← Back to the libraryYouth and Recruiting

How do loss-of-value and disability insurance protect a young basketball player?

By McKinley Malbrough III, J.D., MS-HRM · Certified WNBA player agent · Former certified NBA agent

Published October 19, 2026. Last updated October 19, 2026.

A young player's earning power sits in a first contract that has not been signed yet. That is the gap these policies address. This guide explains what each kind of cover does, who can buy it, how premiums are financed and what to ask before buying. It does not recommend any insurer or product. Costs that follow a player after the draft are covered in the NIL taxes guide, and the paths to a pro contract are in the professional basketball guide.

What is the difference between disability insurance and loss-of-value insurance?

Permanent total disability insurance pays a lump sum if an injury or illness during the policy period permanently prevents the athlete from playing professionally, while loss-of-value insurance pays the difference between the expected first pro contract and a lower one, per a Pillsbury Winthrop Shaw Pittman article from February 2020. That article describes loss of value as a rider on a permanent total disability policy and says it applies only when the injury or illness was the sole cause of the drop in contract value.

What is the NCAA exceptional student-athlete disability insurance program?

The NCAA Exceptional Student-Athlete Disability Insurance program is a group policy for athletes with remaining eligibility and professional potential, and the athlete or family pays the premium, per a Nebraska Law Review article from April 2021. Benefits are paid as a lump sum after an elimination period of twelve consecutive months, and the policy term is at most 24 months, per the same article.

The 2021 article listed a coverage maximum of $10 million for men's basketball and $250,000 for women's basketball, and the 2020 article gave the same figures. Both sources put the draft test for basketball at a projected first-round pick. They differ only for football and hockey, so a family can ask the program administrator what applies now. The NCAA's own program page did not list coverage terms when checked on October 19, 2026.

How does loss-of-value insurance connect to draft slot?

A first-round pick's salary rises with draft position, so a fall costs money, and loss-of-value insurance is designed for that gap. The scale is explained in the rookie scale guide. Insurance Business Magazine described the cover as protecting athletes whose injuries cause them to fall in the draft or to receive a smaller signing bonus and salary, per its October 2014 report.

The NCAA program does not offer the cover. The Nebraska article says it is available only if the athlete personally buys it. Draft position itself is shaped by the lottery, which the 3-2-1 lottery post covers. Eligibility to enter is in the NBA draft eligibility guide.

Can a college player buy insurance, and who pays?

Yes, Division I athletes can buy it, but the athlete pays unless a school or other party does, and the NCAA does not, per the Nebraska article. Before October 15, 2014, athletes could not borrow against future earnings to pay premiums. An NCAA waiver that day let a Division I athlete take a loan from an established, accredited commercial lender to buy loss-of-value insurance, per Insurance Business Magazine. The NCAA then amended Division I bylaws 12.1.2.4.4 and 16.11.1.4 for that purpose, with a lender rule and no third party involved in securing the loan, per the NCAA legislative database.

Whether name, image and likeness income or school revenue sharing can pay premiums is a separate question. The sources reviewed for this article do not say. Campus compliance is the office that can answer. How those payments work is in the revenue sharing guide.

How are premiums priced and financed?

Premiums are a share of the amount insured. The Nebraska article gave up to $10,000 to $12,000 per $1 million for the NCAA program, from data around 2010. The 2020 Pillsbury article gave about $5,000 to $6,000 per $1 million for permanent total disability and about $10,000 to $11,000 per $1 million for loss of value, and put $5 million of each at about $75,000. Those figures are several years old, mostly from football, and are not current quotes. The program loan lets approved athletes defer repayment until they sign a pro contract, benefits become payable or the coverage ends, per the Nebraska article.

The reason to read the loan terms is simple. A premium financed against a future contract is debt that arrives before the contract does.

What exclusions and limits should a family look for?

Start with the sole-cause test, because a drop in draft position can have several causes and the policy pays only when the injury was the sole one. Agents notice that families focus on the coverage amount and skip the definitions, when the definitions decide whether a claim is paid. The sources reviewed do not list the exclusions in a standard athlete policy, so a family can ask the broker for the complete exclusion list in writing. Other useful questions are what proves a loss, who decides it and how long a claim takes.

Coverage that comes with an NBA contract is a different thing. When a team agrees to protect a player's base salary, Article II, Section 4 of the 2023 CBA says that protection still applies if the team terminates the contract because of injury or illness, and it excludes causes such as intentional self-inflicted injury and abuse of alcohol or controlled substances. That is team-agreed protection on a signed contract. It does not replace a policy bought before the draft.

Who should a family ask before buying?

Families often ask a licensed insurance professional, a lawyer who can read the policy and campus compliance, and ask any adviser how they are paid. The questions to put to a prospective adviser are in the guide on who young players should trust. A policy is one tool in a plan, not a guarantee of any outcome.