System and method for administering a lifetime income share plan

• US 20080140586A1
• Filed: 08/03/2007
• Published: 06/12/2008
• Est. Priority Date: 03/23/2006
• Status: Active Grant

• Current Assignee: Empower Annuity Insurance Company of America
• Original Assignee: Hartford Fire Insurance Company (The Hartford Financial Services Group, Inc.)
• Inventors: Mercier, Jonathan L., Mccullum, Ken A.
• Granted Patent: US 7,840,469 B2
• Time in Patent Office: Days
• US Class Current: 705/36R
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/08 Insurance
• CPC Class Codes: G06Q 40/12 Accounting

Abstract

The present invention provides a system and method for administering an investment option known as a lifetime income share. Lifetime income shares mitigate survival risk, the risk that an individual will outlive his or her assets. More specifically, the purchase of a plurality of lifetime income shares guarantees an individual a predetermined, periodic income payment for the life of the purchaser. The guaranteed stream of monthly income commences at a specified age. Furthermore, the guaranteed stream is utilized to supplement an existing income level or provide income in the event that the individual outlives his or her accumulated liquid assets.

Claims

1. A method for administering an income share plan that provides a future income stream, the method comprising the steps of:

providing the plan to a plan participant by a plan provider;

keeping records by a record keeper;

interfacing the plan provider and the record keeper using an annuity platform.

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

providing a means for the plan provider to process and transmit information via a plan provider'"'"'s platform;

providing a means for the record keeper to process and transmit information via a record keeper'"'"'s platform; and

providing a means for the annuity platform to process and transmit information.

3. The method of claim 1 wherein the income share plan includes an accumulation phase and a deferment/disbursement of benefits phase, wherein the record keeper administers the accumulation phase of the plan and the plan provider platform administers the deferment/disbursement of benefits phase of the plan.

4. The method of claim 1 wherein the record keeper is external to the plan provider.

5. The method of claim 1 wherein the record keeper is internal to the plan provider.

6. The method of claim 2 further comprising the step of displaying web pages based on links from the record keeper'"'"'s platform.

7. The method of claim 6 further comprising the step of using data sent to the web pages to display at least a portion of the plan participant'"'"'s data or plan data from the annuity platform.

8. The method of claim 1 wherein the step of interfacing further comprises the step of accepting by the annuity platform batch files received from the record keeper.

9. The method of claim 1 wherein the step of interfacing further comprises the step of processing, by the annuity platform, batch files received from the record keeper.

10. The method of claim 1 wherein the step of interfacing further comprises the step of sending batch files by the annuity platform to the record keeper for processing.

11. The method of claim 2 wherein the step of interfacing includes interfacing by the annuity platform with the plan provider'"'"'s platform.

12. The method of claim 11 further including the step of receiving and processing by the annuity platform batch files from the plan provider'"'"'s platform.

13. The method of claim 11 further including the step of sending batch files to the plan provider'"'"'s platform by the annuity platform.

14. The method of claim 1 further comprising the step of storing information sent to the annuity platform.

15. The method of claim 2 further comprising the step of passing a record keeper ID from the annuity platform to the record keeper'"'"'s platform.

16. The method of claim 2 further comprising the step of sending, with a predetermined frequency, a batch file or real time data that contains data from the record keeper'"'"'s platform to the annuity platform.

17. The method of claim 1 further comprising the step of choosing a beneficiary for the plan participant, wherein the beneficiary is entitled to at least a portion of the participant'"'"'s lifetime income in the event of the participant'"'"'s death.

18. The method of claim 17 further comprising the step of:

processing a beneficiary establishing transaction by the annuity platform including the steps of;

validating that the participant'"'"'s record exists;

validating that the beneficiary'"'"'s record does not already exist for the participant;

comparing year of birth on the participant'"'"'s record against year of birth on transaction, and if the year of birth has changed triggering a year of birth correction transaction, and setting date of birth on the participant record equal to date of birth passed on in the transaction data.

19. The method of claim 18 further comprising the steps of:

locating the share price for the participant'"'"'s year of birth;

locating the share price for the beneficiary'"'"'s year of birth;

calculating cash death benefit amount;

using a beneficiary ID as the beneficiary record key;

using a record keeper ID as the beneficiary'"'"'s record key;

using a plan ID as the beneficiary'"'"'s record key;

setting date of birth on the beneficiary'"'"'s record as equal to the date of birth passed on in the transaction;

setting the gender on the beneficiary'"'"'s record as equal to the gender passed on in the transaction;

setting the number of shares owned on the beneficiary'"'"'s record as equal to an amount of shares determined by annuity platform;

setting cash benefit amount as equal to the calculated cash death benefit amount;

setting the beneficiary net contributions data to zero; and

setting the beneficiary transaction value to zero, setting the beneficiary guaranteed income at age 65 to zero, and creating a new beneficiary record.

20. The method of claim 19 wherein the step of determining the death benefits of the beneficiary comprises computing the product of the number of shares owned by the participant and the beneficiary'"'"'s percentage of death benefit as further multiplied by the quotient of the share price for the participant'"'"'s year of birth by the share price for the beneficiary'"'"'s year of birth.

21. The method of claim 2 wherein the transmitted information is from a group consisting of at least one of the following:

money-in transaction, money-out transaction, notification of the plan participant'"'"'s death, information used to setup the participant account on the annuity platform, transfers of funds within the participant'"'"'s plan, amount of Lifetime Income shares purchased, transfers from the plan provider'"'"'s Lifetime Income option back to the record keeper'"'"'s platform, maximum amount of Lifetime income shares available for transfer, information needed to setup a beneficiary account, notification of the beneficiary'"'"'s death, any lump sum payment the beneficiary received on a death claim, number of converted Lifetime Income shares the beneficiary received as a death benefit payout, transaction which cause a participant to move from the accumulation phase to the deferment phase.

22. The method of claim 1 wherein the annuity platform updates and stores the participant'"'"'s information.

23. The method of claim 1 wherein the annuity platform performs a check to see if the date of birth is different from the participant year of birth currently on record in the annuity platform.

24. The method of claim 23 further comprising the step of correcting the year of birth if the date of birth passed on in the transaction is different from the participant year of birth currently on record in the annuity platform, and adjusting the number of shares owned by the participant.

25. The method of claim 1 wherein Lifetime Income share prices are used to determine at least one of the following:

number of shares purchased, number of shares surrendered/liquidated, and participant'"'"'s cash out value.

26. The method of claim 2 wherein all transaction information transferred by any of the platforms is stored as transaction records by the annuity platform.

27. The method of claim 2 further comprising the steps of:

setting up a clearing account by the annuity platform;

processing by the clearing account information received by the annuity platform from the record keeper'"'"'s platform; and

passing the processed information to the annuity platform.

28. The method of claim 1 further comprising the step of:

creating a participant account wherein the step of creating a participant account includes the steps of;

creating a new participant record;

setting date of birth on the participant'"'"'s record based on received information;

setting the gender on the participant'"'"'s record;

updating the participant'"'"'s record;

creating a result history;

performing a check on the amount-in to see if amount-in is equal to the processed amount; and

generating an error condition if the amount-in is not equal to the processed amount.

29. The method of claim 21 further comprising the steps of:

receiving information related to either the money-in transaction or the money out transaction;

checking whether the participant'"'"'s record exists;

generating an error condition if the participant'"'"'s record does not exist;

comparing the year of birth on the participant'"'"'s record against the year of birth on the transaction; and

processing a year of birth correction transaction and setting the date of birth on the participant'"'"'s record equal to the date of birth passed on in the transaction if the year of birth has changed.

30. The method of claim 29 further comprising the steps of:

setting the gender on the participant'"'"'s record equal to the gender passed on in the transaction;

calculating the participant'"'"'s age by computing the difference between the year in the transaction date and the year of the participant'"'"'s birth on transaction;

locating the share price information wherever it may be within the system for the participant'"'"'s year of birth;

calculating the number of shares purchased;

calculating the number of shares surrendered or liquidated;

calculating the net contributions for the participant, calculating the number of shares owned; and

updating the participant'"'"'s record.

31. The method of claim 2 further comprising the step of processing a death notification transaction in the event of the participant'"'"'s death wherein the processing is handled by the annuity platform, the record keeper'"'"'s platform, or the plan provider'"'"'s platform.

32. The method of claim 31 wherein the death notification transaction comprises the steps of:

validating that the participant'"'"'s record exists;

comparing the year of birth on the participant'"'"'s record against the year of birth on the death notification transaction;

triggering a year of birth correction transaction if the year of birth has changed; and

setting the date of birth on a participant'"'"'s record equal to the date of birth passed on in the transaction if the date of birth has changed.

33. The method of claim 32 wherein the death notification transaction further comprises the steps of:

setting the date of death notification on the participant'"'"'s record equal to the date passed on in the step of death notification transaction; and

setting the gender on the participant'"'"'s record equal to the gender passed on in the transaction and updating the participant'"'"'s record.

34. The method of claim 2 further comprising the step of:

transmitting an error correction transaction to the annuity platform if an error is detected by any platform, wherein the error correction transaction reverses and reapplies transactions to be corrected.

35. The method of claim 2 further comprising the annuity platform performing for each of the participants the steps of:

locating and reading the year of birth on record;

locating and reading share price for the participant'"'"'s year of birth;

calculating the cash out value for the participant;

calculating guaranteed income at 65;

updating records for the participant;

creating a daily record keeper value record; and

passing back to the record keeper'"'"'s platform the cash out value for each participant.

36. The method of claim 17 further comprising the annuity platform performing for each of the beneficiaries the steps of:

locating and reading the year of birth on record;

locating and reading a share price for the beneficiary'"'"'s year of birth;

calculating the cash out value for the beneficiary;

updating the records for the beneficiary;

calculating guaranteed income at 65; and

creating a daily record keeper'"'"'s value record and passing back to the record keeper'"'"'s platform the cash out value for each beneficiary.

37. The method of claim 35 wherein the cash out value for the participant is determined by computing:

cash out value=number of shares owned by participant*[share price*liquidation adjustment factor].

38. The method of claim 35 wherein the guaranteed income at 65 for the participant is determined by computing:

Number of Shares Owned*$10.

39. The method of claim 36 wherein the cash out value for the beneficiary is determined by computing:

cash out value=number of shares owned*[share price*liquidation adjustment factor].

40. The method of claim 36 wherein the guaranteed income at 65 for the beneficiary is determined by computing:

Number of Shares Owned*$10.

41. The method of claim 13 wherein the batch files contain any of the information chosen from the group of:

plan ID, plan type code, the participant'"'"'s ID, the participant'"'"'s date of birth, the participant'"'"'s gender, the participant'"'"'s state of residence, number of shares owned by the participant, current death benefits on the participant'"'"'s account, total contributions made by the participant, total money-out transactions and total death benefit paid to date.

42. The method of claim 1 further comprising accessing the annuity platform in real-time.

43. The method of claim 1 further comprising accessing the annuity platform from external applications.

44. The method of claim 1 wherein the annuity platform is capable of interfacing with multiple independent external platforms.

45. A method for administering an income share plan that provides a future income stream, the method comprising the steps of:

providing the plan to a plan participant by a plan provider;

keeping records; and

interfacing the plan provider and the records using an annuity platform.

46. The method of claim 45 and further comprising the steps of:

providing a means for the plan provider to process and transmit information via a plan provider'"'"'s platform; and

providing a means for the annuity platform to process and transmit information received from the plan provider.

47. The method of claim 45 wherein the step of interfacing includes interfacing by the annuity platform with the plan provider'"'"'s platform.

48. The method of claim 45 further comprising the steps of:

setting up a clearing account by the annuity platform;

processing by the clearing account information received by the annuity platform from the plan provider'"'"'s platform; and

passing the processed information to the annuity platform.

49. The method of claim 46 further comprising the annuity platform performing for each of the participants the steps of:

locating and reading the year of birth on record;

locating and reading share price for the participant'"'"'s year of birth;

calculating the cash out value for the participant;

calculating guaranteed income at 65; and

updating records for the participant.

50. A method for administering an income share plan that provides a future income stream, the method comprising the steps of:

keeping records by a record keeper; and

interfacing the record keeper and an external platform using an annuity platform.

51. The method of claim 50 and further comprising the steps of:

providing a means for the record keeper to process and transmit information via a record keeper'"'"'s platform; and

providing a means for the annuity platform to process and transmit information.

52. The method of claim 50 further comprising the step of displaying web pages based on information from the record keeper'"'"'s platform.

53. The method of claim 52 further comprising the step of using data sent to the web pages to display at least a portion of the plan participant'"'"'s data or plan data from the annuity platform.

54. The method of claim 50 wherein the step of interfacing further comprises the step of accepting by the annuity platform batch files received from the record keeper.

55. The method of claim 50 wherein the step of interfacing further comprises the step of processing, by the annuity platform, batch files received from the record keeper.

56. The method of claim 50 further comprising the step of choosing a beneficiary for the plan participant, wherein the beneficiary is entitled to at least a portion of the participant'"'"'s lifetime income in the event of the participant'"'"'s death.

57. The method of claim 56 further comprising the step of:

processing a beneficiary establishing transaction by the annuity platform including the steps of;

validating that the participant'"'"'s record exists;

validating that the beneficiary'"'"'s record does not already exist for the participant;

comparing year of birth on the participant'"'"'s record against year of birth on transaction, and if the year of birth has changed triggering a year of birth correction transaction, and setting date of birth on the participant record equal to date of birth passed on in the transaction data.

58. The method of claim 57 further comprising the steps of:

locating the share price for the participant'"'"'s year of birth;

locating the share price for the beneficiary'"'"'s year of birth;

calculating cash death benefit amount;

using a beneficiary ID as the beneficiary record key;

using a record keeper ID as the beneficiary'"'"'s record key;

using a plan ID as the beneficiary'"'"'s record key;

setting date of birth on the beneficiary'"'"'s record as equal to the date of birth passed on in the transaction;

setting the gender on the beneficiary'"'"'s record as equal to the gender passed on in the transaction;

setting the number of shares owned on the beneficiary'"'"'s record as equal to an amount of shares determined by annuity platform;

setting cash benefit amount as equal to the calculated cash death benefit amount;

setting the beneficiary net contributions data to zero; and

setting the beneficiary transaction value to zero, setting the beneficiary guaranteed income at age 65 to zero, and creating a new beneficiary record.

59. The method of claim 58 wherein the step of determining the death benefits of the beneficiary comprises computing the product of the number of shares owned by the participant and the beneficiary'"'"'s percentage of death benefit as further multiplied by the quotient of the share price for the participant'"'"'s year of birth by the share price for the beneficiary'"'"'s year of birth.

60. The method of claim 51 wherein all transaction information transferred by the record keeper'"'"'s platform is stored as transaction records by the annuity platform.

61. The method of claim 51 further comprising the steps of:

setting up a clearing account by the annuity platform;

processing by the clearing account information received by the annuity platform from the record keeper'"'"'s platform; and

passing the processed information to the annuity platform.

62. The method of claim 51 further comprising the step of processing a death notification transaction in the event of the participant'"'"'s death wherein the processing is handled by the annuity platform, or the record keeper'"'"'s platform.

63. The method of claim 51 further comprising the annuity platform performing for each of the participants the steps of:

locating and reading the year of birth on record;

locating and reading share price for the participant'"'"'s year of birth;

calculating the cash out value for the participant;

calculating guaranteed income at 65;

updating records for the participant;

creating a daily record keeper value record; and

passing back to the record keeper'"'"'s platform the cash out value for each participant.

64. The method of claim 63 wherein the cash out value for the participant is determined by computing:

cash out value=number of shares owned by participant*[share price*liquidation adjustment factor].

65. The method of claim 63 wherein the guaranteed income at 65 for the participant is determined by computing:

Number of Shares Owned*$10.

66. The method of claim 50 further comprising accessing the annuity platform in real-time.

67. The method of claim 50 further comprising accessing the annuity platform from external applications.

68. The method of claim 50 wherein the annuity platform is capable of interfacing with multiple independent external platforms.

69. A system for administering an income share plan that provides a future income stream comprising:

a plan provider'"'"'s platform including one or more communication modules, and a processing module;

a record keeper'"'"'s platform including one or more communication modules, and a processing module; and

an annuity platform including one or more communication modules, and a processing module, wherein the annuity platform receives and transmits information to and from the plan provider'"'"'s platform and the record keeper'"'"'s platform.

70. A system for administering an income share plan that provides a future income stream comprising:

a plan provider'"'"'s platform including one or more communication modules, and a processing module; and

an annuity platform including one or more communication modules, and a processing module, wherein the annuity platform receives and transmits information to and from the plan provider'"'"'s platform.

71. The system of claim 70 wherein the annuity platform further comprises a data storage module for storing information associated with the income share plan, a display module, a data entry module, and a calculation module.

72. The system of claim 70 wherein the plan provider'"'"'s platform further comprises a data storage module for storing information associated with the income share plan, a display module, a data entry module, and a calculation module.

73. The system of claim 71 wherein said system is operated by a party separate from said annuity platform.

74. The system of claim 72 wherein said system is operated by a party separate from said plan provider'"'"'s platform.

75. The system of claim 71 wherein the annuity platform further comprises a reporting module for producing reports of information associated with income share plan.

76. The system of claim 72 wherein the plan provider'"'"'s platform further comprises a reporting module for producing reports of information associated with income share plan.

77. The system of claim 70 and further comprising a lifetime income database.

78. The system of claim 71 wherein the calculation module calculates parameters of the income share plan.

79. The system of claim 72 wherein the calculation module calculates parameters of the income share plan.

81. A system for administering an income share plan that provides a future income stream comprising:

a record keeper'"'"'s platform including one or more communication modules, and a processing module; and

an annuity platform including one or more communication modules, and a processing module wherein the annuity platform receives and transmits information to and from the record keeper'"'"'s platform.

82. The system of claim 81 wherein the annuity platform further comprises a data storage module for storing information associated with the income share plan, a display module, a data entry module, and a calculation module.

83. The system of claim 81 wherein the record keeper'"'"'s platform further comprises a data storage module for storing information associated with the income share plan, a display module, a data entry module, and a calculation module.

84. The system of claim 82 wherein said system is operated by a party separate from said annuity platform.

85. The system of claim 83 wherein said system is operated by a party separate from said record keeper'"'"'s platform.

86. The system of claim 82 wherein the annuity platform further comprises a reporting module for producing reports of information associated with income share plan.

87. The system of claim 83 wherein the record keeper'"'"'s platform further comprises a reporting module for producing reports of information associated with income share plan.

88. The system of claim 81 and further comprising a lifetime income database.

89. The system of claim 82 wherein the calculation module calculates parameters of the income share plan.

90. The system of claim 83 wherein the calculation module calculates parameters of the income share plan.

92. The system of claim 81 further comprising the annuity platform performing for a beneficiary the steps of:

locating and reading the year of birth on record;

locating and reading a share price for the beneficiary'"'"'s year of birth;

calculating the purchase value for the beneficiary;

updating the records for the beneficiary;

calculating guaranteed income at 65;

creating a daily record keeper'"'"'s value record and passing back to the record keeper'"'"'s platform the purchase value for each beneficiary; and

wherein the purchase value for the participant is determined by computing;

purchase value=number of shares owned by participant*full share price.

93. The system of claim 81 further comprising:

a record keeper'"'"'s platform including one or more communication modules, and a processing module;

a second record keeper'"'"'s platform including one or more communication modules, and a processing module; and

an annuity platform including one or more communication modules, and a processing module wherein the annuity platform receives and transmits information to and from the record keeper'"'"'s platform.

94. The system of claim 93 further comprising a translation module for translating code used by both the record keeper'"'"'s platform and the second record keeper'"'"'s platform into standard language.

91. A system for administering an income share plan that provides a future income stream comprising:

an annuity platform including;

one or more communication modules; and

a processing module, wherein the annuity platform receives and transmits information to and from a plan provider and a record keeper.