Gift of a Lifetime
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Gift of a Lifetime is a life insurance program at Oklahoma State University for alumni introduced this year to raise money for its athletic department.
[edit] Background
On March 1, 2007, Oklahoma State University announced it secured a life insurance policy program titled "Gift of a Lifetime," which works with the OSU Foundation and OSU Athletics Inc. to buy life insurance on its wealthiest alumni. OSU Athletics Inc. was formerly titled "OSU Cowboy Golf" and its board members included influential booster T. Boone Pickens, who gave $165 million to OSU Athletics in January 2006, the largest gift in National Collegiate Athletic Association history.
The Oklahoman reports Athletic Director Mike Holder, the former golf coach and chairman of OSU Cowboy Golf, "devised the cutting edge method to raise funds" on the advice of Pickens, one of the 400 richest people in the world (according to Forbes Magazine). The Los Angeles Times reports Pickens discovered the idea to insure people his age three years ago after a doctor gave him a physical and said he is insurable for life insurance. All the 27 donors in Gift of a Lifetime were required to pass a physical.
Twenty seven alumni are insured on premiums averaging an estimated $357,000 paid by OSU, and each policy returns $10 million upon each person's death. Larry Reece, the executive for major gifts and development at OSU, told the Associated Press that "most of the 25 in the initial pool are donors and season ticket holders. All are between the ages of 65 and 85."[1]
"To a layperson like myself, it's amazing insurance companies make money on this, too, but they know their business," Reece told The Oklahoman.
The beneficiary initially mentioned is OSU's athletic department, but OSU Communications said the foundation intends to expand the program for academics.
Management Compensation Group in Dallas, Texas, approached OSU with the program. John Ridings Lee, the company's executive, said the company is meeting with other colleges to establish similar programs, according to The Chronicle for Higher Education.[2]
A statue in Oklahoma allows the program to exist. Under Title 36, Chapter 1, Article 36, Sec. 3604, part A, 1: "Any individual of competent legal capacity may procure or effect an insurable contract upon his own life or body for the benefit of any person." [3]In part D, the statue states: "Life insurance contracts may be entered into in which the person paying the consideration for the insurance has no insurable interest in the life of the individual insured, where charitable, benevolent, educational or religious institutions, or their agencies, are designated as the beneficiaries thereof. In no event shall an individual be named as a beneficiary."
Another legal aspect to the program is Oklahoma state House Bill 1384, which grants universities the right to keep all donor information confidential. The OSU Foundation worked with the University of Oklahoma and Mark Thomas, president of the Oklahoma Press Association, to craft the legislation presented to the state house by Rep. Terry Ingmire, R-Stillwater (Okla.). Joey Senat, the state's Freedom of Information director, is against the bill, saying secrecy could lead to corruption, perhaps not with "Gift of a Lifetime," but other donations for the state's institutions of higher education.
[edit] Controversy
Lionel Raff, OSU Regents professor, said "The comments I've heard range from morally bankrupt to outrageous," according to The Los Angeles Times.[4] "It's totally inappropriate for any organization to be betting on how long its alumni will live."
In the same Times article, "Robert Lew, a life insurance agent in San Francisco who regularly looks at new insurance programs, questions whether [OSU] will get the financial windfall it expects because of the cost of borrowing the money to buy the policies and because the donors might live a long time. His studies of somewhat similar investment programs suggest that 'the money just ain't going to be there.'"
U.S. Sen. Chuck Grassley, R-Iowa, issued a press release on April 4 to include the program into an inquiry regarding tax exemptions for universities.[[5]] The Congressional Quarterly reports Grassley wants to know more about the program.
