Methods and systems for providing liquidity options and permanent legacy benefits for annuities

• US 20070255635A1
• Filed: 04/16/2003
• Published: 11/01/2007
• Est. Priority Date: 04/16/2003
• Status: Active Grant

• Current Assignee: New York Life Insurance Company
• Original Assignee: New York Life Insurance Company
• Inventors: Multer, Corey, Conway, Robert, Baelis, David
• Granted Patent: US 8,533,080 B2
• Time in Patent Office: Days
• US Class Current: 705/36.R
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 20/102 Bill distribution or payments
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

This invention relates to methods and systems that provide annuities with at least one liquidity option that allows the holder of the liquidity option to exercise the option and convert therewith a portion of a value of the annuity into a liquid asset, such as cash or a cash value, based on the value of future income payments, which can include payments that are guaranteed to be paid for the duration of one or more lifetime. The conversion may be in a variety of forms, such as an advance of at least a portion of the future income payments, or in the form a lump sum distribution of at least a portion of a commuted value of the annuity computed based at least in part on the present value, at the time of the conversion, of future income payments for the remainder of the guarantee period. This invention further relates to methods and systems that provide annuities including a liquid legacy benefit option that provide a lump sum distribution of a portion of an annuity premium to a beneficiary at the end of the guarantee period that is substantially certain at the inception of the annuity.

Claims

1. A method of providing an annuity having a guarantee period comprising:

obtaining information useful for issuing an annuity from an individual; and

computing an annuity variable selected from the group consisting of an annuity premium and future income payments, the annuity variable computed based at least partially on the information obtained from the individual, wherein the annuity comprises at least one liquidity option allowing a holder of the liquidity option to exercise the option and to convert therewith a portion of a value of the annuity, computed at least in part based on the value of future income payments, into a liquid asset.

2. The method of claim 1, wherein annuity comprises at least one liquidity option allowing the holder of the option to convert a portion of the value of the annuity into a liquid asset after the annuity payments have begun.

3. The method of claim 1, wherein the annuity comprises at least one liquidity option allowing the holder of the option to convert a portion of the value of the annuity into a liquid asset, the conversion comprising an advance of at least a portion of the future income payments.

4. The method of claim 3, wherein the liquidity option allows the holder of the liquidity option to exercise the option for a limited number of times.

5. The method of claim 4, wherein the liquidity option allows the holder of the liquidity option to exercise the option twice after annuity payments begin.

6. The method of claim 3, wherein the conversion comprises an advance of a plurality of the future income payments.

7. The method of claim 3, wherein the conversion comprises an advance of six months of the future income payments.

8. The method of claim 3, wherein future income payments due to the holder of the liquidity option subsequent to the advance cease for a period of time to account for the advance of the future income payments.

9. The method of claim 8, wherein the conversion comprises an advance of six months of future income payments and the future income payments cease for six months subsequent to the advance.

10. The method of claim 8, wherein the conversion comprises a lump sum distribution of six months worth of future income payments, wherein the advance comprises five future income payments and future income payments cease for a period of five months to account for the lump sum distribution.

11. The method of claim 1, wherein the annuity comprises a life annuity based on the life of at least one annuitant, guaranteeing future income payments for a duration of the life of the at least one annuitant.

12. The method of claim 1, wherein the annuity comprises at least one liquidity option allowing the holder of the option to convert a portion of the value of the annuity into a liquid asset, the conversion comprising a lump sum distribution of at least a portion of a commuted value of the annuity computed based at least in part on the present value, at the time of the conversion, of future income payments for the remainder of the guarantee period.

13. The method of claim 12, wherein the annuity comprises a guarantee period based on the life of the annuitant and wherein the conversion comprises a lump sum distribution of at least a portion of the commuted value of the annuity computed based at least in part on the present value, at the time of the conversion, of future income payments for the life of the annuitant.

14. The method of claim 12, wherein the annuity comprises at least one liquidity option allowing the holder of the option to exercise the liquidity option for a limited number of times.

15. The method of claim 14, wherein the annuity comprises at least one liquidity option allowing the holder of the option to exercise the liquidity option once after the annuity payments begin.

16. The method of claim 12, wherein the annuity comprises at least one liquidity option allowing the holder of the liquidity option to exercise the liquidity option at predefined time intervals after the annuity payments begin.

17. The method of claim 16, wherein the liquidity option allows the holder of the liquidity option to exercise the liquidity option at about an anniversary of a commencement date to receive income payments, the anniversary selected from the group consisting of the fifth, tenth, and fifteenth anniversaries.

18. The method of claim 12, wherein the annuity comprises at least one liquidity option allowing the holder of the liquidity option to exercise the liquidity option upon a showing of an occurrence of a predefined event.

19. The method of claim 12, wherein the annuity comprises at least one liquidity option allowing the holder of the liquidity option to convert a portion of the value of the annuity into a liquid asset, the conversion comprising a lump sum distribution of about 30% of the commuted value of the annuity.

20. A method of providing an annuity having a guarantee period comprising:

obtaining information useful for issuing an annuity from an individual; and

computing an annuity variable selected from the group consisting of an annuity premium and future income payments, the annuity variable computed based at least partially on the information obtained from the individual, wherein the annuity comprises at least one liquidity option allowing a holder of the option to convert a portion of a value of the annuity into a liquid asset, the conversion comprising an advance of at least a portion of the future income payment.

21. A method of providing an annuity having a guarantee period comprising:

obtaining information useful for issuing an annuity from an individual; and

computing an annuity selected variable from the group consisting of an annuity premium and future income payments, the annuity variable computed based at least partially on the information obtained from the individual, wherein the annuity comprises at least one liquidity option allowing a holder of the option to convert a portion of a value of the annuity into a liquid asset, the conversion comprising an advance of a plurality of future income payments, and wherein the future income payments due to the holder of the liquidity option, subsequent to the advance, cease for a period of time to account for the advance of future income payments.

22. A method of providing an annuity having a guarantee period comprising:

obtaining information useful for issuing an annuity from an individual; and

computing an annuity variable selected from the group consisting of an annuity premium and future income payments, the annuity variable computed based at least partially on the information obtained from the individual, wherein the annuity comprises at least one liquidity option allowing a holder of the liquidity option to convert a portion of a value of the annuity into a liquid asset, the conversion comprising a lump sum distribution of at least a portion of a commuted value of the annuity computed based at least in part on the present value, at the time of the conversion, of future income payments for the remainder of the guarantee period.

23. A method of providing an annuity having a guarantee period comprising:

obtaining information useful for issuing an annuity from an individual; and

computing an annuity variable selected from the group consisting of an annuity premium and future income payments, the annuity variable computed based at least partially on the information obtained from the individual, wherein the annuity comprises at least one liquidity option allowing a holder of the liquidity option to convert a portion of a value of the annuity into a liquid asset, and a guarantee period based on the life of an annuitant, the conversion comprising a lump sum distribution of at least a portion of a commuted value of the annuity computed based at least in part on the present value, at the time of the conversion, of future income payments for the life of the annuitant.

24. A method of providing an annuity having a guarantee period comprising:

obtaining information useful for issuing an annuity from an individual; and

computing an annuity variable selected from the group consisting of an annuity premium and future income payments, the annuity variable computed based at least partially on the information obtained from the individual, wherein the annuity comprises at least one liquidity option allowing a holder of the liquidity option to convert a portion of a value of the annuity into a liquid asset, and a guarantee period based on the life of an annuitant, the conversion comprising a lump sum distribution of at least a portion of a commuted value of the annuity computed based at least in part on the present value, at the time of the conversion, of future income payments for the life of the annuitant.

25. A method of providing an annuity having a guarantee period comprising:

obtaining information useful for issuing an annuity from an individual; and

computing an annuity variable selected from the group consisting of an annuity premium and future income payments, the annuity variable computed based at least partially on the information obtained from the individual, wherein the annuity comprises at least one liquidity option allowing a holder of the liquidity option to convert a portion of a value of the annuity into a liquid asset once after annuity payments begin, and a guarantee period based on the life of an annuitant, the conversion comprising a lump sum distribution of about 30% of a commuted value of the annuity computed based at least in part on the present value, at the time of the conversion, of future income payments for the life of the annuitant.

26. A method of providing an annuity having a guarantee period comprising:

obtaining information useful for issuing an annuity from an individual; and

computing future income payments, the annuity variable computed based at least in part on a legacy benefit option which provides a lump sum distribution of a portion of an annuity premium substantially certain at inception of the annuity to a beneficiary upon the death of at least one annuitant.

27. The method of claim 26, comprising computing future income payments based at least in part on a liquid benefit option which provides a lump sum distribution of a percentage of an annuity premium, the percentage selected from the group consisting of about 25% and about 50%.

28. The method of claim 26, wherein the legacy benefit option provides a lump sum distribution to a beneficiary that does not expire during the term of the annuity.

29. The method of claim 28, comprising computing future income payments with the following algorithm:

$B=\frac{\left(\mathrm{Premium}<br><br>\text{\hspace{1em}<br><br>}\times <br><br>\left(1-T\right)-F\right)-\left(k\times <br><br>\mathrm{Premium}<br><br>\text{\hspace{1em}<br><br>}\times <br><br>A_x\right)}{a_x}$

where;

B=monthly future income payment at issue

T=premium tax

F=policy fee

k=lump sum reduction factor

x=issue age (in years)

A_x=net single premium per unit of death benefit for issue age x

a_x=Present value of a life annuity for issue age x

30. A method of facilitating distribution of annuity payments comprising:

receiving a demand for a liquid distribution; and

computing the liquid distribution according to at least one liquidity option of an annuity, the liquidity option allowing a holder of the liquidity option to convert a portion of the value of the annuity into a liquid asset, the value of the annuity computed at least in part based on a value of future income payments.

31. The method of claim 30, comprising computing the liquid distribution in the form of an advance of at least a portion of future income payments.

32. The method of claim 31, wherein the advance of future income payments comprises an advance of a plurality of future income payments.

33. The method of claim 31, wherein the advance of future income payments comprises an advance of six months of the future income payments.

34. The method of claim 31, wherein the liquid distribution comprises a lump sum distribution of six months worth of future income payments, wherein the advance comprises five future income payments and future income payments cease for a period of five months to account for the lump sum distribution.

35. The method of claim 31, wherein the liquidity option allows the holder of the liquidity option to exercise the option twice after annuity payments begin.

36. The method of claim 31, comprising:

making the liquid distribution; and

ceasing future income payments due to the holder of the liquidity option subsequent to the advance for a period of time to account for the advance of the future income payments.

37. The method of claim 36, wherein the liquid distribution comprises an advance of six months of future income payments and the future income payments cease for six months subsequent to the advance.

38. The method of claim 36, wherein the liquid distribution comprises a lump sum distribution of six months worth of future income payments, wherein the advance comprises five future income payments and future income payments cease for a period of five months to account for the lump sum distribution.

39. The method of claim 30, comprising computing the liquid distribution in the form of a lump sum distribution of at least a portion of a commuted value of the annuity computed based at least in part on the present value, at the time of the conversion, of future income payments for the remainder of the guarantee period.

40. The method of claim 39, wherein the annuity comprises a guarantee period based on the life of an annuitant and wherein the liquid distribution comprises a lump sum distribution of the at least a portion of the commuted value of the annuity computed based at least in part on the present value, at the time of the conversion, of future income payments expected to be paid out for the life of the annuitant.

41. The method of claim 39, wherein the at least one liquidity option allows the holder of the option to exercise the liquidity option once after annuity payments begin.

42. The method of claim 39, wherein the at least one liquidity option allows the holder of the liquidity option to exercise the liquidity option at predefined time intervals after annuity payments begin.

43. The method of claim 42, wherein the at least one liquidity option allows the holder of the liquidity option to exercise the liquidity option at about an anniversary of a date elected for annuity payments to begin, the anniversary selected from the group consisting of the fifth, tenth, and fifteenth anniversaries.

44. The method of claim 39, wherein the at least one liquidity option allows the holder of the liquidity option to convert about 30% of the commuted value of the annuity into a liquid asset.

45. A method of facilitating distribution of annuity payments comprising:

receiving a demand for a liquid distribution; and

computing the liquid distribution according to at least one liquidity option of an annuity, the liquidity option allowing a holder of the liquidity option to convert a portion of the value of the annuity into a liquid asset, the liquid distribution in the form of an advance of a plurality of future income payments.

46. A method of facilitating distribution of annuity payments comprising:

receiving a demand for a liquid distribution;

computing the liquid distribution according to at least one liquidity option of an annuity, the liquidity option allowing a holder of the liquidity option to convert a portion of the value of the annuity into a liquid asset, the liquid distribution in the form of an advance for a plurality of future income payments;

making the liquid distribution; and

ceasing future income payments due to the holder of the liquidity option subsequent to the advance for a period of time to account for the advance of the future income payments.

47. A method of facilitating distribution of annuity payments comprising:

receiving a demand for a liquid distribution; and

computing the liquid distribution according to at least one liquidity option of an annuity, the liquidity option allowing a holder of the liquidity option to convert a portion of the value of the annuity into a liquid asset, the liquid distribution in the form of a lump sum distribution of at least a portion of a commuted value of the annuity computed based at least in part on the present value, at the time of the conversion, of future income payments for the remainder of the guarantee period.

48. A method of facilitating distribution of annuity payments comprising:

receiving a demand for a liquid distribution; and

computing the liquid distribution according to at least one liquidity option of an annuity, the liquidity option allowing a holder of the liquidity option to convert a portion of the value of the annuity into a liquid asset, the annuity comprising a guarantee period based on the life of an annuitant, the liquid distribution in the form of a lump sum distribution of at least a portion of a commuted value of the annuity computed based at least in part on the present value, at the time of the conversion, of future income payments expected to be paid out for the life of the annuitant.