WO2009142665A1

WO2009142665A1 - System and method for administering annuities

Info

Publication number: WO2009142665A1
Application number: PCT/US2008/087761
Authority: WO
Inventors: Philip W. Michalowski; Keith E. Golembiewski; Joseph M. Weiss
Original assignee: Hartford Fire Insurance Company
Priority date: 2008-05-20
Filing date: 2008-12-19
Publication date: 2009-11-26

Abstract

Computer-implemented method for administering an annuity product includes storing by a processor in memory an amount of an initial funding payment, an interest rate formula and a term for an accumulation annuity, and storing terms including a deferral term for a guaranteed income annuity. If the processor determines that the current time is during the term, the processor calculates an amount of interest earned on the fixed rate annuity and storing in memory a credit of the calculated interest amount to a guaranteed income annuity. After the accumulation period, the processor provides an output signal indicative of instructions to provide a notice of expiration. After the deferral period, the processor calculates an income annuity payment amount from the guaranteed income annuity; and provides an output signal indicative of instructions for a payment to be made to an annuitant based on the income annuity payment amount.

Description

SYSTEM AND METHOD FOR ADMINISTERING ANNUITIES

CLAIM OF PRIORITY

[0001] The Applicant claims the benefit of United States Patent Application Serial No. 12/123,739, filed May 20, 2008, entitled SYSTEM AND METHOD FOR ADMINISTERING ANNUITIES, the subject matter thereof incorporated by reference in its entirety.

FIELD OF INVENTION

[0002] The present invention relates to computer systems, and particularly to computer systems for calculating features of financial products.

BACKGROUND

[0003] An annuity is a type of insurance service. In general terms, in an annuity contract, an insurance company and an annuitant contract for the annuitant to make one or more payments to the insurance company. For that consideration, the insurance company makes periodic payments to an annuitant. By way of example, the insurance company may be obliged to make a payment of a predetermined amount to the annuitant annually for a predetermined time period. In another example, the insurance company is obliged to make payments of a predetermined amount to the annuitant annually for the life of the annuitant.

[0004] In a typical annuity product, an asset value associated with an account is annuitized. In other words, the asset value is not available for use by the annuitant, or for use in estate planning.

[0005] In the prior art, one exemplary product provides a variable annuity, based on a single premium, which also includes a stream of payments, funded by an additional fee, that commences at an age selected by the annuitant. SUMMARY OF THE INVENTION

[0006] In one embodiment, a computer system for administering an annuity has a processor and a memory in communication with the processor. The processor is adapted to: store in the memory an amount of an initial funding payment, an interest rate formula and a term for an accumulation annuity; store in the memory at least a deferral period of a guaranteed income annuity; if the current time is during the term, calculate an amount of interest earned on the accumulation annuity; store in the memory a credit of the calculated interest amount to a guaranteed income annuity; determine whether the time is after the accumulation period, and if the time is after the accumulation period, provide an output signal indicative of an instruction to provide a notice of expiration; determine whether the current time is after the expiration of the deferral period, and, if the current time is after the expiration of the deferral period, calculate an income annuity payment amount from the guaranteed income annuity; and provide an output signal indicative of instructions for a payment to be made to the annuitant based on the income annuity payment amount. [0007] In an embodiment, a computer-implemented method for administering an annuity product includes storing by a processor in a memory in communication with the processor an amount of an initial funding payment, an interest rate formula and a term for an accumulation annuity; storing by the processor in the memory at least a deferral period of a guaranteed income annuity; if the processor determines that the current time is during the term, calculating by the processor an amount of interest earned on the accumulation annuity, and storing by the processor the amount in the memory; storing by the processor in the memory a credit of the calculated interest amount to a guaranteed income annuity; if the processor determines that the current time is after the accumulation period, providing by the processor an output signal indicative of an instruction to provide a notice of expiration; if the processor determines that the current time is after the expiration of the deferral period, calculating by the processor an income annuity payment amount from the guaranteed income annuity; and providing by the processor an output signal indicative of instructions for a payment to be made to the annuitant based on the income annuity payment amount.

[0008] In an embodiment, a computer-readable medium has instructions thereon which, when executed by a processor, cause the processor to: store in memory an amount of an initial funding payment, an interest rate formula and a term for an accumulation annuity; store in memory at least a deferral period of a guaranteed income annuity; determine if the current time is during the term, and, if the current time is during the term, calculate an amount of interest earned on the accumulation annuity; store in memory a credit of the calculated interest amount to a guaranteed income annuity; determine if the current time is after the accumulation period and, if the current time is after the accumulation period, provide an output signal indicative of an instruction to provide a notice of expiration; determine if the current time is after the expiration of the deferral period, and, if the current time is after the expiration of the deferral period, calculate an income annuity payment amount from the guaranteed income annuity; and provide an output signal indicative of instructions for a payment to be made to the annuitant based on the income annuity payment amount. [0009] In an embodiment, a computer system for administering an annuity has a processor and a memory in communication with the processor. The processor is adapted to store in a memory in communication with the processor an amount of an initial funding payment, an interest rate formula and a term for an accumulation annuity; store in the memory a deferral period and an initial funding payment of a guaranteed income annuity; determine if the current time is during the accumulation annuity term and, if the current time is during the term, calculate an amount of interest earned on the accumulation annuity; store in the memory a credit of the calculated interest amount at least to the accumulation annuity; determine if the current time is during the accumulation annuity term, and if the time is after the accumulation period, provide an output signal indicative of an instruction to provide a notice of expiration; determine if the current time is after the expiration of the deferral period, and, if the time is after the expiration of the deferral period, calculate an income annuity payment amount from the guaranteed income annuity and store the calculated income annuity payment amount in the memory; and provide an output signal indicative of instructions for a payment to be made to the annuitant based on the calculated income annuity payment amount. [0010] In an embodiment, a computer-implemented method for administering an annuity includes storing by a processor in a memory in communication with the processor an amount of an initial funding payment, an interest rate formula and a term for an accumulation annuity; storing by the processor in the memory a deferral period and an initial funding payment of a guaranteed income annuity; determining by the processor if the current time is during the accumulation annuity term and, if the current time is during the term, calculating by the processor an amount of interest earned on the accumulation annuity; storing by the processor in the memory a credit of the calculated interest amount at least to the accumulation annuity; determining by the processor if the current time is during the accumulation annuity term, and if the time is after the accumulation annuity term, providing by the processor an output signal indicative of an instruction to provide a notice of expiration; determining by the processor if the current time is after the expiration of the deferral period, and, if the time is after the expiration of the deferral period, calculating by the processor of an income annuity payment amount from the guaranteed income annuity and storing by the processor of the calculated income annuity payment amount in the memory; and providing by the processor an output signal indicative of instructions for a payment to be made to the annuitant based on the calculated income annuity payment amount.

[0011] In an embodiment, a computer-readable medium has instructions thereon which, when executed by a processor, cause the processor to: store in a memory in communication with the processor an amount of an initial funding payment, an interest rate formula and a term for an accumulation annuity; store in the memory a deferral period and an initial funding payment of a guaranteed income annuity; determine if the current time is during the accumulation annuity term and, if the current time is during the accumulation annuity term, calculate an amount of interest earned on the accumulation annuity; store in the memory a credit of the calculated interest amount at least to the accumulation annuity; determine if the current time is during the accumulation annuity term, and if the time is after the accumulation annuity term, provide an output signal indicative of an instruction to provide a notice of expiration; determine if the current time is after the expiration of the deferral period, and, if the time is after the expiration of the deferral period, calculate an income annuity payment amount from the guaranteed income annuity and store the calculated income annuity payment amount in the memory; and provide an output signal indicative of instructions for a payment to be made to the annuitant based on the calculated income annuity payment amount.

BRIEF DESCRIPTION OF THE DRAWINGS

[0012] Fig. 1 is a schematic diagram of an exemplary computer system for implementation of a method and system of the invention.

[0013] Fig. 2 is a schematic diagram of an exemplary network for implementation of a method and system of the invention.

[0014] Fig. 3 is a process flow diagram illustrating a method for administering annuities implemented by the computer system of Fig. 1.

[0015] Fig. 4 is a detailed process flow diagram illustrating methods for administering annuities implemented by the computer system of Fig. 1. [0016] Fig. 5 is a schematic diagram illustrating the method of Fig. 3. [0017] Fig. 6 is a process flow diagram of an alternative method for administering annuities implemented by the computer system of Fig. 1.

[0018] Fig. 7 is a process flow illustrating a method, implemented by the network of Fig. 2, of calculating parameters of annuities consistent with the process flows of Figs. 3, 4 and 6.

[0019] Figs. 8A, 8B, 8C, 8D, 8E and 8F are tables illustrating implementations of the method and system of the invention.

DETAILED DESCRIPTION

[0020] It is to be understood that the figures and descriptions of the present invention have been simplified to illustrate elements that are relevant for a clear understanding of the present invention, while eliminating, for the purpose of clarity, many other elements found in typical computer systems, and methods for administration of insurance products such as annuities. Those of ordinary skill in the art may recognize that other elements and/or steps are desirable and/or required in implementing the present invention. However, because such elements and steps are well known in the art, and because they do not facilitate a better understanding of the present invention, a discussion of such elements and steps is not provided herein. [0021] Referring to Fig. 1 , an exemplary computer system for use in the implementation of the invention will now be described. In computer system 100, processor 110 executes instructions contained in programs stored on stored media. Processor 110 communicates, such as through suitable buses and other data channels, with communications port 105 and local memory 110, receives data from user inputs 115, and provides data to outputs 125. Local memory 120 is configured to exchange data with processor 110, and may store programs containing processor-executable instructions, and values of variables for use by such programs. Data storage 130 may include a wide variety of data acquired and processed in accordance with the invention. User input may be provided at inputs 115, which may include keyboards, pointing devices such as mice, and touchscreens. In an embodiment, inputs 115 may include user interfaces, including workstations having keyboards, touchscreens, pointing devices such as mice, or other user input devices, connected via networked communications to processor 110. Outputs 125 may include displays and printers. Communications port 105 may communicate with remote sources of information, and with systems for implementing instructions output by processor 110. Communication may be by one or more of suitable communication methods, including over wired or wireless local area networks and wide area networks, and over communications between networks, including over the Internet. Any suitable data and communication protocols may be employed.

[0022] Communications port 105 may communicate with payment determination system 140. Payment determination system 140 may include one or more computer systems, including processors, memory devices, user inputs, outputs, software executed by the processors, and other conventional components. Payment determination system 140 may be adapted to receive an output signal via communications port 105, which output signal includes payment information, such as an amount, a date payable, and information identifying an annuitant. Payment determination system 140 may further be adapted to determine a payor account and a payment method. The payor account may be an account with a selected bank; by way of example, payment determination system 140 may include a look-up table mapping annuitant information, such as geographic information, to a particular bank and account. Payment determination system 140 may also include stored in memory and accessible by a processor information indicating whether a particular annuitant is to be paid by paper check, by electronic funds transfer, or in some other manner. A processor of payment determination system 140 may cause to be stored in memory of the payment determination system the determined payor account information and the determined payment method. The processor of payment determination system 140 may cause a digital signal to be output indicative of the stored payor account information, the stored payment method, amount information and payee information. [0023] In an embodiment, the output digital signal may be received by check printing and mailing system 150. Check printing and mailing system 150 may include one or more computer systems, including processors, memory devices, user inputs, outputs, software executed by the processors, and other conventional components. The outputs include in particular one or more printers, and may include other devices useful in printing and mailing paper checks, such as devices for feeding paper, separating printed checks, inserting printed checks into envelopes, sealing envelopes, and applying postage to envelopes as appropriate. The printed check is then mailed to the annuitant. The annuitant deposits the check in the annuitant's bank account, causing funds to be credited to the annuitant's bank account, and causing the funds to be withdrawn from the designated bank account from which the payment is made. [0024] In an embodiment, the output digital signal from payment determination system 140 may be received by electronic funds transfer instructions system 160. Electronic funds transfer instructions system 160 may include one or more computer systems, including processors, memory devices, user inputs, outputs, software executed by the processors, and other conventional components. Electronic funds transfer instructions system 160 includes a processor adapted to provide an output signal indicative of an instruction to a bank determined by the payor account information to provide an electronic funds transfer from the payor account to a payee account in an amount as previously determined, such as by processor 110.

[0025] The output signal from electronic funds transfer instructions system 160 may be provided to a bank computer system 170, which carries out an electronic funds transfer, debiting the designated account, and resulting in a credit to a designated annuitant account.

[0026] Referring now to Fig. 2, a schematic diagram of a client server arrangement for implementation of a method and system in accordance with an embodiment of the invention is presented. In the arrangement of Fig. 2, client devices 205, 206, 207 may be connected via network 210 to server 220. In an implementation, client devices 205, 206, 207 may be personal computers running an operating system such as Windows XP, Windows Vista, or Apple Tiger, thin client devices, portable devices such as personal digital assistants (running the Palm OS, by way of example), cell phones, or other devices. Client devices may be operated variously by individual prospective annuitants, insurance brokers or other financial advisors, or by personnel of an insurance service provider. Network 210 may be or include the Internet, a corporate intranet, wireless and wired communications channels, and other network features. Server 220 may include processor 230 having local memory 240 and data storage 250. Program 260 runs on processor 230. Program 260 may initiate sessions with one more of client devices 205, 206, 207. Program 260 may prompt the user for information regarding available assets, desired income and desired asset value goals, and based on information received and various algorithms related to annuity contracts, provide examples. Program 260 may also provide a web front end, and be linked to back end computer systems for implementing administration of annuities. Program 260 may be, by way of example only, a Java-based program.

[0027] A challenge that has been recognized by the inventors is that of both preserving the asset value associated with an annuity and providing a guaranteed stream of income to the annuitant. For example, in a single premium immediate annuity (SPIA), while a stream of income is guaranteed, the principal is not available. Variable annuities provide access to principal, but their income potential is dependent on market performance. As a result, variable annuities fail to provide a predictable stream of income to the annuitant. One solution in the prior art to the problem of providing a predictable stream of income to the annuitant who purchases a variable annuity is for the annuitant to purchase a guaranteed minimum withdrawal benefit (GMWB) rider. The GMWB rider, as its name implies, provides a guarantee of a certain minimum income level, even if the asset value of the variable annuity declines to a point which would not otherwise support the minimum income level. However, the GMWB rider is purchased at an additional cost to the annuitant. The asset value of variable annuities is also linked to the value of securities or of indices based on values of securities, and thus is not predictable.

[0028] Referring now to Fig. 3, a high level process flow of a method for administering an annuity product will be explained, with reference to the computer system of Fig. 1. In accordance with an implementation, an insurance company and a user, who may be the annuitant, have entered into an insurance contract for funding of an annuity. The annuity contract includes both an accumulation annuity and a guaranteed income annuity. A processor may store terms of the accumulation annuity and the guaranteed income annuity 305. Terms are discussed below. The processor may store a credit of initial funding and/or payments of interest on the accumulation annuity to the guaranteed income annuity 310. After the end of the deferral term of the guaranteed income annuity, the amount and timing of periodic payments to the annuitant may be calculated, such as by processor 110 and stored in memory, and output instructions for payments to the annuitant may be formulated and output 315. After the end of an initial term of the accumulation annuity, various accumulation annuity renewal options may be implemented 320 in accordance with instructions from an annuitant. If instructions provide for no renewal, then a processor may provide instructions to pay out an asset value to the annuitant, as indicated by block 325. If instructions provide for renewal of the accumulation annuity with no income from the accumulation annuity to the annuitant, then interest on the accumulation annuity is credited in the future to the accumulation annuity asset value 330. If the instructions provide for renewal with income to the annuitant, then instructions are provided, such as by a processor 110, for payment of the annuitant of interest credited on the accumulation annuity. The asset value of the accumulation annuity remains constant in that scenario. [0029] Referring now to Fig. 4, a more detailed process flow of an implementation of a method of the invention will be explained. The contract with the insurance company involves the payment to the insurance company of an initial amount to fund an accumulation account. The accumulation annuity has a specified term and interest rate or formula for calculation of the interest rate, and instructions are specified for use of the interest. The interest may be credited to fund a guaranteed income annuity. Alternatively, the interest may be credited to the asset value of the accumulation annuity, or the interest may be divided according to a formula between those two purposes. The amount of the initial funding payment, term, interest rate and instructions are stored in memory, such as by processor 105 in data storage 130, as indicated at 405. The initial funding payment funds an accumulation annuity that has a periodic payment. Periodic payments may be at a fixed or variable interest rate. However, the account is not based on investment returns. The asset value of the accumulation account may be changed by withdrawals, charges or reinvestment of interest. The asset value of the accumulation account is not changed by the performance of any security or index. The asset value of the accumulation account is independent of the value of any security or index. By way of example, the periodic interest payments may be annual.

[0030] The funding and terms of the guaranteed income annuity are also stored in memory. An initial funding payment may fund the guaranteed income annuity. A deferral period for the guaranteed income annuity may be determined. A formula for calculation of payments on the guaranteed income annuity, based on timing of funding and other factors, may be provided. The payment amount, deferral period and formula may be stored in memory 410, such as by processor 105 storing the information in data storage 130.

[0031] Thereafter, during the accumulation annuity initial term, the processor 105 may check whether a sufficient time has elapsed to calculate interest payments 412. If sufficient time has elapsed, then the interest on the accumulation annuity is calculated by processor 105 and stored in memory, such as data storage 130, as indicated at 415. The calculated interest is then stored in data storage 130 by processor 105 as a credit funding a deferred guaranteed income annuity or the asset value of accumulation annuity 420. If the accumulation term is not complete 425, this process is repeated. [0032] Upon expiration of the term of the accumulation account, or a suitable time period in advance of the expiration of the accumulation account, as determined by processor 105, the processor 105 may output a signal indicative of an instruction to generate a notification of expiration 430. In response to the signal, the customer may be notified of investment options for the account value of the accumulation account. As discussed above in connection with Fig. 3, there are a number of options with respect to renewals.

[0033] The deferred guaranteed income annuity has a deferral period. Referring to Fig. 4B, processor 105 determines whether the deferral period has been completed 440. At the completion of the deferral period, as determined by processor 105, the processor 105 calculates the amount (or checks the amount previously calculated) of a periodic payment, and provides an output signal indicative of an instruction to commence periodic payments to the annuitant, as indicated by block 445. If the processor 105 determines that the deferral period has not yet expired, no payment is made 450, and the process flow returns to periodically determining whether the deferral period has expired. The amount of the periodic payments depends on the amount and timing of the funding payments, and the deferral period. In general terms, the longer the deferral period, the greater the funding payments, the greater the elapsed time between the date of the funding period and the expiration of the deferral period, the greater the periodic payments to the annuitant. In an embodiment, level payments may continue for a specified term, or for the life of the annuitant. In other embodiments, the amount of payments may be variable and dependent on one or more factors. A formula for calculation of payment amounts is included in the annuity contract. Such formulas are well known to those of ordinary skill in the art of insurance annuities. The formula may be stored in memory by the processor 105 in data storage 130. The processor 105 may access the formula from data storage 130, temporarily retain the formula in local memory 120, access data relating to amounts and timing of funding payments stored in data storage 130, and calculate the amount of each payment using the accessed data and the formula. The processor may similarly access formulas and data for all other calculations required or desirable in implementation of the method of the invention. [0034] An embodiment of a method of the invention will now be explained with reference to Fig. 5. In Fig. 5, time progresses from left to right, with an exemplary period of 20 years illustrated. Customer 500 provides an initial funding payment 510 to accumulation annuity 520. Accumulation annuity provides periodic payments 530 to income guarantee annuity 540. After the end of the accumulation term, which is illustrated here as ten years, payments 530 cease. The accumulation annuity may be renewed, as illustrated here, and the gains, in the form of interest on the asset value, reinvested as increases in the asset value. The accumulation annuity continues to have an asset value during the renewal term. After the end of the deferral period, which is also ten years in this example, income guarantee annuity provides payments 550 to customer 500. In the deferred guaranteed income annuity, there is no asset value available for the use of the annuitant. As there is no asset value available, the guaranteed income annuity 550 is said to be completely annuitized. [0035] In another embodiment, both the accumulation annuity and the income guarantee income may be funded by initial payments. In this embodiment, the interest from the accumulation annuity may be entirely reinvested in the accumulation annuity. In the alternative, a portion of the interest from the accumulation annuity may be reinvested in the accumulation annuity, and a remaining portion contributed to the guaranteed income annuity. In this embodiment, referring to Fig. 6, with reference to the computer system of Fig. 1 , processor 105 stores 605 in memory, such as data storage 130, an amount of an initial funding payment, an interest rate formula and a term for an accumulation annuity. The processor 105 also stores in memory 130 a deferral period and an initial funding payment of a guaranteed income annuity 610. Processor 105 may also store in memory a formula for calculation of the payment amounts of the guaranteed income annuity. If the current time is during the accumulation annuity term, as determined by processor 105, the processor 105 calculates 615 an amount of interest earned on the accumulation annuity. The processor 105 stores in memory 130 a credit of the calculated interest amount at least to the accumulation annuity 620. If the time is after the accumulation period, as determined by processor 105, the processor 105 provides an output signal including an instruction for a notice of expiration to be provided 630. In response to a notice of expiration, an annuitant may choose to renew the accumulation annuity, and may elect for payment to be reinvested or to be paid to the annuitant. If the time is after the expiration of the deferral period, as determined by processor 105, the processor 105 calculates an income annuity payment amount from the guaranteed income annuity 635, and provides an output signal indicative of instructions for a payment to be made to the annuitant based on the income annuity payment amount 640. In an embodiment, the processor 105 may store in memory 130 a credit of a portion of the calculated interest amount to the guaranteed income annuity.

[0036] In an implementation, it may be desirable to determine the terms of the annuity based on current assets of the annuitant and the income and asset goals of the annuitant. In an implementation, this process may be performed using the system of Fig. 2. Accordingly, referring to Fig. 7, with reference to the computer system of Fig. 2, a method may further include, prior to the time of storing an initial funding amount, receiving at processor 230, from an annuitant, or an annuitant's broker or other financial advisor, such as from client devices 205, 206, 207, and via the network, an available initial funding amount, at least a desired income annuity amount and a desired asset value amount for the accumulation annuity 705. The process flow then proceeds to processor 230 calculating the accumulation term, and deferral term consistent with the received initial funding amount and the desired income annuity amount and asset value amount 710. In so doing, the processor may access a suitable formula stored in data storage 250. The generation of suitable formulas is well-known to those of skill in the art of insurance annuities. The processor 230 may provide an output 515, such as via a web page transmitted to client device 205, 206, 207, a printout from a printer, or an audio message from an audio interface having audio cards and one or more speakers, indicating at least the calculated accumulation term and the calculated deferral term. It will be appreciated that the inputs received by the processor 230, and the corresponding formula accessed from data storage 250, may be varied. For example, the deferral period may be an input received by the processor, and the amount of the initial funding may be a result calculated by the processor and provided for output at client devices 205, 206, 207.

[0037] Fig. 6A is a table illustrating an exemplary implementation of a method and system according to the invention. In this implementation, a client, at an age of 67, funds the accumulation annuity, with a term of 10 years, with $100,000. The interest rate is a fixed 5.5%. All interest from the accumulation annuity is directed to the income guarantee, or HIS, annuity. The deferral period is ten years. The accumulation annuity is renewed for 10 years, with interest directed to reinvestment. As a result, the initial

$100,000 investment results in $95,935 in income during the renewal term, and an asset value of $161 ,909, after 20 years.

[0038] Fig. 8B is a table, similar to Fig. 8A, differing only in that the income after renewal of accumulation annuity is directed to payments to the annuitant. Thus, the original $100,000 remains intact, and an annual income of $15,094 is received for the ten year renewal term.

[0039] Fig. 8C is a table, also similar to Fig. 8A, differing in that the initial funding,

$100,000 in total, is split 75/25 between the accumulation annuity and the guaranteed income annuity, and further that the interest from the accumulation annuity is reinvested during the initial ten year term as well as during the renewal term. This example results in a greater accumulation of asset value than those of Figs. 8A and 8B, but with a smaller annual income.

[0040] Fig. 8D, is a table, similar to Fig. 8C, differing in that the interest on the accumulation annuity during the ten-year renewal term is paid to the annuitant as income. This scenario results in a smaller asset value than the example of Fig. 8C, but a greater annual income during the renewal term. It will be appreciated that the annuitant may select from year to year whether to reinvest the income from the accumulation renewal or receive the interest as income.

[0041] Fig. 8E is a table, similar to Fig. 8A, but illustrating commencing the method at age 60, and including a second ten-year renewal. During the second ten-year renewal, interest earned on the accumulation annuity is credited to the asset value of the annuity. This scenario results in an increasing asset value to $276,565 after 30 years, with level income, starting after 10 years.

[0042] Fig. 8F is a table, similar to Fig. 8B, but illustrating commencing the method at age 60, and including a second ten-year renewal. Thus, during both renewal terms, interest earned on the accumulation annuity is paid to the annuitant as income. The guaranteed income annuity annual payments are less than in Fig. 8B, as the formula for payment level takes into account the age of the annuitant at the commencement of the stream of payments. The payment is less if the age of the annuitant is less, given the likelihood of an obligation to make payments over a greater period of time. [0043] The present invention is operable with computer storage products or computer readable media that contain program code for causing a processor to perform the various computer-implemented operations. The computer-readable medium is any data storage device that can store data which can thereafter be read by a computer system such as a microprocessor. The media and program code may be those specially designed and constructed for the purposes of the present invention, or they may be of the kind well known to those of ordinary skill in the computer software arts. Examples of computer-readable media include, but are not limited to magnetic media such as hard disks, floppy disks, and magnetic tape; optical media such as CD-ROM disks; magneto- optical media; and specially configured hardware devices such as application-specific integrated circuits (ASICs), programmable logic devices (PLDs), and ROM and RAM devices. Examples of program code include both machine code, as produced, for example, by a compiler, or files containing higher-level code that may be executed using an interpreter. Steps in the computer-implemented methods may be implemented in processors running software stored locally, and/or in configurations such as application service providers, in which certain steps are executed on processors communicating with one another over a network such as the Internet. Either standalone computers or client/server systems, or any combination thereof, may be employed.

[0044] A system in accordance with the invention may include means corresponding to each step in each method described herein. Each means may be implemented by processor 110 executing instructions contained in programs which may be stored in a storage medium, such as local memory 120 or data storage 130. It will be appreciated that any of the steps in the methods in accordance with the invention described herein may be so implemented.

[0045] While the foregoing invention has been described with reference to the above embodiments, various modifications and changes can be made without departing from the spirit of the invention. Accordingly, all such modifications and changes are considered to be within the scope of the appended claims.

Claims

CLAIMSWhat is claimed is:

1. A computer system for administering an annuity that includes an accumulation and a guaranteed income annuity, comprising: a processor; a memory in communication with the processor; the processor adapted to: store in the memory an amount of an initial funding payment, an interest rate formula and a term for the accumulation annuity; store in the memory at least a deferral period of the guaranteed income annuity; if the current time is during the term, calculate an amount of interest earned on the accumulation annuity; store in the memory a credit of the calculated interest amount to the guaranteed income annuity; determine whether the time is after the accumulation period, and if the time is after the accumulation period, provide an output signal indicative of an instruction to provide a notice of expiration; determine whether the current time is after the expiration of the deferral period, and, if the current time is after the expiration of the deferral period, calculate an income annuity payment amount from the guaranteed income annuity; and provide an output signal indicative of instructions for a payment to be made to the annuitant based on the income annuity payment amount, wherein the asset value of the accumulation annuity account is independent of the value of a security or index.

2. The system of claim 1 , wherein the processor is further adapted to, at the time of the storing of the initial funding payment, store in the memory an initial funding payment to the guaranteed income annuity.

3. The system of claim 1 , wherein the processor is further adapted to, at the time of expiration, in response to a digital signal indicative of received customer instructions, store in the memory an instruction to renew the accumulation annuity, and to credit interest on the accumulation annuity at least in part to the accumulation annuity.

4. The system of claim 1 , wherein the processor is further adapted to, at the time of expiration, in response to a digital signal indicative of received customer instructions, store in the memory an instruction to renew the accumulation annuity and an instruction to provide payment to the customer of interest on the renewed accumulation annuity.

5. The system of claim 1 , wherein the processor is further adapted to, prior to the time of storing an initial funding amount, receive a digital signal indicative of an available initial funding amount, at least a desired income annuity amount and a desired asset value amount for the accumulation annuity; calculate the accumulation term and deferral term consistent with the received initial funding amount and the desired income annuity amount and asset value amount; and provide an output indicating at least the calculated accumulation term and the calculated deferral term.

6. The system of claim 1 , wherein the processor is further adapted to, prior to the time of storing an initial funding amount, receive a digital signal indicative of at least a desired income annuity amount, a desired asset value amount for the accumulation annuity, and a desired deferral period; calculate the initial funding amount, the accumulation term consistent with the received desired income annuity amount, desired asset value amount and desired deferral period; and provide an output indicating the calculated initial funding amount and accumulation term.

7. The system of claim 1 , further comprising: a payment determination system having a processor for: receiving the output signal, determining of a payor account and a payment method; storing of the determined payor account information and the determined payment method in a memory of the payment determination system; outputting of a digital signal indicative of the stored payor account information, the stored payment method, amount information and payee information; and a payment fulfillment system for receiving the digital signal from the payment determination system and for fulfillment of payment in accordance with the information conveyed by the digital signal from the processor of the payment determination system.

8. The system of claim 7, wherein the payment fulfillment system is a check printing and mailing system for printing and mailing a check drawn on the payor account in an amount and to a payee as determined by the information conveyed by the digital signal from the processor of the payment determination system.

9. The system of claim 7, wherein the payment fulfillment system is a system for generating electronic funds transfer requests for providing of an instruction to a bank determined by the payor account information to provide an electronic funds transfer from the payor account to a payee account in an amount determined by the information conveyed by the digital signal from the processor of the payment determination system.

10. The system of claim 1 , further comprising an input module, the processor adapted to receive one or more of the initial funding payment amount, the interest rate formula and the term for the accumulation annuity from the input module.

11. The system of claim 10, wherein the input module comprises a workstation having a keyboard and a pointing device.

12. A computer-implemented method for administering an annuity product, comprising the steps of: storing by a processor in a memory in communication with the processor an amount of an initial funding payment, an interest rate formula and a term for an accumulation annuity; storing by the processor in the memory at least a deferral period of a guaranteed income annuity; if the processor determines that the current time is during the term, calculating by the processor an amount of interest earned on the accumulation annuity, and storing by the processor the amount in the memory; storing by the processor in the memory a credit of the calculated interest amount to a guaranteed income annuity; if the processor determines that the current time is after the accumulation period, providing by the processor an output signal indicative of an instruction to provide a notice of expiration; if the processor determines that the current time is after the expiration of the deferral period, calculating by the processor an income annuity payment amount from the guaranteed income annuity; and providing by the processor an output signal indicative of instructions for a payment to be made to the annuitant based on the income annuity payment amount.

13. The method of claim 12, further comprising, at the time of the storing of the initial funding payment, storing by the processor in the memory an initial funding payment to the guaranteed income annuity.

14. The method of claim 12, further comprising, at the time of expiration, in response to a digital signal indicative of received customer instructions, storing by the processor in the memory an instruction to renew the accumulation annuity, and to credit interest on the accumulation annuity at least in part to the accumulation annuity.

15. The method of claim 12, further comprising, at the time of expiration, in response to a digital signal indicative of received customer instructions, storing by the processor in the memory an instruction to renew the accumulation annuity and an instruction to provide payment to the customer of interest on the renewed accumulation annuity.

16. The method of claim 12, further comprising, prior to the time of storing an initial funding amount, receiving a digital signal indicative of an available initial funding amount, at least a desired income annuity amount and a desired asset value amount for the accumulation annuity; calculating by the processor the accumulation term and deferral term consistent with the received initial funding amount and the desired income annuity amount and asset value amount; and providing by the processor an output indicating at least the calculated accumulation term and the calculated deferral term.

17. The method of claim 12, further comprising, prior to the time of storing an initial funding amount, receiving a digital signal indicative of at least a desired income annuity amount, a desired asset value amount for the accumulation annuity, and a desired deferral period; calculating by the processor the initial funding amount, the accumulation term consistent with the received desired income annuity amount, desired asset value amount and desired deferral period; and providing by the processor an output indicating the calculated initial funding amount and accumulation term.

18. The method of claim 12, further comprising the step of receiving the output signal at a processor of a payment determination system; determining by the processor of the payment determination system of a payor account and a payment method, and storing of the determined payor account information and the determined payment method in memory by the processor of the payment determination system; outputting by the processor of the payment determination system of a digital signal indicative of the stored payor account information, the stored payment method, amount information and payee information; receipt by a processor of a payment fulfillment system of the digital signal from the payment determination system; and fulfillment of payment in accordance with the information conveyed by the digital signal from the processor of the payment determination system.

19. The method of claim 18, wherein the payment fulfillment system is a check printing and mailing system, and wherein the step of fulfillment comprises printing and mailing a check drawn on the payor account in an amount and to a payee as determined by the information conveyed by the digital signal from the processor of the payment determination system.

20. The method of claim 18, wherein the payment fulfillment system is a system for generating electronic funds transfer requests, and wherein the step of fulfillment comprises providing by the payment fulfillment system of an instruction to a bank determined by the payor account information to provide an electronic funds transfer from the payor account to a payee account in an amount determined by the information conveyed by the digital signal from the processor of the payment determination system.

21. A computer-readable medium having a plurality of instructions thereon which, when executed by a processor, cause the processor to: store in memory an amount of an initial funding payment, an interest rate formula and a term for an accumulation annuity; store in memory at least a deferral period of a guaranteed income annuity; determine if the current time is during the term, and, if the current time is during the term, calculate an amount of interest earned on the accumulation annuity; store in memory a credit of the calculated interest amount to a guaranteed income annuity; determine if the current time is after the accumulation period and, if the current time is after the accumulation period, provide an output signal indicative of an instruction to provide a notice of expiration; determine if the current time is after the expiration of the deferral period, and, if the current time is after the expiration of the deferral period, calculate an income annuity payment amount from the guaranteed income annuity; and provide an output signal indicative of instructions for a payment to be made to the annuitant based on the income annuity payment amount.

22. The computer-readable medium of claim 21 , wherein the instructions further cause the processor to store in the memory an initial funding payment to the guaranteed income annuity.

23. The computer-readable medium of claim 21 , wherein the instructions further cause the processor to, at the time of expiration, in response to a digital signal indicative of received customer instructions, store in the memory an instruction to renew the accumulation annuity, and credit interest on the accumulation annuity at least in part to the accumulation annuity.

24. A computer system for administering an annuity, comprising: a processor; a memory in communication with the processor; the processor adapted to: store in a memory in communication with the processor an amount of an initial funding payment, an interest rate formula and a term for an accumulation annuity; store in the memory a deferral period and an initial funding payment of a guaranteed income annuity; determine if the current time is during the accumulation annuity term and, if the current time is during the term, calculate an amount of interest earned on the accumulation annuity; store in the memory a credit of the calculated interest amount at least to the accumulation annuity; determine if the current time is during the accumulation annuity term, and if the time is after the accumulation period, provide an output signal indicative of an instruction to provide a notice of expiration; determine if the current time is after the expiration of the deferral period, and, if the time is after the expiration of the deferral period, calculate an income annuity payment amount from the guaranteed income annuity and store the calculated income annuity payment amount in the memory; and provide an output signal indicative of instructions for a payment to be made to the annuitant based on the calculated income annuity payment amount.

25. The system of claim 24, wherein the processor is further adapted to, at the time of expiration of the accumulation annuity term, in response to a digital signal indicative of received customer instructions, store in the memory an instruction to renew the accumulation annuity, and to credit interest on the accumulation annuity at least in part to the accumulation annuity.

26. The system of claim 24, wherein the processor is further adapted to, at the time of expiration of the accumulation annuity term, in response to a digital signal indicative of received customer instructions, store in the memory an instruction to renew the accumulation annuity and an instruction to provide payment to the customer of interest on the renewed accumulation annuity.

27. A computer-implemented method for administering an annuity, comprising the steps of: storing by a processor in a memory in communication with the processor an amount of an initial funding payment, an interest rate formula and a term for an accumulation annuity; storing by the processor in the memory a deferral period and an initial funding payment of a guaranteed income annuity; determining by the processor if the current time is during the accumulation annuity term and, if the current time is during the term, calculating by the processor an amount of interest earned on the accumulation annuity; storing by the processor in the memory a credit of the calculated interest amount at least to the accumulation annuity; determining by the processor if the current time is during the accumulation annuity term, and if the time is after the accumulation annuity term, providing by the processor an output signal indicative of an instruction to provide a notice of expiration; determining by the processor if the current time is after the expiration of the deferral period, and, if the time is after the expiration of the deferral period, calculating by the processor of an income annuity payment amount from the guaranteed income annuity and storing by the processor of the calculated income annuity payment amount in the memory; and providing by the processor an output signal indicative of instructions for a payment to be made to the annuitant based on the calculated income annuity payment amount.

28. The method of claim 27, further comprising storing by the processor in the memory a credit of a portion of the calculated interest amount to the guaranteed income annuity.

29. The method of claim 27, further comprising the step of, at the time of expiration of the accumulation annuity term, in response to a digital signal indicative of received customer instructions, storing by the processor in the memory an instruction to renew the accumulation annuity, and to credit interest on the accumulation annuity at least in part to the accumulation annuity.

30. A computer-readable medium having a plurality of instructions thereon which, when executed by a processor, cause the processor to: store in a memory in communication with the processor an amount of an initial funding payment, an interest rate formula and a term for an accumulation annuity; store in the memory a deferral period and an initial funding payment of a guaranteed income annuity; determine if the current time is during the accumulation annuity term and, if the current time is during the accumulation annuity term, calculate an amount of interest earned on the accumulation annuity; store in the memory a credit of the calculated interest amount at least to the accumulation annuity; determine if the current time is during the accumulation annuity term, and if the time is after the accumulation annuity term, provide an output signal indicative of an instruction to provide a notice of expiration; determine if the current time is after the expiration of the deferral period, and, if the time is after the expiration of the deferral period, calculate an income annuity payment amount from the guaranteed income annuity and store the calculated income annuity payment amount in the memory; and provide an output signal indicative of instructions for a payment to be made to the annuitant based on the calculated income annuity payment amount.

31. The computer-readable medium of claim 30, wherein the instructions further cause the processor to, at the time of expiration of the accumulation annuity term, in response to a digital signal indicative of received customer instructions, store in the memory an instruction to renew the accumulation annuity, and to credit interest on the accumulation annuity at least in part to the accumulation annuity.

32. The computer-readable medium of claim 30, wherein the instructions further cause the processor to, at the time of expiration of the accumulation annuity term, in response to a digital signal indicative of received customer instructions, store in the memory an instruction to renew the accumulation annuity and an instruction to provide payment to the customer of interest on the renewed accumulation annuity.