Funding Methods for
Cryopreservation at Alcor
The following four funding methods are currently accepted by Alcor for new applicants and for supplemental funding for existing members. Full pre-funding is required for Alcor membership, which includes Alcor’s best efforts at cryopreservation (cryonic suspension), long-term care, and recovery (see Costs: “Alcor Cryopreservation Agreement - Schedule A - Required Costs and Cryopreservation Fund Minimums”). Infrequently, under special circumstances, an additional alternative funding arrangement not shown here may be considered. To assure Alcor’s ability to provide proper care, necessary components of any funding method must include security, reliability and liquidity. To the extent possible, regardless of the funding method selected, the funding provided reverts back to the former member in the event of any membership cancellation. In addition to cryopreservation funding, members have modest annual dues or equivalent (Life Membership), and standby charges (Comprehensive Member Standby); see Costs, for details. The Alcor Foundation encourages those considering new membership to complete their arrangements expeditiously, by using the most-practical current funding method available which satisfies their individual circumstances. “Delay can be hazardous to one’s health!”
1. Life Insurance
Used by the vast majority of current Alcor members, this is the most typical funding arrangement because it is affordable on a day-to-day basis (see table below for illustrative costs). Alcor is designated as both the beneficiary and owner of the life insurance policy (revocable if membership terminated), although Alcor may accept co-ownership and/or collateral assignment on large policies. The death benefit must equal or exceed the amount required for cryopreservation. Periodic premiums are paid to the life insurance company (an independent business entity from the Alcor Foundation), thus enabling the cost to be spread over an extended period of time. Alcor makes a claim on the policy only after the legal death of the member. Only highly-rated insurance companies (rated “A-” or better by A.M. Best should be considered by the applicant.
Types of Life Insurance. There are three types of life insurance: Term Insurance, Whole Life Insurance, and Universal Life Insurance.
- Term Insurance offers coverage for a “term” or period of time, such as 10 years or 20 years. During that term, the cost of insurance does not change. Term Insurance is a low-cost option and can often be converted to a Whole or Universal Life policy, which will cost more but will not terminate after a period of time. If using a Term policy, the applicant should ensure that it can be converted or renewed. Otherwise, changes in health status during the term can leave a person uninsurable. If the policy terminates before being converted, the Alcor membership will not continue unless a new policy is obtained.
- Whole Life Insurance is insurance for the duration of a person’s life (no expiration date) and costs more than Term Insurance. It builds cash or equity over time, which is tax deferred and protected from creditors. In the case of a limited pay whole life or universal life policy, the policy can accumulate enough cash value to become "Paid up." This means no further premiums are due and the policy will remain in place until the face amount is paid out. In later years of life, when earning power may be lower, this can be helpful, as it keeps the policy in force without making payments.
- Universal Life Insurance, also called Adjustable Life, can be thought of as an account in which money grows at current interest rates. Out of this fund, the insurance company deducts the cost of insurance. The cost for a Universal Life policy is typically midway between Term and Whole Life policies. Payments to a Universal Life policy can be increased or decreased within broad limits defined by the policy. It is possible to "Pay up" the policy with a single payment lump sum or pay the policy off over 7 years. Modern Universal Life policies sometimes have an underlying guaranteed rider which enables these policies to have the safety of Whole Life Insurance, along with better cash accumulation and greater flexibility of payments.
Illustrative Monthly Premiums for Life Insurance. The table below provides some illustative rates for life insurance. All rates quoted August 2010 with an A-rated carrier, for a “preferred non-tobacco user.” The first example below is for a 30-year level term life insurance policy, upgradeable to whole/universal life insurance with no evidence of insurability. The remaining examples are for universal life with a “guarantee to age 120” rider providing that premiums will not increase and benefit amounts will not decrease until age 120. Quotes provided by insurance agent and Alcor member Rudi Hoffman.
29-year old female,
|29-year old female,
|34-year old male,
|62-year old male,
For life insurance brokers / agents who have previous experience with Alcor’s requirements (no endorsements are given or implied, consistent with Alcor’s status as a non-profit Foundation), see Insurance Agents.
2. Prepaid - Cash or Equivalent
Funds may be transferred to Alcor’s secure prepaid Smith-Barney account in the form of check, money order, credit card, debit card, wire transfer, federally-insured certificates of deposit, marketable securities, other financial instruments, etc., or combinations thereof. If prepayment is made in marketable securities, Alcor may liquidate the marketable securities upon receipt. The funds are retained individually for the member within the government insured, prepaid account until required for cryopreservation. Interest is compounded within the account as a tax deductible donation to Alcor or conveyed to the member, at the member’s option. The greater of one hundred dollars ($100.00) per year or two percent (2%) of the annual interest generated in the account will be retained by Alcor as an unqualified gift to cover administrative fees for maintaining the account. The prepaid option is usually the fastest method of funding, and therefore often provides the shortest path to completing the membership sign-up process. Prepaid arrangements normally require the least time investment for the applicant and typically are the most appropriate for those under severe time constraints (as with a last-minute membership) or where the out-of-pocket funding cost is of relatively minor concern to the applicant. Depending on the applicant’s health and age, which affect the cost of insurance, prepaid funding may be the least expensive funding mechanism.
All trusts involve some form of fees to the oversight trust company. Some applicants may perceive a potential advantage of trust funding, as it introduces third-party involvement in the trust company, which pays Alcor after the terms of your contract with Alcor have been satisfied.
- Alcor Standard Trust: This legal instrument is the most widely used trust document among current Alcor members. The two-part document (the Funding Agreement and the Revocable Cryopreservation Trust) has been fully approved by Alcor legal counsel and the Alcor Board of Directors, and is therefore immediately available in its existing format and content. The Alcor Standard Trust is designed to be entirely autonomous from a member’s estate, to provide secure Alcor membership funding. Nevertheless, it is recommended that this Standard Trust be appropriately considered when arranging one’s complete estate financial plan.
- Special Trusts: Pre-existing and individually tailored trusts, as well as adaptations of the Alcor Standard Trust, can be accommodated to fund new memberships. To assure the member’s proper cryopreservation, long-term care and restoration, and the security of current members and the Alcor Foundation, special trusts must be reviewed and approved by Alcor legal counsel, at applicant’s expense; the cost varies with the document’s complexity and counsel’s time. Special trusts require specific approval by the Alcor Board of Directors. Although more complex than some other funding options, a number of members have found special trusts to best meet their particular needs.
An annuity is “a savings plan with a life-insurance company”. As with prepaid funding, a lump sum is paid up-front, equivalent to at least the amount necessary to qualify for the applicant’s Alcor membership. But the payment is to a life-insurance company entirely separate from Alcor, to establish the annuity. Amounts above the minimum funding may be added to the annuity at any time. An annuity can provide the same level of certainty of funds being available to Alcor as a life insurance policy, without the restrictions of obtaining life insurance (age, driving record, health, etc.) and may provide a higher rate of interest return than other forms of funding.
Alcor Requirements for Annuities:
- A mechanism must exist to allow Alcor to continually monitor on-line the availability of the accounts earmarked for cryonics funding.
- In the event of the annuitant’s death, all back end fees and surrender penalties must be waived.
- Alcor must be the irrevocable beneficiary.
- Only guaranteed, fixed annuities are accepted.
- At least the minimum funding level must be maintained.
- The insurance company must be rated “A-” or better by A.M. Best.
The only type acceptable to Alcor is a fixed annuity. In this plan, the life insurance company provides a guarantee that the principal (the initial lump sum) and the interest (the growth on the account) remain available for payment to the beneficiary. Some fixed annuities declare a specified rate for a given time period, similar in concept to a bank certificate of deposit (CD). One year, five year, and ten year periods are available, all with guaranteed interest rates. After the end of the period, a new rate is established by the insurer.
A more recent fixed annuity is the guaranteed index annuity. This is a type of fixed annuity that has the following features:
- The principal (the original lump sum) is guaranteed. In most cases and states, this is guaranteed by both the highly-rated insurance company and the state government (in the unlikely event of insurance-company failure).
- The growth on the money is determined by the change in a stock market index, such as the Standard and Poor’s 500 index. A floor is set so that a declining index does not decrease the annuity’s value.
- Growth in these annuities accumulates tax-free until withdrawal, allowing compounding of interest that might otherwise be reduced by taxation.
- Upon pronouncement of the owner’s “death,” the annuity proceeds pass directly to the specified beneficiary. With a properly-designated beneficiary, there is no delay or reduction of assets which otherwise could be caused by a probate process.
The annuity owner can remain the individual who is doing the funding. Also, while not technically required, it is recommended that the life insurance company issuing the policy be apprised of the annuity’s purpose.
Annuities meeting Alcor criteria require no additional legal or Board review. Modified and individualized annuities may be used, and are treated similarly to special trusts, requiring specific legal review at applicant’s expense, and Alcor Board of Director approval.
Additional Funding Considerations
Additional funding (beyond the minimum membership requirements) is accepted and encouraged by the Alcor Foundation. Pre-arranged enhanced funding is strongly recommended for covering air-ambulance costs from cryotransport locations originating away from the Scottsdale / Phoenix area, to strengthen standby services, to aid a member’s unexpected legal defense, and to address unanticipated problems. Any unused funds are allocated per the member’s instructions in his/her contract with the Alcor Foundation. Additionally, a significant number of members have provided extra generic funding to aid and strengthen the Foundation, on the premise that a stronger organization is likely to provide a stronger bridge to their future. Supplemental funding can be achieved by extending the funding amount within any of the above funding methods beyond membership minimums.
Based on the principle of assuring its members, to the highest degree possible, the best cryopreservation, long-term care, and quality future revival, only secure funding strategies with assured rapid liquidity are considered. Therefore many forms of assets are not normally suitable for funding membership, including real estate, many investment instruments (stocks, bonds, mutual funds, etc.), commercial paper, certain forms of physical assets, wills, and so forth. Certain types of group life-insurance policies (as furnished through a member’s employer, etc.) may be suitable if the policy can be owned by Alcor or assigned to Alcor. Many assets that are not suitable as-is may be converted by the applicant to another form that is suitable for funding purposes (i.e. the sale of real estate, mutual funds, etc.). For your special situation, discuss details with the Alcor Membership Coordinator.
Country of Residence:
Alcor encourages membership from all countries. Although the vast majority of Alcor’s members are from the United States and Canada, Alcor currently has members in more than ten different countries, including Australia and within Europe and Asia. The treatment of certain financial instruments may be affected by the residence of an applicant. For your specific situation, discuss details with the Alcor Membership Coordinator.
For quite some time Alcor has accepted life insurance policies naming Alcor as the owner and beneficiary. Since insurance companies in countries outside the United States often are not willing to name a US organization as the policy owner, the Alcor Board of Directors on December 2, 2006, approved a life insurance funding option for residents of the United Kingdom and other countries outside the United States, with the following stipulations:
- Alcor is named the beneficiary.
- There should either be no collateral assignees, or Alcor must be named as the assignee.
- The policy is placed in absolute trust.
- A minimum of one Alcor representative is named as a Trustee.
- The Death Benefit (or Sum Assured) is permanently maintained equal to or in excess of the Cryopreservation Minimum, in equivalent United States Dollars.
- Alcor is to be notified if policy lapses.
- Premium is paid current.
- Alcor requires a copy of the policy, Policy Schedule, stamped Trust Request Form (must be Absolute Trust), and stamped Deed (naming Alcor as an additional Trustee).