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

• US 7,974,898 B2
• Filed: 07/09/2008
• Issued: 07/05/2011
• 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: Boronow, Gordon, Kuperstock, N. David, Arena, Robert, O'Donnell, Robert, Schwartz, Robert
• Primary Examiner(s): Patel; Jagdish N
• Assistant Examiner(s): Bartley; Kenneth
• Application Number:
  US12/170,174
• Publication Number:
  US 20080270323A1
• Time in Patent Office: 1,091 Days
• Field of Search: 705/4, 705/35, 705/36.R
• 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 for providing stabilized annuity payments, the system comprising a processor, a memory, and a computer program stored in the memory. The computer program allocates the 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. 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. 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.

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 identifying said assets in memory;

storing information identifying said series of anticipated periodic payments in the memory;

determining an initial value of said assets;

defining a first pool by allocating a portion of said assets to said first pool, wherein said first pool has a first value representing an initial present value of the anticipated periodic payments;

defining a second pool by allocating a remaining portion of said assets to said second pool, wherein said second pool has a second value representing the initial value of said assets less said first value;

at periodic intervals over the time period;

determining a third value representing a subsequent market value of the assets in said first pool;

comparing, by a computer, said third value to a fourth value representing a present value of a remaining number of said anticipated periodic payments; and

in response to a determination that 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 new value representing said fourth value; and

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

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 a 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 a 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 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.

6. 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 initial value of said assets;

determining a fifth value representing a 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.

7. The method of claim 6, 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.

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

9. The method of claim 1, wherein:

the anticipated periodic payments are paid to an annuitant.

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

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

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

13. A computer program embodied on a non-transitory 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 identifying said assets in memory;

a computer code segment which stores information identifying said series of anticipated periodic payments in the memory;

a computer code segment which determines a 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, wherein said first pool has a first value representing a present value of the anticipated periodic payments;

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

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

a computer code segment which, at the periodic intervals over the time period, compares said third value to a fourth value representing a present value of a remaining number of said anticipated periodic payments;

a computer code segment which, in response to a determination that 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; and

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

14. The computer program of claim 13, 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 a 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.

15. The computer program of claim 14, wherein said predetermined portion of the assets represents a difference between said fifth value and said first trigger level.

16. The computer program of claim 14, 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.

17. The computer program of claim 14, 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.

18. The computer program of claim 13, 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.

19. The computer program of claim 18, 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.

21. The computer program of claim 13, wherein said first pool and said second pool include, at least in part, commingled assets.

20. The computer program of 13, further comprising a computer code segment which modifies said first value in response to a reduction in the remaining number of said anticipated periodic payments.

22. 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 identifying said assets and information identifying said series of anticipated periodic payments in the memory;

a processor programmed to;

determine a current value of said assets;

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

define a second pool by allocating a remaining portion of said assets to said second pool, wherein said second pool has a second value representing the current value of said assets less said first value;

at periodic intervals over the time period;

determine a third value representing a subsequent market value of the assets in said first pool;

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

in response to a determination that 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; and

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

23. The computer system of claim 22, 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.

24. The computer system of claim 23, wherein said predetermined portion of the assets represents a difference between said fifth value and said first trigger level.

25. The computer system of claim 23, 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.

26. The computer system of claim 23, 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.

27. The computer system of claim 22, 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 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.

29. The computer system of claim 22, wherein said processor is further programmed to adjust said first value in response to a reduction in the remaining number of said anticipated periodic payments.

30. The computer system of claim 22, wherein said first pool and said second pool include, at least in part, commingled assets.

31. 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 a portion of assets into a first pool;

allocating a remaining portion of the assets into a second pool;

receiving and storing a first payment amount;

receiving and storing a first trigger value;

determining a current value of the assets;

in response to a determination that said current value is greater than said first trigger value, reallocating, by a computer, a first portion of the assets from said second pool to said first pool, increasing the first payment amount to a second payment amount; and

in further response to the determination that said current value is greater than said first trigger value, determining a second trigger value.

32. The method of claim 31, further comprising the steps of:

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

determining a 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.

33. The method of claim 32, 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.

34. The method of claim 32, further comprising the step of modifying said first amount in response to a reduction in a number of anticipated periodic payments.

35. The method of claim 32, wherein said steps of determining the current value of the assets and determining the value of said assets in said first pool are performed periodically.

36. The method of claim 32, wherein said steps of determining a value of the assets and determining the current value of said assets in said first pool are performed in response to an event.

37. The method of claim 31, wherein the assets determined are the assets allocated into said second pool.

38. The method of claim 37, wherein substantially all the assets above said first trigger value are reallocated from said second pool to said first pool to maintain said assets in said second pool equal to or less than said first trigger value.

39. The method of claim 31, wherein the assets determined are comprised of the assets allocated into said second pool and said first pool.

40. The method of claim 31, wherein:

the anticipated periodic payments are paid to an annuitant; and

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

41. The method of claim 31, wherein said first pool and said second pool include, at least in part, commingled assets.

42. The method of claim 31, wherein said reallocating from said second pool to said first pool to increase said first payment amount is performed according to a predetermined ratio.