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System and method for funding an organization

  • US 7,895,103 B1
  • Filed: 08/12/2008
  • Issued: 02/22/2011
  • Est. Priority Date: 08/12/2008
  • Status: Active Grant
First Claim
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1. A method for funding an organization, said method comprising the steps of:

  • (a) establishing a special purpose entity for the benefit of said organization;

    (b) identifying, using a programmed computer, life insurance policies, said life insurance policies being on individuals in whom said organization and said special purpose entity have an insurable interest, said policies having premiums, death benefits and a beneficiary,(c) calculating, using a programmed computer, predicted cash flows from said death benefits based on said premiums, a census of said individuals and mortality tables, said predicted cash flows from said death benefits having an internal rate of return (IRR),(d) based on said IRR calculated by said programmed computer, calculating a repayment schedule of a debt structure, using said programmed computer, said debt structure repaying said premiums together with interest during a debt period using said predicted cash flows from said death benefits, said debt structure having a borrowing rate, said identifying step further comprising;

    (i) sorting, using said programmed computer and said census, said individuals into classifications that determine said premiums,(ii) calculating, using said programmed computer, said predicted cash flows from said death benefits by combining said death benefits as predicted in view of said mortality tables and said payment for said premiums, said premiums corresponding to said classifications,(iii) calculating, using said programmed computer, an IRR based on said cash flow during said debt period,(iv) comparing said IRR to said borrowing rate to determine if said IRR is greater than said borrowing rate,(v) if said IRR is greater than said borrowing rate, recalculating cash flow, with said programmed computer, with a funding portion of said cash flow being payable to said organization,(vi) calculating with said programmed computer a program cost rate from said recalculated cash flow,(vi) comparing said IRR to said program cost rate, and(vii) when said IRR exceeds said program cost rate, identifying said life insurance policies;

    (e) ;

    (f) ;

    (g) issuing, by said special purpose entity, debt securities in exchange for said proceeds;

    (h) using said proceeds from the issuance of said debt securities to initiate said life insurance policies by paying said premiums on said life insurance policies, said life insurance policies being owned by said special purpose entity, said special purpose entity being beneficiary of said life insurance policies;

    (i) receiving, by said special purpose entity, said actual cash flows from said death benefits of said policies as said policies mature, said actual cash flows being uneven;

    (j) calculating, using a programmed computer, portions of said actual cash flows to be directed to funding said organization to paying financial obligations of said special purpose entity and the amount of funds, if any, required from a secondary source of funding to physically transform said uneven actual cash flows into useable, even cash flows necessary to fund said organization by providing funds for said financial obligations of said special purpose entity when said predicted cash flow falls short of said actual cash flow;

    (k) receiving by said special purpose entity, said funds, if any, from said secondary source of funding;

    (l) directing, by said special purpose entity, said portions of said actual cash flows and said funds, if any, from secondary source of funding, to fund said organization according to said schedule of payments; and

    (m) paying said financial obligations of said special purpose entity.

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