Disability Insurance Costs Keeping NHL Players Off The Ice

As reported in the National Post and the Globe and Mail, exorbitant insurance costs are keeping NHL players off the ice at the upcoming orientation camp for the Olympic men’s hockey team. Steve Yzerman, the executive director of the national men’s hockey team, would much prefer to have the players on the ice at the upcoming orientation, but the price tag is simply too high for Hockey Canada.

The four-day camp that starts Sunday, August 25, in Calgary hopes to give management, the coaching staff, and Hockey Canada the opportunity to present players with the team’s plans for Sochi, such as playing schemes, international rules and regulations, and logistics. Hockey Canada has held similar camps prior to Olympic events. Some of the logistic and preparation issues include how the players are going to the event, a walkthrough of the venues, where friends and family stay, and the tournament’s drug testing policy. However, getting the players on the ice won’t be happening. Hockey Canada president Bob Nicholson said that it would “cost over $1-million to have the invited 47 players on the ice.” According to capgeek.com, the players combined 2013–2014 salary total was $259 million.

LSM Insurance expert Tamara Humphries points out that insuring high-profile athletes is often a challenge. Traditional carriers will generally not underwrite professional athletes. There are a few reasons for this. Their income levels well exceed maximum issue limits for most traditional carriers. Many top flight athletes make incomes in excess of $10 million a year. Most traditional disability insurance providers cap the monthly benefit amount at $25,000 a month or $300,000 a year, and this does little to protect these high-profile athletes’ incomes. There is also very limited claims experience for professional athletes, and insurance companies need accurate claims experience to set pricing.

The number of athletes in a given sport is very limited, and the risk surrounding that sport is often a moving target. If we look at NHL players as an example, these players are skating faster and shooting the puck much harder than they were 20 years ago. The equipment itself can also influence risk. Today’s hockey sticks are generating more force when a player shoots the puck, while better skates are also allowing players to skate faster. A quicker puck and faster skates lend themselves to an increased likelihood of injury.

However, it’s not just high-profile athletes who may have a hard time getting disability insurance. The increased popularity in combat sports has also posed a unique challenge for insurers.

Mixed martial artists — even those earning limited incomes — may also find it very difficult to obtain disability insurance. These sports have a high risk, and traditional carriers simply do not want to underwrite these athletes.

Tamara Humphries points out, “These athletes will likely have to look at a speciality carrier that works with high-risk athletes.” She also says, “Weekend warriors should check the exclusions within their personal or group disability policies.”

Many standard disability policies contain exclusions if the disability relates to participation in what the insurance company deems a hazardous activity. The applicant should read the application very carefully. If the questionnaire includes a question related to participation in certain sports and this question is not answered accurately, the application could be considered null and void.

Other variables going into the pricing of a disability policy include the insured’s age, smoking status, and overall health. The plan design also impacts how much the applicant will pay. The longer the elimination period — which relates to how long until the policy pays out — the lower the premium. Most disability policies offer elimination periods of 30, 60, or 90 days. The benefit period of the policy refers to how long the benefit is paid out for. The longer the benefit period, the higher the premium. Benefit periods can be two years, five years, or to age 65.

You can also add other riders to the policy to enhance the overall level of protection. An own occupation rider enhances definitions of “disability” above what is found in a standard policy. This rider is only available for certain occupations. A future income option rider allows the insured to upgrade their coverage in the future without a medical examination. This can be a nice feature for athletes who have limited incomes now but big earning potential. Another popular rider is a cost of living benefit, which allows the insured’s monthly benefit to stay in line with inflation.