this podcast. I do want to make sure that I tell everybody about the podcast that you have coming up, which is the Done and One podcast. Did I get that right?
- [54:37]
B
That's it? Yes, you did.
- [54:39]
A
I love it. So tell us about what that podcast entails and. And what are you looking to do with it?
- [54:44]
B
So this came out of a lot of thought, and what happened was we get approached a lot by individuals who want access to the people that we talk to, whether it's family members, whether it's athletes, things like that. And we don't give them access. That is a client. It's confidential relationship. But there are stories out there that need to be told. There's success stories out there of individuals who have, who have actually had extreme success on the field. They finished. Had great careers, or they may have not had a great career from the point of being able to finish strong, but they did have a disability policy that was paid out, and now they're a business owner and they're earning a tremendous amount of money. They've had great success. The other piece to that is interviewing individuals who have. Who are now in the nil space. What did it look like prior to. Compared to what it looks like now? Because you're going to have individuals who are out there who are going to earn more money in college than they'll ever earn in the pros. I would say that would be the majority of the college collegiate athlete landscape right now. And, and having good information, good surroundings and, you know, talking through the, you know, these situations, talking to administrators, talking to people on the US Olympic Committee, talking to people in the, in, in the leagues to say, okay, where do we think college athletics is going? What are the major problems? What needs to be fixed? Those kind of things. But for the most part, it's really going to be focused on really the, the athlete and, and their, you know, they, they did it and they want it in whatever capacity that is.
- [56:36]
A
That's great. So I love that. The done and one podcast. David, thanks, man. I can't thank you enough. I knew from the first time we had a conversation, I said, I need to have this guy on the podcast because you speak truth, but you have a really, really great way of explaining information that is otherwise, you know, somewhat complex and really breaking it down in a way that's digestible. So thank you.
- [57:01]
B
Thank you. I'm very honored. I appreciate it.
- [57:04]
A
We'll see you next time.