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ERIC Number: EJ769767
Record Type: Journal
Publication Date: 2007-May-25
Pages: 1
Abstractor: ERIC
Reference Count: N/A
ISBN: N/A
ISSN: ISSN-0009-5982
Life-Insurance Deals May Be Costly for Colleges
Wolverton, Brad
Chronicle of Higher Education, v53 n38 pA1 May 2007
In the past two months, nearly 100 colleges have started exploring a financial concept that seems almost too good to be true: collecting hundreds of millions of dollars for long-term capital needs by taking out life-insurance policies on wealthy alumni. The idea started with Oklahoma State University, which said this spring that it had secured some $270 million for its athletics program by setting up life-insurance policies on 27 boosters. The university said it would borrow $20 million to pay for the policies and be the sole beneficiary of the plans after the donors died. Some college officials see life-insurance policies as a foolproof way to preserve the long-term financial health of their institutions. As long as they own the plans themselves, the colleges believe they will receive the full benefits when their donors die. But some insurance experts worry that agents' commissions, investment uncertainties, and longer life spans could cut into the money colleges ultimately receive from policies. State insurance commissioners who have heard about colleges' growing interest in the arrangements warn them to proceed with caution before establishing plans.
Chronicle of Higher Education. 1255 23rd Street NW Suite 700, Washington, DC 20037. Tel: 800-728-2803; e-mail: circulation@chronicle.com; Web site: http://chronicle.com/
Publication Type: Journal Articles; Reports - Descriptive
Education Level: Higher Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A
Identifiers - Location: Florida; Oklahoma