An insurance method wherein an insured and/or his current insurance
policy is analyzed and the policy owner is offered a new insurance
contract for consideration and/or the receipt of benefits from the
insured's old insurance policy. Premiums are readjusted for the
insured so that the new insurance policy is more favorable than
the old insurance policy. Health and age, amongst other factors,
play a role in the new required premium and structure. When the
insured dies, the benefit from the old insurance policy is transferred
to the new owner who then pays out the benefit specified in the
1. An insurance method comprising: receiving benefits from an owner
or insured's existing insurance policy; charging an owner or insured
a premium for a new insurance policy; calculating said premium based
on AHL factors with a data processing apparatus; and transferring
at least a portion of said benefits from said owner or insured's
existing insurance policy to an entity.
2. The method in claim 1, further comprising calculating said premium
based on QC factors.
3. The method of claim 1, wherein said entity is a beneficiary.
4. The method of claim 1, wherein said entity is a new insurance
5. The method of claim 1, wherein said premium is lowered in proportion
to the lower said insured's health.
6. The method of claim 4, wherein said new insurance company reduces
reserves needed for claims.
7. The method of claim 4, wherein said new insurance company does
not require reinsurance.
8. The method of claim 1, wherein said owner or insured is guaranteed
a certain level of income.
9. The method of claim 1, wherein said owner or insured is not
taxed on distributions from said new insurance policy.
10. An insurance method, comprising: reviewing an owner or insured's
insurance policy holdings; reapportioning said owner or insured's
insurance policy holdings per AHL factors with a data processing
apparatus; and providing said owner or insured a contract so that
if said owner or insured pays a newly calculated premium, then said
owner or insured's contract will remain in force.
11. The insurance method of claim 10, further comprising reapportioning
said owner or insured's insurance policy holdings per QC factors.
12. The insurance method of claim 10, wherein said reviewing occurs
when no great life change has occurred.
13. The insurance method of claim 10, wherein said reapportioning
occurs to achieve optimal insurance coverage based upon AHL factors.
14. The insurance method of claim 1, wherein a death benefit is
15. The insurance method of claim 10, wherein a death benefit is
16. The method of claim 10, further comprising sharing the benefits
of said owner or insured's insurance policy in return for providing
said owner or insured said guarantee.
17. An insurance method, comprising: reviewing an insured's AHL
factors with a data processing apparatus; offering a contract to
the insured which only pays out a benefit if the insured lives longer
than an agreed upon period of time.
CROSS REFERENCE TO RELATED APPLICATIONS
 Priority is hereby claimed to application Ser. No. 60/442,503
in the names of Michael G. Siefe and Don Kuhn filed on Jan. 27,
2003 entitled Life insurance continuation plan.
BACKGROUND OF INVENTION
 The present invention is a business method for life insurance.
Specifically, the present invention is a business method wherein
life insurance is purchased or maintained at a lower cost than traditionally
available because premiums are calculated based upon an individual's
current health. Alternatively, the present invention provides guarantees
a client does not currently have.
 Life insurance is oftentimes thought of as a necessary evil.
Individuals recognize the benefits of life insurance, although the
terms under which life insurance is traditionally provided dissuade
many individuals from ever purchasing life insurance. Worse still,
many individuals maintain life insurance in the younger years of
their life, foregoing important life insurance coverage in the latter
years of their life. In some instances, a large amount of money
is paid over an individual's lifetime for life insurance premiums,
and once the life insurance term expires later in life, there is
little if any way for the individual to recoup any of the money
paid as premiums. Thus, there are many factors that make life insurance
a rather uninviting prospect for individuals.
 In short, the problem is that millions of people, even if
they have life insurance for some period of time, will drop life
insurance coverage someday. Some will drop coverage because they
are tired of paying premiums or the premiums have become too high.
Life insurance costs traditionally rise overtime, no matter which
insurance product an individual maintains. When a person buys life
insurance, premium levels are often calculated with the concept
of a person living to the maturity age of the life insurance contract.
Oftentimes this age is 100. Sometimes it is earlier than 100, and
often times it is past 100. Keeping life insurance through the maturity
age of the life insurance contract can be very expensive. Clearly
term insurance costs go up significantly at advanced ages (if it
can even be continued). Universal life (UL) policies, also known
as flexible premium adjustable life policies, have flexible premiums;
however, the underlying cost factors go up significantly at older
ages. The cost factors on most interest sensitive whole life policies
go up as people age. When properly analyzed (including opportunity
cost of the cash values), traditional whole life policies and variable
life policies have increasing costs as people age.
 Moreover, with interest rates credited in insurance policies
and insurance dividend rates coming down (and other factors including
falling investment yield on variable life policies, possible increases
in mortality costs, increases in expenses charged in life insurance
contracts, etc.), owners of insurance policies will have to pay
premiums longer than they had expected on many cash value life insurance
policies. Alternatively, they may have to pay higher premiums than
they had originally anticipated paying on some types of policies.
Higher premiums are always a negative to the insured.
 Some people will drop life insurance coverage because it
is just too confusing to maintain or viewed as a waste of money.
For example, UL policies, one of the more popular types of life
insurance, can be written with a level death benefit or increasing
death benefit. In reality, most UL policies are written with a level
death benefit because of cost. If a person dies with a level death
benefit, whatever cash values are in the policy are essentially
wasted. For example if a decedent has an insurance policy with a
$1,000,000 death benefit and a $700,000 cash value, the policy still
only pays $1,000,000 to the beneficiary. In contrast, if the same
policy has $10,000 in cash value, it would still pay $1,000,000
to the beneficiary. Importantly, any extra premiums--the premiums
are flexible within limits--paid to build up the higher $700,000
cash value are wasted by the policy owner in this example. If the
policy owner maintains a cash value of only $10,000 in the policy,
the policy owner is only saving money in the short run; the policy
owner runs the risk of the policy being under funded and negatively
amortizing the cash values of the life insurance policy. As the
policy values negatively amortize, the policy owner has to eventually
increase premium payments, reduce the life insurance face amount,
or risk not having coverage on a long term basis.
 Restated, the problem is that many individuals, even if
they have life insurance, waste money in maintaining the policy
or will cancel life insurance prematurely. In essence, as alluded
to in the previous paragraph, the policy owner needs to monitor
the life insurance policy carefully. The policy owner would greatly
benefit if the policy owner's death could be accurately predicted.
Knowing that death would occur soon, the policy owner could pay
minimal premiums; however, knowing that death would occur well into
the future, more premiums would be necessary to offset the much
higher costs of the life insurance at older ages, so the policy
owner would plan accordingly. If the policy owner pays minimal premiums
and the policy owner lives longer than expected, the insurance program
is jeopardized. Thus, many people overpay their life insurance premiums
relative to their current health and life expectancy in order to
avoid under-funding problems. This necessary evil is less than desirable.
 When premiums become too high, policy holders look to derive
some profit from a life insurance policy before abandoning it. Presently,
there is a market for viatical and senior settlements. People who
no longer need or want their life insurance can sell their existing
policies--often at a premium; exceeding their cash surrender values--to
investors, groups of investors, limited partnerships, etc. The sale
of these policies are based upon many factors such as the insured's
age, health, life expectancy, and quality/competitiveness of the
existing life insurance coverage and the amount of the cash value
in the contract (AHLQC). Many people, however, are uncomfortable
about the idea of having investors profiting on their death. Some
are afraid that they will be killed so that investors will receive
their investment returns. Consequently, there are many reasons that
the viatical senior settlements are not used on many cases that
could otherwise qualify.
 The AHLQC factors are evaluated in total as opposed to individually.
For instance, each one is evaluated, but it is the aggregate effect
of the factors together, which determine the value of an existing
policy to those investors.
 Viatical and Life settlements evaluate the AHLQC factors
in order to determine a present value of an existing policy. The
better a policy, the older a client, the shorter the life expectancy,
etc. the more an investor is willing to pay. The bottom line, is
that investors buy a policy with the expectation that a death benefit
will be paid to them within a certain period of time and for a certain
cost of maintenance (of the existing policy). The insured/owner
is paid cash today for the policy they bought years ago. The investors
pay today with the expectation of a death benefit payable to them
in the future. That future date is based primarily on the insured's
current age, health, life expectancy. The cost of maintaining the
existing policy is based on how long the investors will have to
pay premiums (ie. that future date mentioned above) and how competitive
that policy is (ie. how low/high the costs on that policy are).
So, the investors will estimate the cost of the current policy until
the client is expected to die, the present value of the death benefit
at that date (rate used for that calculation is the desired return
on investment), and pay the client the difference.
 One current practice is for agents to settle a policy and
then use that money to buy a new policy that creates two sales for
the agent. This slick replacement package might be ethically challenged
when one considers that the new policy being issued is based on
the current underwriting practice of insurance companies where less
healthy insureds pay more. In fact, some advisors may view such
a strategy as a neatly packaged program to "churn" existing
insurance policies to earn extra commissions. So, while the settlement
pays more for someone with impaired health, the new insurance policy
costs more. Clients will sometimes do this in order to get a new
product that has better guarantees. With existing insurance policies,
clients will pay a premium to carry the policy to age 100; this
means they are often overpaying for their insurance because most
people will not live to age 100. Unlike the present invention, the
just described second policy is often calculated to age 100. It
is also important to keep in mind that the newly calculated premium
will be higher for those with less than average health which compounds
the overpayment even more. Unlike the present invention, the just
described second policy is often calculated with premiums which
are higher than the just described policy which was surrendered.
 People, on average, would prefer that any value on the AHLQC
factors aggregate to benefit their heirs rather than investors.
Additionally, in some cases, money from life insurance is oftentimes
not needed in retirement. For these reasons, viatical settlements
and senior settlements do not well address the market place. Thus,
there is a need for a method for providing insurance at reduced
rates based upon health factors, such that the insured can save
money while alive without losing existing benefits. While there
are a variety of insurance products available, as detailed in the
following paragraphs, none meet the present need because of their
 In the past, one insurance company offered clients new policies
without the insured having to be healthy to qualify. In order to
cover itself against the increased risk, the insurance company required
that the insured assign the old insurance contract to the new insurance
company. The new insurance company would keep the old insurance
contract in order to mitigate its risk of taking on an unhealthy
insured. Unlike the present invention, the new policy this company
offered was not tailored to the AHLQC factors. Unlike the present
invention, the new policy would not have better terms if the client
had shortened life expectancy. Unlike the present invention, no
credit was given in the new policy for diminished life expectancy
only a credit for existing cash values. Unlike the present invention,
the new insurance policies were similar in design to the company's
normal product line. For example, a 65 year old healthy, non smoker
would be faced with the same premium scenario as another 65 year
old unhealthy, non smoker. Thus, unlike the present invention, the
unhealthy person would end up with the same insurance package as
the healthy person.
 Also, in the past, the insurance industry has produced tax-free
exchanges, called 1035 exchanges, between insurance policies and
annuity policies. When one does a 1035 exchange, the old policy
is assigned to the new company. The new company then surrenders
the old contract and puts the client's cash values into their new
life insurance or annuity contracts' account. Unlike the present
invention, 1035 exchanges do not keep the old life insurance contract
in force., Rather, the old life insurance contract is surrendered.
 Additionally, presently, an insured individual could monitor
some types of life insurance, and completely on that insured's own
intuition and belief, change the amount of premiums that that insured
pays to try to approximate that insured's own life expectancy. A
major problem for the insured or owner, in such case, is that there
are dire consequences for under or over estimating life expectancy.
Unlike the present invention, an insured or owner can severely suffer
financially because the law of large numbers with millions of insured
individuals will not apply as a cushion in case under or over estimating
life expectancy occurs.
 Therefore, a need has been established for a life insurance
continuation plan that would allow an insurance policy owner to
take advantage of the fact that the insured might not live to the
maturity age of the contract or might have diminished life expectancy.
There is a further need for policy owners to benefit from optimizing
their cash values in some types of life insurance contracts. Finally,
there is a need for people to be able to keep existing life insurance
at the same or lower premiums without the concern of losing their
SUMMARY OF INVENTION
 A system wherein life insurance can be purchased or maintained
for a lower cost than present outlays is the solution to the aforementioned
problems. The present invention enables improved guarantees relative
to a policy owner's present life insurance policy as well. The present
invention provides, in most cases, coverage based upon AHLQC factors.
In most cases, the lower the client's life expectancy or the worse
the client's health, the better the deal (cheaper premiums or better
guarantees) that the client can be offered by a new insurance company
or through other embodiments of this concept.
 The present invention, in its simplest form, has an insurance
company. underwrite a new life insurance policy on an insured. The
present invention should not be limited to insurance company use.
For instance, any individual or entity could use the AHLQC factors
to determine the cost over time for an existing policy. Then, that
entity could provide a guarantee to the insured/owner (for a cost)
that if the insured/owner paid the newly calculated premium (ie.
cost over time), the policy would stay in force. If there were a
miscalculation on the part of this entity, it would have to cover
the increased costs. Essentially, another embodiment of the present
invention is policy management for a fee.
 The underwriting is unique because it essentially rewards
through lower premium payments, better guarantees, shorter time
for premiums and/or other sweeteners--older age, poor health, and/or
diminished life expectancy and quality of existing insurance (ALHQC).
In short, most people will not live to age 100 or beyond. Most premiums
today are calculated based on a time horizon which exceeds most
people's true life expectancy. Thus, most clients overpay for their
insurance coverage. By more accurately evaluating how long a policy
needs to stay in force, and how much it will cost over that period
of time, a more appropriate premium can be calculated. The AHLQC
factors are used to determine cost and time horizon so client premiums
can be more appropriately calculated.
BRIEF DESCRIPTION OF DRAWINGS
 FIG. 1 shows a classic requital scenario.
 FIG. 2 shows some possible alternatives to the hypothetical
premium of $30,000 annually.
 FIG. 3 shows some possible alternatives to the plan design
of the new life insurance policy that is part of the present invention.
 FIG. 4 shows that in some cases the death benefit could
be dropped to a lower level on the new policy.
 The simplest way to understand the present invention is
via the flow chart as represented in FIG. 1. It is essentially simple
application of the business method represented in the present invention.
 The given information is that John Doe has a universal life
policy with a $1,000,000 face amount from ABC insurance company.
He has a cash value in his policy of $100,000. He is currently paying
premiums of $50,000 annually. He could pay less than $50,000 annually
but runs the risk of eventually prohibitive premiums if he lives
 To implement the present invention, XYZ insurance company
analyzes John Doe's health and finds out that his health is somewhat
diminished (this concept may still work if his health is not diminished
but the cost/benefit won't be as-good). While we anticipate the
greatest client benefits for those whose newly calculated life expectancy
is substantially reduced, there are instances where an average client
would like the guarantees offered by the present invention. Plus,
since most policies will request payments based on carrying a policy
to age 100 (or maturity), this program will base that cost over
a shorter period of time because even the average person will not
live to age 100. Also, see the following paragraph discussing John
Doe without significant AHLQC factors. XYZ insurance company then
offers John Doe a $1,000,000 policy with a $30,000 guaranteed premium
if he will assign (very similar to a 1035 exchange and a 1035 exchange
might accomplish this) all rights in his current insurance policy
such as ownership, cash value, death benefit, etc. to XYZ insurance
 Once John Doe has accepted XYZ insurance company's offer
for the new policy, XYZ insurance company puts John Doe's current
life insurance policy in its portfolio to mitigate XYZ insurance
company's risk in case John Doe dies in the near future. Thus, if
John Doe dies in the near future, the policy from ABC insurance
company will a pay death benefit to XYZ insurance company. In turn,
XYZ insurance company then will pay money to John Doe's beneficiary
under the terms of the new policy between John Doe and XYZ insurance
company. While the present invention anticipates XYZ holding ABC
policy until Doe's death, there may be situations where it is beneficial
for XYZ to not hold ABC policy until Doe's death. For example, the
insured's health suddenly improves so that XYZ determines that ABC
policy does not need to be maintained.
 As a footnote to the example provided in FIG. 1, assume
that John Doe does not have significant AHLQC factors to justify
XYZ insurance company offering him lower premiums. Specifically,
John Doe cannot benefit from his AHLQC factors. In such case, the
present invention is still advantageous because it offers a guaranteed
premium since the present invention anticipates regular use of the
guaranteed concept; still, the full guarantee is not a requirement
as a carrier or entity could offer modified guarantees (i.e. guaranteed
for a period of time and then premium could change after that).
John Doe is a policy owner that has a contract with ABC insurance
company, but his contract is without significant premium guarantees.
With the present invention, John Doe can get premium guarantees
without paying gigantic commissions to buy a new conventional life
insurance policy. The guarantees could be for a one-time premium
payment, no further premiums, five-year premium payments, etc. The
guarantees could mean guaranteed increasing, decreasing, or level
premiums. The premiums could even be indexed to factors. For instance,
premiums could start at a certain amount and increase over time.
The increase could be based on LIBOR, inflation, or some other index
of the company's choosing (think of this like an annual renewable
term where the cost goes up each year in a predictable manner, but
based on the index a carrier chooses instead of mortality). Another
variation a carrier could choose would be to guarantee the premium
until life expectancy and then increase it each year after that
based on mortality or some other index of the carrier's choosing.
Alternatively, a premium could start high and decrease over time;
might be attractive for those clients who anticipate lower cash
flow in the future (i.e. someone who will retire in the future).
The bottom line is that premium schedules can be almost infinite
depending on how the client wishes to pay.
 In the short run, XYZ insurance company could pay nothing
to keep the ABC insurance company's policy in force because ABC
insurance company's policy's cash value would keep it in force by
itself for several years. The existing cash values could act as
a fund for covering the costs associated with the existing policy.
If the carrier chose to, it could have the current policy costs
taken out of policy cash values until cash value goes to zero. When
cash value goes to zero, the new carrier would then have to start
paying premiums into the policy so it would stay in force until
the client died. Consequently, if John Doe dies in the near future,
implementation of the present invention is profitable for XYZ insurance
company. Specifically, XYZ insurance company has taken in $30,000
as a premium from John Doe, but technically paid out nothing whatsoever
because the $1,000,000 death benefit paid to John Doe's beneficiary
under terms of the XYZ policy is equal to the $1,000,000 collected
by XYZ from the ABC insurance company.
 If, however, John Doe lives a long life, XYZ insurance company
will lose money since it will keep paying premiums on ABC insurance
company's policy to maintain that policy in XYZ insurance company's
portfolio. The premiums for the ABC insurance company policy will
continue to increase as John Doe ages, and according to the present
invention, once the cash value of the ABC insurance company policy
is fully depleted, XYZ insurance company will have no choice but
to pay premiums to ABC insurance company to ensure the ABC insurance
policy does not lapse. Thus, part of the present invention provides
for a proper analysis of an existing insurance policy so that pricing
for the insured is commensurate with life expectancy. Insurance
companies have huge amounts of data which allow them to be statistically
certain of the date of death when their samples are large enough.
The way a carrier uses this invention, and averts losing money,
is by using this program with a large number of clients. Thus, over
large numbers of lives, it will be almost certain of ensuring profitability.
 FIG. 2 shows some possible alternatives to the hypothetical
premium of $30,000 annually. Virtually any other premium configuration
could be used that would satisfy XYZ insurance company's desire
for profitability, as well as the policy owner's desires as to how
the policy owner desires to pay premiums. In alternative 1, the
policy owner could pay $50,000 annually for 5 years and then pay
no further premiums. Alternative 2 shows a one-time premium of $200,000
and no further premiums. This invention envisions being able to
offer various schedules of premium which are equal on a present
value basis, but can be funded over various periods of time. Just
like mortgages can come in 15 or 30 year notes, this program could
provide for various funding levels and/or time frames. For instance,
XYZ uses AHLQC factors to calculate when ABC policy will pay out
the death benefit and how much it will cost until then. Once this
information is known, XYZ can calculate various times frames and
premiums required to provide them desired return on investment.
 FIG. 3 shows some possible alternatives to the plan design
of the new life insurance policy that is part of the present invention.
Virtually any benefit or rider can be added to the new policy that
XYZ insurance company offers; that benefit or rider is not necessarily
a feature from the old policy. This is only one example of how the
new policy could be improved via the use of riders. Virtually any
rider or benefit could be added to the new policy just as if it
were a normal insurance transaction; often, the additional cost
for these riders or benefits could be more than covered by the cost
savings received under the use of present invention. Alternative
Design 1 allows the death benefit to continue beyond age 100 until
the client actually dies. This is preferable because the policy
owner could currently have insurance run out at age 100 under many
current life insurance configurations. Also, many current plan configurations
could cause taxable gain at age 100 if there is a gain in cash value
relative to premiums put into the life insurance policy. This problem
would be solved because the present invention provides for a new
contract to continue insurance to a really old age. Newer policies
offer this "maturity extension rider" while many older
policies do not. Policies which mature are required to pay the cash
value out to the owner of the policy. To the extent this cash value
exceeds the premiums paid, the client will have taxable gain. Current
invention could provide a policy which has no maturity and thus
 One current insurance plan configuration, which could cause
taxable gain, is the lifetime use of policy cash values through
loans and withdrawals. Since life insurance is a FIFO (first in
first out) contract, withdrawals come out tax free first (as a return
of basis). After the withdrawal of their basis, many policy owners
take loans out against the policy cash values (again a tax free
distribution). When the client dies, the loans are paid back from
the death benefit proceeds. If the policy lapses prior to death,
and the loans have not been paid back, those un-repaid loans will
be treated as taxable income. Using AHLQC, the present invention
could provide the opportunity to both maximize that lifetime income,
and guarantee the policy does not lapse prior to death. With most
clients, a calculation is made to determine how much a client can
take from the policy on a regular basis such that there is at least
$1 in the policy at maturity. In fact, many agents will calculate
how much can be taken out so the policy has cash value at maturity.
Present invention could use AHLQC factors to determine how much
could be taken out and have the policy stay in force until life
expectancy. For instance, a client would normally have the company
software calculate annual withdrawals and loans the policy could
provide from age 65 to age 90 but still stay in force until age
100; the policy must have cash values sufficient to cover policy
costs from age 90 to age 100. With the current invention, a carrier
could use the company software to calculate the maximum distributions
obtainable so the policy only had to stay in force until life expectancy;
if life expectancy is age 90, XYZ does not need any money in the
policy to carry for age 90 to age 100. Again, XYZ would need enough
clients doing this so that they would be statistically certain of
 It is expected that most policy owner' s implementing the
present invention would want a guaranteed premium from, per the
aforementioned example, XYZ life insurance company. Many policy
owners would be exchanging old policies that did not have a very
good guarantee for the policy described in the present invention
that would have a significantly better guarantee. However, some
policy owners might want a policy that offers a lower, but not entirely
guaranteed premium. Alternatively, they may want a payment schedule
where premiums increase over time or decrease over time (on a guaranteed
or non guaranteed basis). This would be possible in the present
invention, as aforementioned, because it presents a new policy that
can be retailored as necessary.
 Alternative Design 2 indicates that a premium might also
be indexed to some other factor such as LIBOR rates, CPI, Cost of
Reinsurance, etc. Tying the client premium to CPI would allow the
client and carrier to negate the effects of inflation or loss of
purchasing power. The client would particularly appreciate premiums
tied to CPI because it would afford them a manageable premium that
increased as their purchasing power increased. The carrier might
appreciate the revenue generated from these sales would keep pace
with inflation. An alternative design could be to provide a premium
to the client which would change based on the experience a carrier
has with its costs. For instance, a reinsurance arrangement between
XYZ and its reinsurer may improve (i.e. costs are lower than anticipated).
If the reinsurer reduces it's cost to XYZ, XYZ could pass that along
to the client (ie. Lower premiums or dividends). In short, a variety
of mechanisms could be used to give a client lower (but variable)
 Alternative Design 3 shows that riders could be put on the
plan that did not exist in earlier coverage. In this example, a
sweetener could be added such as providing a $50,000 payment to
the policy owner if the insured is ever diagnosed with cancer. Riders
could be added that would provide disability income, accidental
death enhancement of death benefit, etc. Because XYZ company has
evaluated AHLQC factors, it should have a unique perspective on
the client's current situation. What this means is that because
they expect payment from ABC at a relatively certain time, they
would have a future payment which could be used as reimbursement
for an event that may have to be paid prior to life expectancy.
The rider benefit should be the present value of the death benefit
minus the costs, minus profit expectation. Again, the difference
between present invention and normally issued policies is that this
invention provides XYZ with a death benefit whereas current practice
is just to apply ABC surrender values to XYZ policy; presumably,
the death benefit payable at a future date is worth more than the
surrender value today.
 Alternative Design 4 contemplates that a company offers
a contract issued on an individual that provides if he or she lives
past a certain time period he or she would receive a lump sum payment
or stream of payments from the contract issuer. The contract holder
would get little or nothing if he/she died before the specified
date in the contract.
 As an example, if an individual is afraid he or she will
live too long and that the premiums on his or her life insurance
would become exorbitant, he or she could buy this contract (based
on AHL factors) for a premium of $20,000 per year for 10 years (or
some other period of time the parties agreed to) and get a contract
that would pay the $500,000 (for example) at the end of 10 years--only
if the individual was still living. That money (the $500,000 in
this example) might then be used to pay future premiums on their
existing life insurance. AHLfactors would tend to reduce the premium
relative to the payout ($500,000 in this example). This contract
would be completely independent of the life insurance policy that
the policy owner wanted to keep. But, this contract allows the client
to pay lower premiums on his or her "old" contract knowing
that if he or she "lives too long" he or she will have
a large pot of money paid to him or her at a specified future date.
 Alternative Design 5 provides as follows: An individual
or couple is afraid that they will outlive their retirement savings
if they live too long. At age 55 they come up with a financial plan
that will allow them to live comfortably until age 90 at which time
they will be broke and will have outlived their assets. They pay
a premium of say $1,000 per year for the next 35 years. If they
live beyond age 90, they are given a payment of $200,000. Of course
the payment could also be a series of payments similar to various
settlement options currently offered by financial services firms
(again, the payment is based on AHL factors).
 In short, by evaluating or calculating what the life expectancy
is, a carrier could issue a contract (for a premium) that pays a
lump sum to the purchaser at some agreed upon future date. Premiums
would be based on the relationship between that future date and
the life expectancy. For instance, the shorter the life expectancy
and the longer the contract period, the lower the premium will be.
On the other hand, the longer the life expectancy and the shorter
the contract period, the higher the premium will be. We propose
this contract is a new and unique concept directly related to the
life insurance continuation plan because it takes into account life
expectancy and time horizon in calculating client outlay.
 Another unique aspect of the present invention is that it
helps insurance companies on their reserve requirements. Traditionally,
when a life insurance company offers a life insurance policy, the
life insurance company profits if the insured lives long enough
to pay more premiums than the benefit it pays out. Conversely, the
life insurance company loses money if the insured dies quickly because
a benefit is paid which is oftentimes greater than the premiums
paid, even assuming the premiums were invested. Significantly, the
present invention turns such profitability notions on their head
the rules governing profit and loss are reversed. With the present
invention, if the insured dies quickly, the company profits. On
the other hand, if the insured lives too long the present invention
would not be profitable for the insurance company. Consequently,
the present invention balances the existing risk in an insurance
company's portfolio, since it is assumed that the insurance company
will already have, and will continue to issue, traditional insurance
policies while simultaneously implementing the present invention.
 Furthermore, the present invention reduces the need for
reinsurance, and potentially, reserve requirements. Reinsurance
is where a carrier "partners" with another entity that
guarantees to share the risk with the insurance company. For instance,
a carrier may offer a $1 million policy to a client but have this
other entity (i.e. reinsurer) agree to pay part of that $1 million.
Carriers do this in order to share the risk they have to pay out
large claims on unfavorable terms. In short, reinsurance is insurance
for insurance companies. Because the regulatory bodies recognize
insurance companies will have to pay claims but desire to maximize
profit, the regulatory bodies have established reserve requirements.
Reserves are held by carriers in conservatively invested accounts
(read, low yield) so as to have a reasonable expectation there is
enough money to pay claims. The amount of reserves is calculated
using statistical analysis of the carrier policies. Based on current
industry practice, regulators require more money be held in reserves
for policies which cover insureds with short life expectancies.
So, the shorter lifespan someone is expected to have, the more a
carrier must hold in reserves. The present invention almost perfectly
matches a liability with an asset (almost dollar for dollar). This
is because XYZ will receive a death benefit from ABC when the client
dies. XYZ must pay a death benefit to John Doe, but it has received
a death benefit which can be used to offset what it must pay out.
 FIG. 4 shows that in some cases the death benefit could
be dropped to a lower level on the new policy. John Doe comes in
with a $1,000,000 policy from another insurance carrier. XYZ insurance
company analyzes John Doe's health, life expectancy, and quality
of existing insurance policy, and offers the owner of John Doe's
life insurance a policy for $700,000 on the life of John Doe. The
owner of the policy is guaranteed that there will be no further
premiums. XYZ insurance company profits by receiving $1,000,000
death benefit and only having to pay out $700,000 to John Doe's
beneficiaries. The policy owner is happy because there are no further
premiums to be paid. XYZ's profitability is based upon their actuarial
calculation of John Doe's AHLQC and that XYZ will receive $300,000
when John Doe dies. XYZ Life Insurance Company will lose money if
John Doe lives too long as it will either have to continue paying
much higher premiums on his old policy or it will have to take on
the risk of his new policy if it surrenders his old policy. The
amount of insurance XYZ agrees to issue will be based on the present
value of the death benefit where present value rate equals ROI expectation.
This present value will be adjusted downward by an amount equal
to the present value of the costs to maintain the ABC policy. The
time horizon and costs are determined using AHLQC factors.
 In the above example, the new insurance policy was issued
at a lower face amount than the old life insurance policy. The face
amount of the new life insurance policy could also be larger than
the old policy. In this scenario, a client may want $1.5 million
of insurance. Client currently has $1 million policy. XYZ issues
one policy with two components: $1 million issued using current
invention and $500,000 issued like a normal policy. The blending
of the two premiums would most likely provide the client a lower
premium than buying a policy under current/conventional strategies
(i.e. new carrier surrenders ABC policy and applies that money to
the costs for new policy).
 The present invention, in its various embodiments, is intended
to work successfully with all types of existing and future life
 While all embodiments of the present invention employ AHLQC
factors to either underwrite new insurance or determine what percentage
of life insurance benefits can be kept by the policy owner of the
old life insurance policy, there are many options for the method
of the system that underwrites new insurance or partners the old
policy owner with investor's, insurance companies, partnerships,
mutual funds, etc.
 Money could be invested by ordinary investors in a common
pool (i.e., mutual fund, general or limited partnerships, corporations,
trusts, etc.). Banks, insurance companies, institutional investments,
etc. could also provide the investment money. Essentially, the investment
fund could buy parts of existing life insurance policies. The investors
would agree to keep existing coverage in place by paying premiums.
They in turn would own (and be beneficiary) for a percentage of
the old life insurance policy. They would agree to pay some or all
of the future premiums and in turn would receive part of the death
benefit when the insured died. They would use AHLQC factors to determine
what percentage of the existing life insurance that they had to
keep in order to be profitable.
 Possibly, a form of partnership would be used to raise the
money. The partnership could be part owner (and beneficiary) of
the existing life insurance. Because of the partnership, it is probable
that Transfer for Value rules would be avoided. By avoiding Transfer
for Value rules, there is a small possibility that the investors
would receive an income tax free return on investment because of
the tax treatment of life insurance, as aforementioned.
 In general, according to conventional authorities, any transfer
for a valuable consideration of a right to receive all or part of
the proceeds of a life insurance policy is a transfer for value.
The transfer for value rule extends far beyond outright sales of
policies. The naming of a beneficiary in exchange for any kind of
valuable consideration would constitute a transfer for value of
an interest in the policy. Even the creation by separate contract
of a right to receive all or a portion of the proceeds would constitute
a transfer for value. On the other hand, a mere pledging or assignment
of a policy as collateral security is not a "transfer for value".
. . . And a transfer will be considered a "transfer for value"
even though no purchase price is paid for the policy or interest
in the policy, provided the transferor receives some other valuable
 Exceptions to, and exemptions from, the transfer for value
rule exist when, per conventional texts: 1) Sale or transfer to
insured himself 2) Sale or transfer to a partner of the insured.
Sale or transfer to Corporation the insured is a shareholder or
officer. Sale or transfer to members of LLC who are taxed as a partnership.
 3) If the basis for determining gain or loss in the hands
of the transferee is determined in whole or in part by the reference
to the basis of the transferor; for example, where a policy is transferred
from one corporation to another in a tax free reorganization, where
the policy is transferred between spouses or where the policy is
acquired by gift.
 A second partnership option would be where a company or
partnership (not necessarily an insurer it could be any type of
business) and an insured or owner of a policy partnered. The business
would essentially offer the owner of the policy a lower premium
based on AHLQC factors. The company would calculate a premium that
the owner of the insurance policy would have to pay probably to
the insurance contract possibly to the business. A premium would
be added for profitability to the business entity. If the policy
owner paid the premium, the business would guarantee that the insurance
coverage would stay in force. Likewise this concept could be used
whereby the business could share in the death benefit and receive
part of the death benefit. The business would then pay premiums.
This demonstrates that this concept might not necessarily require
an insurance company's participation. In summary, the client could
partner with someone (or some entity) who would use AHLQC factors
to determine the optimum premium for the existing contract; then,
for a premium, guarantee that existing policy.
 There are some potential situations where a non-profit life
insurance carrier would be created to run this concept. In addition
to all of the normal forms of insurance carriers there is a possibility
that a Fraternal Insurance carrier could be used. Members of these
fraternal organizations came together seeking mutual aid. They helped
each other and, in doing so, helped themselves. Depending on a fraternal's
background, known as a "common bond", these organizations
focused on social opportunities, preservation of the values of the
members' homeland, cultural assimilation into the new world and
assistance in everything from tuberculosis treatments to finding
 Another benefit of some fraternal organizations was the
provision of financial support to a surviving spouse upon the death
of the member. This so called "death benefit" usually
was paid to the widow after "passing the hat" at a meeting.
 These fraternal organizations presumably would be operated
for the benefit of the members and not require as much operating
income (ie. Profit). In addition, there could be substantial tax
benefits of organizing under the fraternal organization structure
to provide the benefits described in this patent.
 In order to achieve the objectives of rating by AHLQC factors
in a way to help consumers keep existing life Insurance, a series
of 1035 exchange transaction might be used. If allowed by the tax
code, perhaps the 1035 exchange would be to a third party not even
to an insurance company as is usually the case with 1035 exchanges.
This third party might be an individual, business, pool of investments,
etc. Money could flow back and forth between the third party and
the insurance co., bank, investors, etc. that would guarantee the
new life insurance benefit to the policy owner that signed over
interests in a life insurance policy.
 As mentioned in the previous paragraph, a series of policy
assignments could also achieve the above objectives.
 For the purpose of the present invention, 1035 exchanges
and assignments are very similar. A 1035 exchange is really an assignment.
In many of the scenarios in this business plan essentially a 1035
exchange is done, however, the money is not actually rolled over.
In that context, it is more like an assignment. In general, the
typical business practice is for insurance companies to underwrite
a client's health and determine how much premium needs to be paid
(the worse a client's health, the higher the premium). Once this
cost for insurance is calculated, ownership of the "old"
policy is transferred to the "new" carrier through an
absolute assignment. It is our understanding that current practice
is for the "new" carrier to surrender the "old"
policy and apply those values to the new policy as pre-paid premium
which can reduce the client's premium outlay. This differs from
our idea in that we use AHLQC instead of just health to determine
client outlay: so the worse a client's health, the better the existing
contract, etc., the lower the required premium.
 As mentioned in the previous paragraphs, a series of ownership
and beneficiary changes could also achieve the above objectives.
 Policies that were evaluated and purchased or partially
purchased based on AHLQC factors could be traded as mutual fund
shares or units of partnerships or other forms of businesses or
Trusts. In such a manner, they could actually achieve some level
 In any of the embodiments of the present invention, everything
possible would be done to optimize any old life insurance that was
kept. This might include taking partial withdrawals out against
the old policy and investing the proceeds. If the investors could
receive a higher rate of return, this might include borrowing money
from the old insurance contract, repositioning dividends, changing
dividend options, etc.
 The same factors could be used to buy back (or essentially
partner with the owner of the disability contract) disability insurance
policies that are no longer needed because of the retirement of
the worker. Assuming the disability insurance contract did not have
an actively at work requirement, the purchase of or partial ownership
of a disability insurance policy would provide value in some cases
even if the health of the worker had not deteriorated.
 The same concept as mentioned in the above paragraph could
occur on some types of variable annuities. Many variable annuities
have a death benefit far in excess of their cash values. This is
due to the declining equity markets and also some of the automatically
increasing death benefit riders on variable annuities. The purchase
or partial ownership of certain types of annuities would provide
value if the health of the annuitant had deteriorated. There are
other annuity riders that could be taken advantage of.
 The present invention encompasses the embodiments described
above, and moreover, any and all embodiments within the scope of
the following claims.