Life after death

Oklahoma State University, the heart of the Bible Belt, discovered there is in fact life after death. That is, life for its athletics department, after the death of its “respected” and “distinguished” alumni. \nLast week the university announced it had borrowed $20 million to pay for the premiums of 28 life-insurance policies, each worth about $10 million. The insured are all between 65 and 85, meaning the university will begin receiving annuity payments totaling some $280 million within the next 10 to 15 years. The policies are the brainchild of the university’s alumnus Boone Pickens, who wants to leave a powerful legacy at his alma mater. “We’d always joke around that we’re all going to go to that great cowboy nation in the sky one day, and this is a chance to leave a legacy and an impact on the future,” said Larry Reece, executive director of major gifts and development for the university.\nYou might be wondering how Oklahoma State University and the insurance company could both be happy in the end. Life insurance is a very confusing business that involves insanely complex statistical algorithms that we will neither try to comprehend nor explain. However, the process basically works like this: When an individual takes out a policy, he or she is essentially betting against his own longevity. Let’s say a $10 million policy has a yearly premium of $10,000, which means the insured will pay the insurance company $10,000 per year until that person dies, at which point the insurance company will pay the beneficiary $10 million. In the interim, the insurance company will take the money it receives in premiums and invest it, hopefully earning more than the millions being paid out.\nWhy not simply invest $20 million in McDonald’s or Starbucks and cut out the middle-man? The reason is simple enough: Life-insurance claims can be exempt from Federal Estate Taxes, known lovingly among Republicans as the “death tax.” By “investing” the $20 million in life-insurance policies, Oklahoma State hopes to create a tax shield for its financial future.\nSo when will our distinguished trustees, and noted alumni recognize their own impending deaths in order to save our failing athletics department? IU ought to start taking out policies on everyone it can, starting with the oldest: the trustees. God knows they’re just days away from keeling over anyway. \nThe new athletics facilities being planned will cost the University an estimated $55 million. We could pay for the entire construction by rubbing out just four trustees, and have four more cash cows left over just in case we should need to renovate Ballantine Hall. \nOklahoma State University’s plan is so brilliant that Texas Tech University, the home of former IU basketball coach Bobby Knight, is considering a similar program. We cannot allow this to happen. The perfectly morbid key to fiscal stability in IU’s athletics department is a double-indemnity clause on the dangerously unstable Knight, which would provide double the pay-out in the event of death by folding chair to the face during a basketball game.