NCAA approves waiver for players to borrow against future earnings for insurance policies

Dr. Saturday
Oregon quarterback Marcus Mariota passes during the first half of a NCAA college football game against UCLA, Saturday, Oct. 11, 2014, in Pasadena, Calif. (AP Photo/Mark J. Terrill)
Oregon quarterback Marcus Mariota passes during the first half of a NCAA college football game against UCLA, Saturday, Oct. 11, 2014, in Pasadena, Calif. (AP Photo/Mark J. Terrill)

The NCAA will now allow players seeking loss-of-value insurance to get a waiver to secure a loan against their future earnings to purchase the insurance.

Loss-of-value insurance has become more popular recently as top players have taken out policies to protect themselves in case of catastrophic injuries. Florida State QB Jameis Winston, Oregon QB Marcus Mariota and Texas A&M OT Cedric Ogbuehi all have loss-of-value polices. Florida State and Texas A&M are paying for Winston and Ogbuehi's policies via the NCAA-approved student assistance fund.

Here's the NCAA's full release.

The academic and membership affairs staff approved a waiver to allow a Division I student-athlete to borrow against his future earnings potential to secure a loan from an established, accredited commercial lending institution, for the purpose of purchasing loss-of-value insurance.  The Division I amateur status and benefits, gifts and services legislation specifies that student-athletes may borrow against their future earnings potential from an established, accredited commercial lending institution exclusively for the purpose of purchasing insurance (with no cash surrender value) against a disabling injury or illness that would prevent the individual from pursuing a chosen career, provided a third party (including a representative of an institution's athletics interests) is not involved in arrangements for securing the loan.  Staff waived the normal application of the amateur status and benefits, gifts and services to permit the student-athlete to secure a loan to pay for the premium for loss-of-value insurance under the same circumstances that a student-athlete is permitted to obtain a loan to pay the premium for disabling-injury insurance. 

In issuing this waiver, the staff noted that the intent of NCAA Division I Proposal No. 2009-23 was to address the growing trend within the community of agents and financial advisors to arrange disabling-injury insurance policies and loans for student-athletes and to allow institutions to assist student-athletes with securing insurance in order to eliminate improper third-party involvement and alleviate the pressures on student-athletes to seek out this assistance from third parties.  The staff also noted institutions are encouraged to work with their conference offices to propose legislation for the 2015-16 legislative cycle.

Winston's policy is valued at between $8-10 million. Ogbuehi said that Texas A&M's decision to take out the policy for him helped sway his decision to return to school for another year. The families of Mariota and three other Oregon players paid for loss-of-value policies but after the school found out that what A&M and FSU did was within NCAA guidelines, the school reimbursed the families.

The NCAA decision is a good move as well, as the student assistance funds at each school are not unlimited. While expensive policies (the policy of Ogbuehi, a likely first-round pick is approximately $50,000) obviously go towards star players, the waiver potentially frees up money for other athletes to utilize in the student assistance fund.

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Nick Bromberg is the assistant editor of Dr. Saturday on Yahoo Sports. Have a tip? Email him at nickbromberg@yahoo.com or follow him on Twitter!

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