Financial instrument providing a guaranteed growth rate and a guarantee of lifetime payments

• US 7,831,496 B2
• Filed: 04/14/2006
• Issued: 11/09/2010
• Est. Priority Date: 07/29/2005
• Status: Active Grant

• Current Assignee: Prudential Insurance Company of America (Prudential Financial Incorporated)
• Original Assignee: Prudential Insurance Company of America (Prudential Financial Incorporated)
• Inventors: Kane, Daniel O., Runestad, Dain Eric, Schwartz, Robert J., Kuperstock, N. David, Herschler, Jacob M., O'Donnell, Robert Francis, Putterman, Steven Lee, Buzzelli, Marc Joseph, Phifer, Gary E. III, Jackman-Ward, Fiona Alexandra, Fishbein, Robert Alan, Shecklev, Christopher Patrick, Rae, Polly
• Primary Examiner(s): Kazimi; Hani
• Assistant Examiner(s): Kanervo; Virpi H
• Application Number:
  US11/404,979
• Publication Number:
  US 20070100715A1
• Time in Patent Office: 1,670 Days
• Field of Search: None
• US Class Current: 705/36.00R
• 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

Abstract

A method for providing a financial instrument includes determining an initial account balance associated with a financial instrument based upon an initial deposit amount, wherein the financial instrument includes an account with an account balance that changes over time. The method further includes establishing a first guarantee of a protected value, the protected value including at least an amount based upon the initial account balance growing at a minimum growth rate for a defined period of time or until one or more defined events occur, whichever is sooner; and establishing a second guarantee that a beneficiary may periodically receive a transfer of an amount of money for the life of a designated party, wherein the amount comprises a percentage of the protected value at the time of a particular event, provided that the amount may vary based upon withdrawals from the account in excess of a first particular limit.

Claims

1. A data processing system configured to manage a financial instrument comprising a guarantee of a minimum positive growth rate and a guarantee of a lifetime income, the data processing system comprising:

one or more processors; and

one or more memory modules, wherein at least one of the one or more memory modules comprises software configured, when executed by the one or more processors, to;

store, in at least one of the one or more memory modules, an initial balance of an account created according to the financial instrument, wherein the financial instrument allows discretionary withdrawals from the account;

store, in at least one of the one or more memory modules, a percentage value fixed upon an effective date of the guarantee of the lifetime income;

store the minimum positive growth rate in at least one of the one or more memory modules;

determine an updated account balance using the one or more processors, the determination based at least in part on a market performance of the account;

store the updated account balance in at least one of the one or more memory modules;

calculate a protected value using the one or more processors and the minimum positive growth rate, the protected value being at least equal to an amount based upon the initial account balance growing at the minimum positive growth rate for at least a defined period of time or until one or more defined events occur, whichever is sooner, wherein the protected value represents a positive rate of return provided by the guarantee of the minimum positive growth rate regardless of the market performance of the account; and

calculate a transfer amount as a product of the percentage value multiplied by the protected value at the time of a particular event, wherein the guarantee of the lifetime income provides for periodic transfers to a beneficiary for the life of a designated party.

2. The system of claim 1, wherein the software is further configured, when executed by the one or more processors, to transfer to the beneficiary the transfer amount, wherein the transferring is either due to withdrawals from the account or due to benefit payments made to the beneficiary, provided that the transfer amount varies if the withdrawals from the account exceed a first particular limit defined by the financial instrument.

3. The system of claim 1, wherein the initial account balance is equal to an initial amount deposited into the account.

4. The system of claim 1, wherein the minimum positive growth rate is a fixed rate between four percent and six percent.

5. The system of claim 1, wherein the minimum positive growth rate is a variable rate.

6. The system of claim 5, wherein the minimum positive growth rate is based on a consumer price index.

7. The system of claim 1, wherein the protected value further comprises at least any positive value calculated by subtracting the amount based upon the initial account balance growing at the minimum positive growth rate from the updated account balance, at the end of the defined period of time or at the time of the one or more defined events occur.

8. The system of claim 1, wherein the initial account balance is based on an account balance from an existing contract.

9. The system of claim 1, wherein the percentage value is independent of the designated party'"'"'s age.

10. The system of claim 1, wherein the percentage value is independent of the designated party'"'"'s age and gender.

11. A method for administering a financial instrument comprising a guarantee of a minimum positive growth rate and a guarantee of a lifetime income, the method comprising:

storing, in at least one memory module of one or more memory modules, an initial balance of an account created according to the financial instrument, wherein the financial instrument allows discretionary withdrawals from the account;

storing, in at least one of the one or more memory modules, a percentage value fixed upon an effective date of the guarantee of the lifetime income;

storing the minimum positive growth rate in at least one of the one or more memory modules;

determining an updated account balance using one or more processors, the determination based at least in part on a market performance of the account;

storing the updated account balance in at least one of the one or more memory modules;

calculating a protected value using the one or more processors and the minimum positive growth rate, the protected value being at least equal to an amount based upon the initial account balance growing at the minimum positive growth rate for at least a defined period of time or until one or more defined events occur, whichever is sooner, wherein the protected value represents a positive rate of return provided by the guarantee of the minimum positive growth rate regardless of the market performance of the account; and

using the one or more processors, calculating a transfer amount as a product of the percentage value multiplied by the protected value at the time of a particular event, wherein the guarantee of the lifetime income provides for periodic transfers to a beneficiary for the life of a designated party.

12. The method of claim 11, further comprising transferring to the beneficiary the transfer amount, wherein the transferring is either due to withdrawals from the account or due to benefit payments made to the beneficiary, provided that the transfer amount varies if the withdrawals from the account exceed a first particular limit defined by the financial instrument.

13. The method of claim 11, wherein the initial account balance is equal to an initial amount deposited into the account.

14. The method of claim 11, wherein the minimum positive growth rate is a fixed rate between four percent and six percent.

15. The method of claim 11, wherein the minimum positive growth rate is a variable rate.

16. The method of claim 15, wherein the minimum positive growth rate is based on a consumer price index.

17. The method of claim 11, wherein the protected value further comprises at least any positive value calculated by subtracting the amount based upon the initial account balance growing at the minimum positive growth rate from the updated account balance, at the end of the defined period of time or at the time of the one or more defined events occur.

18. The method of claim 11, wherein the initial account balance is based on an account balance from an existing contract.

19. The method of claim 11, wherein the percentage value is independent of the designated party'"'"'s age.

20. The method of claim 11, wherein the percentage value is independent of the designated party'"'"'s age and gender.

21. A method for administering a financial instrument comprising a guarantee of a minimum positive growth rate and a guarantee of a lifetime income, the method comprising:

storing, in at least one memory module of one or more memory modules, an initial balance of an account created according to the financial instrument, wherein the financial instrument allows discretionary withdrawals from the account;

storing, in at least one of the one or more memory modules, a percentage value fixed upon an effective date of the guarantee of the lifetime income;

storing the minimum positive growth rate in at least one of the one or more memory modules;

determining an updated account balance using one or more processors, the determination based at least in part on a market performance of the account;

storing the updated account balance in at least one of the one or more memory modules;

calculating a protected value using the one or more processors and the minimum positive growth rate, the protected value being at least equal to an amount based upon the initial account balance growing at the minimum positive growth rate for at least a defined period of time or until one or more defined events occur, whichever is sooner, wherein the protected value represents a positive rate of return provided by the guarantee of the minimum positive growth rate regardless of the market performance of the account; and

using the one or more processors, calculating a transfer amount as a product of the percentage value multiplied by the protected value at the time of a particular event, wherein the guarantee of the lifetime income provides for periodic transfers to one or more beneficiaries for the life of the longest surviving of a plurality of designated parties.

22. The method of claim 21, further comprising transferring to the one or more beneficiaries the transfer amount, wherein the transferring is either due to withdrawals from the account or due to benefit payments made to the one or more beneficiaries, provided that the transfer amount varies if the withdrawals from the account exceed a first particular limit defined by the financial instrument.

23. The method of claim 21, wherein the one or more beneficiaries comprise a married couple.

24. The method of claim 21, wherein the minimum positive growth rate is a variable rate.

25. The method of claim 24, wherein the minimum positive growth rate is based on a consumer price index.

26. The method of claim 21, wherein the protected value further comprises at least any positive value calculated by subtracting the amount based upon the initial account balance growing at the minimum positive growth rate from the updated account balance, at the end of the defined period of time or at the time of the one or more defined events occur.

27. The method of claim 21, wherein the initial account balance is based on an account balance from an existing contract.

28. The method of claim 21, wherein the percentage value is independent of the designated parties'"'"' ages.

29. The method of claim 21, wherein the percentage value is independent of the designated parties'"'"' ages and genders.

30. A method for administering a financial instrument comprising a guarantee of a minimum positive growth rate and a guarantee of a lifetime income, the method comprising:

storing, in at least one memory module of one or more memory modules, an initial balance of an account created according to the financial instrument, wherein the financial instrument allows discretionary withdrawals from the account;

storing, in at least one of the one or more memory modules, a percentage value fixed upon an effective date of the guarantee of the lifetime income;

storing the minimum positive growth rate in at least one of the one or more memory modules;

determining an updated account balance using one or more processors, the determination based at least in part on a market performance of the account;

storing the updated account balance in at least one of the one or more memory modules;

calculating a protected value using the one or more processors and the minimum positive growth rate, the protected value being at least equal to an amount based upon the initial balance growing at the minimum positive growth rate for a duration, the duration beginning at a first time and extending at least until a second time, wherein the second time is determined by an expiration of a specified period of time after the first time or by an occurrence of one or more defined events, whichever is sooner, wherein the protected value represents a positive rate of return provided by the guarantee of the minimum positive growth rate regardless of the market performance of the account; and

using the one or more processors, calculating a transfer amount as a product of the percentage value multiplied by the protected value at the time of a particular event, wherein the guarantee of the lifetime income provides for periodic transfers to a beneficiary for the life of a designated party.

31. The method of claim 30, further comprising transferring to the beneficiary the transfer amount, wherein the transferring is either due to withdrawals from the account or due to benefit payments made to the beneficiary, provided that the transfer amount varies if the withdrawals from the account exceed a first particular limit defined by the financial instrument.

32. The method of claim 30, wherein the first time is substantially equivalent to five years after the time at which the initial account balance is stored.

33. The method of claim 30, wherein the second time is substantially equivalent to the time at which a first discretionary withdrawal is made from the account.

34. The method of claim 30, wherein the minimum positive growth rate is a variable rate.

35. The method of claim 34, wherein the minimum positive growth rate is based on a consumer price index.

36. The method of claim 30, wherein the protected value further comprises at least any positive value calculated by subtracting the amount based upon the initial account balance growing at the minimum positive growth rate from the updated balance, at the second time.

37. The method of claim 30, wherein the initial account balance is based on an account balance from an existing contract.

38. The method of claim 30, wherein the percentage value is independent of the designated party'"'"'s age.

39. The method of claim 30, wherein the percentage value is independent of the designated party'"'"'s age and gender.