Charles Kushner has been a generous philanthropist to a host of Jewish causes and we owe him a great deal of gratitude. The sensitivity he shows for the struggle that the common Jewish family faces to pay for a Jewish education and his desire to find a solution is admirable. However, his April 23 proposal of using pools of life insurance policies as a plan to cover tuition is neither novel nor actuarially viable. In 2007, T. Boone Pickens started a similar life insurance fund-raising plan called “The Gift of a Lifetime” to generate $250,000,000 for Oklahoma State University. That scheme is now the subject of a major lawsuit by the university against the life insurance company and the agent that sold the life insurance policies. Furthermore, life insurance’s primary utility is to provide policy beneficiaries protection against financial distress or ruin due to the death of the insured. However, besides certain tax benefits, which are not applicable for the Kushner plan, life insurance is generally not a relatively good investment compared to other investment opportunities, as life insurance companies sell policies to make money.
I would suggest following the funding models of Harvard and Yale and create a significant endowment that is professionally managed and could generate investment income in perpetuity, which would alleviate the financial burden caused by the tuition crisis for all future generations. I hope Mr. Kushner continues to apply his energy, creativity and resources to address the tuition crisis, but unfortunately this life insurance proposal is a nonstarter.