Generating an annuity payment using a dynamic asset allocation investment

• US 8,566,191 B2
• Filed: 07/05/2005
• Issued: 10/22/2013
• Est. Priority Date: 07/05/2005
• Status: Active Grant

• Current Assignee: FMR LLC
• Original Assignee: FMR LLC
• Inventors: Cheng, Ren, Shelon, Jonthan
• Primary Examiner(s): AMELUNXEN, BARBARA J
• Application Number:
  US11/174,944
• Publication Number:
  US 20070011063A1
• Time in Patent Office: 3,031 Days
• Field of Search: 705/35, 705/36, 705/36.R, 705/4, 705/37, 705/38
• 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 40/02 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

Abstract

An annuity is provided to an annuitant based on the performance of an investment. Assets of the investment are automatically reallocated over time and the annuity payment may change based on the performance of the automatically allocated assets. In some examples, the assets are automatically reallocated based on a demographic, which can include an age, a range of ages, and/or a gender.

Claims

1. A computerized method for reallocating assets of a variable annuity without user input, comprising:

determining, by a computing device, prior to the inception of the variable annuity, a dynamic asset allocation for the variable annuity, the dynamic asset allocation including at least two different asset allocations corresponding to at least two different time periods of a lifetime of the variable annuity, a first asset allocation corresponding to a first time period and a second asset allocation corresponding to a second time period;

storing the dynamic asset allocation into computer memory;

allocating, by the computing device, the assets of the variable annuity according to the first asset allocation corresponding to the first time period of the dynamic asset allocation;

using, by the computing device, a predetermined algorithm to reallocate the assets of the variable annuity without obtaining any user input after the inception of the variable annuity, the assets of the variable annuity reallocated according to the second asset allocation corresponding to the second time period of the dynamic asset allocation; and

determining, by the computing device, at least one annuity payment for an annuitant based on performance of the assets of the variable annuity.

2. The method of claim 1 wherein the dynamic asset allocation is based on a demographic.

3. The method of claim 2 wherein the demographic comprises an age.

4. The method of claim 2 wherein the demographic comprises a gender.

5. The method of claim 2 wherein the demographic comprises a range of ages.

6. The method of claim 1 further comprising calculating the at least one annuity payment based on a previous annuity payment.

7. The method of claim 1 further comprising calculating the annuity payment using a factor that relates performance of the variable annuity to a benchmark rate.

8. The method of claim 1 further comprising calculating the at least one annuity payment using a factor that accounts for an administrative fee.

9. The method of claim 1 wherein the dynamic asset allocation is based on a first parameter.

10. The method of claim 9 wherein the first parameter comprises a benchmark rate.

11. The method of claim 9 wherein dynamic asset allocation is based on a second parameter.

12. The method of claim 11 wherein the second parameter comprises a compound risk, a cash flow out of the variable annuity, a start date, or any combination thereof.

13. The method of claim 1 wherein the dynamic asset allocation is such that payments are estimated to last during a life expectancy.

14. The method of claim 1 wherein the annuity payment is guaranteed to the annuitant for life.

15. The method of claim 1 wherein the variable annuity comprises-a mutual fund modified for an immediate annuity, wherein the mutual fund has an asset allocation mix changing over time.

16. The method of claim 15 wherein the mutual fund employs a benchmark rate.

17. The method of claim 1 further comprising selecting the variable annuity from a plurality of funds.

18. The method of claim 17 wherein the selection of one or more funds from the plurality of funds is based on age, gender, life expectancy, or any combination thereof, of the annuitant, or a group of annuitants to which the annuitant is most closely related.

19. The method of claim 17 further comprising selecting one of the plurality based on a risk tolerance.

20. The method of claim 1 wherein the assets are allocated into a plurality of asset types.

21. The method of claim 20 wherein the plurality of asset types comprises at least two of the following asset types:

domestic equity, international equity, investment-grade fixed income, high-yield bond, money market, Certificates of Deposit (CDs), Treasury bills (T-bills), real estate trust, private investment fund, or mutual funds.

22. The method of claim 20 wherein an asset type in the plurality of asset types with the largest percentage of assets over a period of time during existence of the variable annuity comprises domestic equities.

23. The method of claim 1 further comprising:

determining, by the computing device, if the annuitant is still living; and

stopping, by the computing device, annuity payments if the annuitant is not living.

24. The method of claim 1 wherein the dynamic asset allocation is based on a demographic and a benchmark rate, the benchmark rate representing a rate of return needed to maintain identical predetermined annuity payments over the life of the variable annuity.

25. The method of claim 1 wherein the variable annuity is a deferred annuity.

26. The method of claim 1 wherein the variable annuity is an immediate annuity.

27. A computer program product, tangibly embodied in a non-transitory machine-readable storage device, the computer program product including instructions being operable to cause data process apparatus to:

determine, prior to the inception of a variable annuity, a dynamic asset allocation for the variable annuity, the dynamic asset allocation including at least two different asset allocations corresponding to at least two different time periods of a lifetime of the variable annuity, a first asset allocation corresponding to a first time period and a second asset allocation corresponding to a second time period;

store into computer memory the dynamic asset allocation;

allocating, by the computing device, the assets of the variable annuity according to the first asset allocation corresponding to the first time period of the dynamic asset allocation;

use a predetermined algorithm to reallocate the assets of the variable annuity without obtaining any user input after the inception of the variable annuity, the assets of the variable annuity reallocated according to the second asset allocation corresponding to the second time period of the dynamic asset allocation; and

determine at least one annuity payment for an annuitant based on performance of the assets of the variable annuity.