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amount value.”4 The $489,000 death benefit, plus the unearned
premium account value, would be paid to the Roark Foundation,
with 75 percent ultimately going to the Gideons, but NCF would be
able to use the remaining 25 percent for its own programs. The
Roark Trust would receive at least the remaining $1.711 million
of the death benefit.5
3. If NCF made some of the payments but then stopped.
Under this option, NCF’s portion of the death benefit would be
fixed at $489,000 until the accrued premiums earned were equal to
NCF’s payments. NCF’s interest in the policy would then end, but
if the Trust and NCF agreed to terminate the policy while some of
the premiums remained unearned, NCF would at least get those
premiums back.
Pippenger was also involved in the arrangement. Whenever
Mr. Roark sent in money to NCF, Pippenger would fill out and send
4 As is common with insurance companies, IDS Life earns its
premiums by accepting risk for a given time. It thus “earns”
accelerated premiums only over that time. The “unearned premium
account value” was the excess of the premiums NCF had paid over
the amount IDS Life had earned.
5 The Roark Trust would actually receive the larger of the
death benefit or a percentage of the “policy value.” In the
early years of the policy, the death benefit would almost
certainly be larger than the policy value. However, as with most
universal life policies, the longer the Roarks’ policy was in
effect, the more likely it would be that the accounts into which
the accelerated premiums were invested would grow in value and
eventually exceed the death benefit. Under the Plan Agreement,
this buildup in value would accrue entirely to the Trust’s
benefit, not NCF’s.
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Last modified: May 25, 2011