Oklahoma State Gambled Millions That Its Boosters Would Die, And Lost

[jocoshock]

http://deadspin.com/5894864/oklahoma-state-gambled-millions-that-its-boosters-would-die-and-lost

Back in 2007, on the advice of Pickens, the Cowboys athletic department purchased policies for 27 of their very biggest fans. Most were donors and season ticket holders, and all were over the age of 65. Upon an insured donor's death, Lincoln Financial would pay out $10 million to the sole beneficiary, the OSU athletic department. It was called the "Gift of a Lifetime" program, and it was a wager, like all life insurance, but presumably the actuarial tables were in the university's favor.

Then no one died...

[Kung Wu]

Ouch. Does this have stupid written all over it or is it just me?

[wu_shizzle]

nm

[1972Shocker]

Obviously with hind sight it was not a good move financially and it is certainly questionable morally and ethically to make bet to benefit from the death of your boosters.

Can you imagine if a couple of boosters had died from other than natural causes or under unusual circumstances. Oh my, that would have been fun.

[ShockTalk]

Ouch. Does this have stupid written all over it or is it just me?

No, it's really stupid.

[Kung Wu]

Hey guys I got this AWESOME idea! Lets start a program where we HOPE our most fiscally loyal fans die! Wait, no! Let's start a program where we NEED them to die!! It'll be awesome, what could go wrong?

[AG1219]

Do any of you guys have life insurance plans set up for yourself or families? I am gambling a few bucks a month that if I die, my wife and son will be afforded the luxury of continuing the life they currently live without the dependance of my income. This in a weird way is the same thing. Okie St depends on their big donors each year coming through with a large donation to run their university and/or athletic department. If Donor X dies, that money doesn't come in next year, but they have an insurance policy to be able to still get that money.. Boone or someone saw the odds and thought it would be worth the risk.

What is weird is that Okie St wants their money back, I will agree with you guys that I don't quite understand that.

[Kung Wu]

Do any of you guys have life insurance plans set up for yourself or families? I am gambling a few bucks a month that if I die, my wife and son will be afforded the luxury of continuing the life they currently live without the dependance of my income. This in a weird way is the same thing. Okie St depends on their big donors each year coming through with a large donation to run their university and/or athletic department. If Donor X dies, that money doesn't come in next year, but they have an insurance policy to be able to still get that money.. Boone or someone saw the odds and thought it would be worth the risk.

What is weird is that Okie St wants their money back, I will agree with you guys that I don't quite understand that.

I think you are missing the key point. There is certainly nothing wrong with life insurance. However, would you commit yourself to such a large premium that it would potentially bankrupt your family if you dont die?

[1972Shocker]

The OSU situation is really not like buying life insurance on yourself for your wife's or your children's benefit. It is more akin to you buying life insurance on your parents for your benefit and then hoping they die ASAP for the biggest payoff so you can live well.

[ShockTalk]

Generally, one buys life insurance to protect others/family against a premature death which could put financial hardship upon them or to cover a debt or expenses that could not otherwise be easily covered. If you live, to me, that's still better than the alternative. The idea is to spread the risk over a large group. Look at it as a firing squad. You have 100 people lined up that have families that depend on their income. Now you have another 100 people with rifles, but only 10 have live bullets. What's your family worth to you if someone offers cents on the dollar to protect your family if you're the unfortunate one.

Actuarially (if that's the word/spelling), an insurance company calculates the odds of death for each in a group, plus enough extra to cover their expenses and some profit, then charges a premium to each in that group. The insurance company and the insured both want the insured to live, not die prematurely. In this case with Okie St, they were the owner/beneficiary and obviously, for Okie St to come out on this deal, they wanted their supporters to die prematurely and got real nervous when nobody died quickly. They were stupid to do this.

[1972Shocker]

Years ago I had an insurance executive tell me that he was not in the business of taking a risk. He was in the business of spreading risk among his policyholders and charging enough to cover his expenses and make a profit.

I he was taking any significant risk and/or not charging enough to make a profit then he was not doing his job properly.

[AG1219]

I think you are missing the key point. There is certainly nothing wrong with life insurance. However, would you commit yourself to such a large premium that it would potentially bankrupt your family if you dont die?

I read it as they are questioning is what they did morally and ethically wrong? I dont think so, since to me it seems the same as life insurance. Now to your point of is it stupid if it causes great financial loss (bankrupt, etc.), thats on Boone or whoever saw the numbers and decided to take the risk. I agree it looks stupid, but as @1972Shocker: said, thats hindsight. Since we don't know the ages/health of the donors, one could argue that OSU pulled the plug on the investment/risk too soon. We'll never know.

I do find it ironic that the story is being reported on "dead"spin.

[1972Shocker]

I do find it ironic that the story is being reported on "dead"spin.

That is funny. :biggrin-new:

[SubGod22]

They pulled the plug and now all 10 will die in the next year or so

[ShockTalk]

I read it as they are questioning is what they did morally and ethically wrong? I dont think so, since to me it seems the same as life insurance. Now to your point of is it stupid if it causes great financial loss (bankrupt, etc.), thats on Boone or whoever saw the numbers and decided to take the risk. I agree it looks stupid, but as @1972Shocker said, thats hindsight. Since we don't know the ages/health of the donors, one could argue that OSU pulled the plug on the investment/risk too soon. We'll never know.

I do find it ironic that the story is being reported on "dead"spin.

Moot point. An insurance takes all that into consideration before hand and the premium charged is based on each and everyone of their ages/health. Odds are, over time, OSU breaks about even.