System, method, and computer program product for providing stabilized annuity payments and control of investments in a variable annuity

• US 20020184129A1
• Filed: 02/20/2002
• Published: 12/05/2002
• Est. Priority Date: 02/20/2001
• Status: Active Grant

• Current Assignee: Prudential Insurance Company of America (Prudential Financial Incorporated)
• Original Assignee: Prudential Insurance Company of America (Prudential Financial Incorporated)
• Inventors: Kuperstock, N. David, Arena, Robert, Schwartz, Robert, Boronow, Gordon, OʼDonnell, Robert
• Granted Patent: US 7,401,037 B2
• Time in Patent Office: Days
• US Class Current: 705/35
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

A system, method, and computer program product for providing stabilized annuity payments and control of investments in a variable annuity, the system comprising a processor, a memory, and a computer program stored in the memory. The computer program allocates the short and long term risks associated with an investment to the potential beneficiaries of the annuitant by controlling the allocation of assets between two investment pools. The annuitant pool is the pool on which annuity payments are based and the beneficiary pool contains assets that are provided to the beneficiaries upon the death of the annuitant. The beneficiary pool is used as a cushion to isolate the contents of the annuitant pool from fluctuations in value. The beneficiary pool is initially funded with sufficient assets to minimize the likelihood of its depletion under fairly conservative estimates of market conditions. If the underlying investments perform poorly, assets from the beneficiary pool are reallocated to the annuity pool in order to maintain the existing annuity payment. Thus, for as long as the beneficiary pool is not depleted, the annuity payment is stabilized and will not decrease. If the underlying investments perform favorably, increasing in value, excess amounts above a set trigger level amount will be periodically transferred to the annuitant pool. As these gains are transferred to the annuity pool, the annuity payment amounts will be increased accordingly.

Claims

1. A method of managing assets for stabilizing payment amounts in a series of anticipated periodic payments over a time period using a computer having a memory, the method comprising the steps of:

storing information relating to said assets and said series of anticipated periodic payments in memory;

determining the current value of said assets;

defining a first pool by allocating a portion of said assets to said first pool having a first value representing a present value of the anticipated periodic payments;

defining a second pool by allocating a portion of said assets to said second pool having a second value representing the current value of said assets less said first value;

determining a third value representing the current value of the assets in said first pool at periodic intervals over the time period;

comparing said third value to a fourth value representing a present value of the remaining anticipated periodic payments; and

when said third value is less than said fourth value, reallocating a portion of said assets from said second pool to said first pool so that said first asset pool has a current value representing said fourth value.

2. The method of claim 1, further comprising the steps of:

defining a first trigger level representing a value which is a predetermined amount greater than said second value;

determining a fifth value representing the current value of the assets in said second pool at periodic intervals over the time period;

comparing said fifth value to said first trigger level; and

when said fifth value is greater than said first trigger level, reallocating a predetermined portion of the assets from said second pool to said first pool to increase the payment amount of the anticipated periodic payments.

3. The method of claim 2, wherein said predetermined portion of the assets represents the difference between said fifth value and said first trigger level.

4. The method of claim 2, wherein:

said first value and said second value define a predetermined allocation; and

said predetermined portion of the assets represents an amount of assets sufficient to allocate the assets in said first pool and said second pool substantially to said predetermined allocation.

5. The method of claim 1, further comprising the steps of:

defining a first trigger level representing a value which is a predetermined amount greater than said current value of said assets;

determining a fifth value representing the current value of the assets at periodic intervals over the time period;

comparing said fifth value to said first trigger level; and

when said fifth value is greater than said first trigger level, reallocating a predetermined portion of the assets to said first pool to increase the payment amount of the anticipated periodic payments.

6. The method of claim 1, further comprising the step of adjusting said first value in response to a reduction in the number of anticipated periodic payments.

7. The method of claim 1, wherein:

the anticipated periodic payments are paid to an annuitant; and

said second pool includes assets designated for at least one beneficiary.

8. The method of claim 7, wherein reallocating a portion of said assets from said second pool to said first pool results in a decrease in the value of said assets designated for said at least one beneficiary.

9. The method of claim 1, wherein said first pool and said second pool include, at least in part, commingled assets.

10. The method of claim 2, further comprising the step of defining a second trigger level representing a value which is a predetermined amount greater than the current value of said assets in said second pool.

11. The method of claim 5, further comprising the step of defining a second trigger level representing a value which is a predetermined amount greater than the current value of said assets.

12. The method of claim 1, wherein the assets are held in a plurality of investments.

13. The method of claim 1, wherein the payment amount is reduced only when said second value is substantially zero.

14. The method of claim 1, wherein said step of determining a third value is performed in response to an event.

16. The computer program of claim 15, further comprising:

a computer code segment which defines a first trigger level representing a value which is a predetermined amount greater than said second value;

a computer code segment which determines a fifth value representing the current value of the assets in said second pool at periodic intervals over the time period;

a computer code segment which compares said fifth value to said first trigger level; and

a computer code segment which, when said fifth value is greater than said first trigger level, reallocates a predetermined portion of the assets from said second pool to said first pool to increase the payment amount of the anticipated periodic payments.

17. The computer program of claim 16, wherein said predetermined portion of the assets represents the difference between said fifth value and said first trigger level.

18. The computer program of claim 16, wherein:

said first value and said second value define a predetermined allocation; and

said predetermined portion of the assets represents an amount of assets sufficient to allocate the assets in said first pool and said second pool substantially to said predetermined allocation.

19. The computer program of claim 15, further comprising:

a computer code segment which defines a first trigger level representing a value which is a predetermined amount greater than said current value of said assets; and

a computer code segment which determines a fifth value representing the current value of the assets at periodic intervals over the time period;

a computer code segment which compares said fifth value to said first trigger level; and

a computer code segment which, when said fifth value is greater than said first trigger level, reallocates a predetermined portion of the assets to said first pool to increase the payment amount of the anticipated periodic payments.

21. The computer program of claim 16, further comprising a computer code segment which defines a second trigger level representing a value which is a predetermined amount greater than the current value of said assets in said second pool.

22. The computer program of claim 19, further comprising a computer code segment which defines a second trigger level representing a value which is a predetermined amount greater than the current value of said assets.

24. The computer system of claim 23, wherein said processor is further programmed to:

define a first trigger level representing a value which is a predetermined amount greater than said second value;

determine a fifth value representing the current value of the assets in said second pool at periodic intervals over the time period;

compare said fifth value to said first trigger level; and

when said fifth value is greater than said first trigger level, reallocate a predetermined portion of the assets from said second pool to said first pool to increase the payment amount of the anticipated periodic payments.

25. The computer system of claim 24, wherein said predetermined portion of the assets represents the difference between said fifth value and said first trigger level.

26. The computer system of claim 24, wherein:

said first value and said second value define a predetermined allocation; and

said predetermined portion of the assets represents an amount of assets sufficient to allocate the assets in said first pool and said second pool substantially to said predetermined allocation.

27. The computer system of claim 23, wherein said processor is further programmed to:

define a first trigger level representing a value which is a predetermined amount greater than said current value of said assets;

determine a fifth value representing the current value of the assets at periodic intervals over the time period;

compare said fifth value to said first trigger level; and

when said fifth value is greater than said first trigger level, reallocate a predetermined portion of the assets to said first pool to increase the payment amount of the anticipated periodic payments.

28. The computer system of claim 23, wherein said processor is further programmed to adjust said first value in response to a reduction in the number of anticipated periodic payments.

29. The computer system of claim 23, wherein said first pool and said second pool include, at least in part, commingled assets.

30. The computer system of claim 24, wherein said processor is further programmed to define a second trigger representing a value which is a predetermined amount greater than the current value of said assets in said second pool.

31. The computer system of claim 27, wherein said processor is further programmed to define a second trigger level representing a value which is a predetermined amount greater than the current value of said assets .

32. The computer system of claim 23, wherein said first pool and said second pool include, at least in part, commingled assets.

15. A computer program embodied on a computer readable medium for enabling a computer system to manage assets for stabilizing payment amounts in a series of anticipated periodic payments over a time period, the computer program comprising:

a computer code segment which stores information relating to said assets and said series of anticipated periodic payments in memory;

a computer code segment which determines the current value of said assets;

a computer code segment which defines a first pool by allocating a portion of said assets to said first pool having a first value representing a present value of the anticipated periodic payments;

a computer code segment which defines a second pool by allocating a portion of said assets to said second pool having a second value representing the current value of said assets less said first value;

a computer code segment which determines a third value representing the current value of the assets in said first pool at periodic intervals over the time period;

a computer code segment which compares said third value to a fourth value representing a present value of the remaining anticipated periodic payments; and

a computer code segment which, when said third value is less than said fourth value, reallocates a portion of said assets from said second pool to said first pool so that said first asset pool has a current value representing said fourth value.

20. The computer program of 15, further comprising a computer code segment which modifies said first value in response to a reduction in the number of anticipated periodic payments.

23. A computer system for managing assets for stabilizing payment amounts in a series of anticipated periodic payments over a time period, the computer system comprising:

a memory storing information relating to said assets and said series of anticipated periodic payments in memory;

a processor programmed to;

determine the current value of said assets;

define a first pool by allocating a portion of said assets to said first pool having a first value representing a present value of the anticipated periodic payments;

define a second pool by allocating a portion of said assets to said second pool having a second value representing the current value of said assets less said first value;

determine a third value representing the current value of the assets in said first pool at periodic intervals over the time period;

compare said third value to a fourth value representing a present value of the remaining anticipated periodic payments; and

when said third value is less than said fourth value, reallocate a portion of said assets from said second pool to said first pool so that said first asset pool has a current value representing said fourth value.

33. A method for managing assets for stabilizing payment amounts in a series of anticipated periodic payments over a time period, the method comprising the steps of:

allocating the assets into a first pool and a second pool;

establishing a first payment amount;

determining a first trigger value;

assessing a current value of the assets; and

reallocating assets from said second pool to said first pool to increase the first payment amount to a second payment amount in response to said current value being greater than said first trigger value.

34. The method of claim 33, further comprising the steps of:

determining a first amount of assets sufficient to fund the anticipated periodic payments;

assessing the value of said assets in said first pool; and

reallocating sufficient assets from said second pool to said first pool to provide said first amount of assets in said first pool in response to said value of said assets in said first pool being less than said first amount.

35. The method of claim 33, wherein the assets assessed are the assets allocated into said second pool.

36. The method of claim 33, wherein the assets assessed are comprised of the assets allocated into said second pool and said first pool.

37. The method of claim 34, further comprising the step of reallocating substantially all of said assets of said second pool to said first pool in response to said value of said assets in said first pool being less than said first amount.

38. The method of claim 34, further comprising the step of modifying said first amount in response to a reduction in the number of anticipated periodic payments.

39. The method of claim 33, wherein:

the anticipated periodic payments are paid to an annuitant; and

said second pool contains assets designated for at least one beneficiary.

40. The method of claim 39, wherein reallocating from said second pool to said first pool results in a decrease in the value of said assets designated for said at least one beneficiary.

41. The method of claim 33, wherein said first pool and said second pool include, at least in part, commingled assets.

42. The method of claim 33, wherein said reallocating from said second pool to said first pool to increase said first payment amount is performed according to a predetermined ratio.

43. The method of claim 33, further comprising the step of determining a second trigger value in response to said current value being greater than said first trigger value.

44. The method of claim 35, wherein substantially all the assets above said first trigger value are reallocated from second pool to said first pool to maintain said assets in said second pool equal to or less than said first trigger value.

45. The method of claim 35, wherein the payment amount is reduced only when said current value of said assets is substantially zero.

46. The method of claim 34, wherein said steps of assessing a current value of the assets and assessing a value of said assets in said first pool are performed periodically.

47. The method of claim 34, wherein said steps of assessing a value of the assets and assessing a value of said assets in said first pool performed in response to an event.