Method and system for a deferred variable annuity with flexible lifetime benefit payments

• US 20090030737A1
• Filed: 11/16/2007
• Published: 01/29/2009
• Est. Priority Date: 07/24/2007
• Status: Active Grant

• Current Assignee: Hartford Fire Insurance Company (The Hartford Financial Services Group, Inc.)
• Original Assignee: Hartford Fire Insurance Company (The Hartford Financial Services Group, Inc.)
• Inventors: Weiss, Joseph M.
• Granted Patent: US 7,885,834 B2
• Time in Patent Office: Days
• US Class Current: 705/4
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 20/40 Authorisation, e.g. identification of payer or payee, verification of customer or shop credentials; Review and approval of payers, e.g. check credit lines or negative lists
• 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 computer implemented data processing system and method administers a deferred variable annuity contract during the accumulation phase for a relevant life. The annuity contract has a payment base value, a contract value, and a step-up provision. Administration of the product determines whether a step-up of the payment base value is applicable. If applicable, the product determines a step-up, wherein the step-up is guaranteed at a predetermined percentage. The investments of the deferred variable annuity contract are not limited to a specific asset allocation in order to qualify for the step-up provision.

Claims

1. A data processing system for administering a deferred variable annuity contract during the accumulation phase, the annuity contract having a payment base value, a contract value and yearly lifetime benefit payments, said system comprising:

a storage device;

a processor coupled to the storage device, the storage device storing modules utilized by the processor for predetermining a series of payout periods, wherein the number of years of each payout period is greater than one year, for predetermining a maximum total withdrawal percent for each payout period, and for calculating the amount of the lifetime benefit payment withdrawal for each given year within a given payout period by receiving an instruction from the relevant life that provides a withdrawal percent to use for each given year; and

wherein the sum of the withdrawal percents from each given year within the payout period is equal to or less than the predetermined maximum total withdrawal percent that is allowed for the given payout period.

2. A system for administering a deferred variable annuity contract during the accumulation phase, the annuity contract having a payment base value, a contract value, and a lifetime benefit payments, comprising:

a storage device;

a processor coupled to the storage device, the storage device storing modules utilized by the processor, the modules comprising;

i. a first module for receiving information from a relevant life in order to establish a deferred variable annuity contract;

ii. a third module for receiving lifetime benefit payment withdrawal requests from the relevant life;

iii. a third module for predetermining a series of payout periods, wherein the number of years of each payout period is greater than one year;

iv. a fourth module for predetermining a maximum total withdrawal percent for each payout period; and

v. a fifth module for calculating the amount of the lifetime benefit payment withdrawal for each given year within a given payout period.

3. The data processing system of claim 2, wherein calculating the amount of the lifetime benefit payment withdrawal for each given year within a given payout period is performed after receiving an instruction from the relevant life that provides a withdrawal percent to use for each given year.

4. The data processing system of claim 2, wherein in the sum of the withdrawal percents from each given year within the payout period is equal to or less than the predetermined maximum total withdrawal percent that is allowed for the given payout period.

5. A computer implemented data processing method for administering a deferred variable annuity contract during the accumulation phase, the annuity contract having a payment base value, a contract value, and a yearly lifetime benefit payments, said method comprising the steps of:

a. determining the number of years of a first payout period for the lifetime benefit payments, wherein the number of years of the first payout period is greater than one year;

b. determining a maximum total withdrawal percent for the first payout period;

d. if requested by the relevant life, periodically calculating a yearly lifetime benefit payment withdrawal for the relevant life which decreases the contract value;

wherein the amounts of the lifetime benefit payment withdrawals for each given year within the first payout period are calculated by receiving an instruction from the relevant life that provides a withdrawal percent to use for each given year;

wherein the withdrawal percents provided by the relevant life'"'"'s instruction may differ for each given year within the first payout period;

wherein the sum of the withdrawal percents from each given year within the first payout period, as provided by the relevant life'"'"'s instruction, is equal to or less than the predetermined maximum total withdrawal percent that is allowed for the first payout period; and

wherein the above steps are repeated at the conclusion of each payout period.

6. The computer implemented data processing method of by claim 5, further comprising the step of:

calculating a present payment base for said annuity contract;

wherein each of the yearly lifetime benefit payment withdrawals during a given payout period are calculated using the following formula;

((Payment Base)×

(year X Withdrawal Percent),

wherein (year X Withdrawal Percent) is selected by the relevant life);

wherein X is the number of years of the given payout period; and

wherein [(year 1 Withdrawal Percent)+(year 2 Withdrawal Percent)+ . . . +(year X Withdrawal Percent)] is equal to or less than (maximum total Withdrawal Percent for the given payout period), wherein (maximum total Withdrawal Percent for the given payout period) is predetermined by the company issuing the annuity product.

7. The computer implemented data processing method of claim 13, further comprising the step of:

if requested by the relevant life, periodically calculating a withdrawal payment during a given payout period—

that is in excess of;

(maximum total Withdrawal Percent for the given payout period)×

(Payment Base)—

for the relevant life which decreases each of;

the contract value and the payment base.

8. The computer implemented data processing method of claim 5, wherein the relevant life may not request a yearly lifetime benefit payment withdrawal until after:

(i) the expiration of a moratorium period, which is measured from the issue date of the contract;

or (ii) the date the relevant life reaches age 60, whichever is later.

9. The computer implemented data processing method of claim 5, further comprising the step of:

calculating a present payment base for said annuity contract;

wherein each of the yearly lifetime benefit payment withdrawals during a given payout period are calculated using the following formulas;

((Payment Base)×

(year 1 Withdrawal Percent),

wherein (year 1 Withdrawal Percent) is selected by the relevant life); and

((Payment Base)×

(year 2 Withdrawal Percent)

wherein (year 2 Withdrawal Percent) is selected by the relevant life).

10. The computer implemented data processing method of claim 5 further comprising the step of predetermining a yearly withdrawal percent chart that provides a withdrawal percent for each year of the relevant life'"'"'s future age;

and wherein the maximum total withdrawal percent for the given payout period is calculated using the following formula;

((predetermined yearly withdrawal percent at the first year of the given payout period according to the withdrawal percent chart)×

(number of years of the given payout period)).

11. The computer implemented data processing method of claim 10, wherein the predetermined yearly withdrawal percent chart is a function of the relevant life'"'"'s age.

12. The computer implemented data processing method of claim 10, wherein once the first lifetime benefit payment withdrawal is taken, the yearly predetermined withdrawal percent is fixed for the remainder of the contract.

13. The computer implemented data processing method of claim 10, wherein the yearly predetermined withdrawal percent increases at the beginning of each subsequent payout period over the term of the annuity.

14. The computer implemented data processing method of claim 10, wherein the yearly predetermined withdrawal percent decreases at the beginning of each subsequent payout period over the term of the annuity.

15. The computer implemented data processing method of claim 10, wherein the yearly predetermined withdrawal percent fluctuates over the term of the annuity.

16. The computer implemented data processing method of claim 5, wherein the lifetime benefit payment for a given year, if any, is paid in periodic installments throughout the given year.

17. The computer implemented data processing method of claim 5, wherein the lifetime benefit payment for a given year, if any, is paid in a single installment during the given year.

18. The computer implemented data processing method of claim 5, wherein the lifetime benefit payment withdrawal for a given year, if any, that is requested by the relevant life during the given year is less than the maximum available amount for that period.

19. The computer implemented data processing method of claim 5, wherein the number of years of the first payout period for the lifetime benefit payments is in the range of 2 to 20 years.

20. The computer implemented data processing method of claim 5, wherein the number of years of the first payout period for the lifetime benefit payments is in the range of 3 to 10 years.

21. The computer implemented data processing method of claim 5, wherein the number of years of the first payout period for the lifetime benefit payments is 5 years.

22. The computer implemented data processing method of claim 5, wherein the number of years of the first payout period for the lifetime benefit payments is the same as the number of years of each subsequent payout period, if any.

23. The computer implemented data processing method of claim 5, further comprising the step of:

calculating a death benefit for a beneficiary upon the death of the relevant life, wherein the death benefit is the greater of;

(a) a predetermined guaranteed death benefit amount; and

(b) the present contract value.

24. The computer implemented data processing method of claim 5, wherein the guaranteed death benefit is paid to the beneficiary only if the relevant life dies during the accumulation phase.

25. The computer implemented data processing method of claim 5, wherein if the contract value reaches a predetermined minimum value, then the contract annuitizes and annuity payments commence.