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Insurance Abstract
The invention relates to a method of managing a life insurance policy
in which the life insurer receives a premium from an insured life
and wherein if the insured life suffers an insured event, the life
insurer pays a predetermined sum assured to the insured life or
a beneficiary nominated by the insured life. The method includes
defining a retirement age and when the insured life reaches the
retirement age, paying at least one payment from the life insurer
to the insured life. After the at least one payment the sum assured
is reduced so that the amount which will be paid to the insured
life or their nominated beneficiary in the event of them suffering
an insured event in the future is reduced.
Insurance Claims
We claim:
1. A method of managing a life insurance policy, in which the life
insurer receives a premium from an insured life and wherein if the
insured life suffers an insured event, the life insurer pays a predetermined
sum assured to the insured life or a beneficiary nominated by the
insured life, the method including: defining a retirement age; and
when the insured life reaches the retirement age, paying at least
one payment from the life insurer to the insured life.
2. A method according to claim 1 wherein after the at least one
payment the sum assured is reduced so that the amount which will
be paid to the insured life or their nominated beneficiary in the
event of them suffering an insured event in the future is reduced.
3. A method according to claim 2 wherein the reduction of the sum
assured is equivalent to the at least one payment made to the insured
life.
4. A method according to claim 1 wherein the retirement age is
one of 50, 55, 60, 65 or 70 or any age between 50 and 70.
5. A method according to claim 1 wherein when the insured life
reaches retirement age, periodic payments are made from the life
insurer to the insured life.
6. A method according to claim 1 wherein the insured life receives
a lump sum payout at retirement.
7. An electronic system for managing a life insurance policy, in
which the life insurer receives a premium from an insured life and
wherein if the insured life suffers an insured event, the life insurer
pays a predetermined sum assured to the insured life or a beneficiary
nominated by the insured life, the system including: a memory for
storing: information relating to the insured life; information relating
to a predefined retirement age of the insured life; and information
relating to a sum assured; and a processor disposed in communication
with the memory, the processor being adapted to: when the insured
life reaches the retirement age, pay at least one payment from the
life insurer to the insured life;
8. An electronic system according to claim 7 wherein the processor
is further adapted to after the at least one payment, reduce the
sum assured so that the amount which will be paid to the insured
life or their nominated beneficiary in the event of them suffering
an insured event in the future is reduced.
9. An electronic system according to claim 8 wherein the processor
is further adapted to reduce the sum assured by an amount which
is equivalent to the at least one payment made to the insured life.
10. An electronic system according to claim 7 wherein the processor
is further adapted to make periodic payments from the life insurer
to the insured life when the insured life reaches retirement age.
11. An electronic system according to any one of claim 7 wherein
the processor is further adapted to make a lump sum payout to the
insured life at retirement.
Insurance Description
BACKGROUND OF THE INVENTION
[0001] This invention relates to a method of managing a life insurance
policy and to a system therefor.
[0002] Typical life insurance policies operate in that an insured
life pays a premium to the life insurer and a payout is made to
the insured life or their beneficiaries upon the insured life suffering
a disability, contracting a dread disease or dying. The payout on
these contingencies is collectively termed as risk benefits.
[0003] It will be appreciated that although such policies cover
many of the life changing events the insured life may experience,
they do not cover one major event, namely, retirement.
[0004] It is an object of the present invention to address this.
SUMMARY OF THE INVENTION
[0005] This invention relates to a method of managing a life insurance
policy, in which the life insurer receives a premium from an insured
life and wherein if the insured life suffers an insured event, the
life insurer pays a predetermined sum assured to the insured life
or a beneficiary nominated by the insured life, the improvement
comprising:
[0006] defining a retirement age; and
[0007] when the insured life reaches the retirement age, paying
at least one payment from the life insurer to the insured life.
[0008] In one embodiment, after the at least one payment the sum
assured is reduced so that the amount which will be paid to the
insured life or their nominated beneficiary in the event of them
suffering an insured event in the future is reduced.
[0009] Preferably, the reduction of the sum assured is equivalent
to the at least one payment made to the insured life.
[0010] The retirement age may be any one of 50, 55, 60, 65 or 70
or any other age between 50 and 70.
[0011] Preferably, when the insured life reaches retirement age,
periodic payments are made from the life insurer to the insured
life.
[0012] In addition to this, the insured life may receive a lump
sum payout at retirement.
[0013] The invention further relates to a electronic system for
managing a life insurance policy, in which the life insurer receives
a premium from an insured life and wherein if the insured life suffers
an insured event, the life insurer pays a predetermined sum assured
to the insured life or a beneficiary nominated by the insured life,
the system including:
[0014] a memory for storing:
[0015] information relating to the insured life;
[0016] information relating to a predefined retirement age of the
insured life;
[0017] information relating to a sum assured; and
[0018] a processor disposed in communication with the memory, the
processor being adapted to:
[0019] when the insured life reaches the retirement age, pay at
least one payment from the life insurer to the insured life.
[0020] The processor may further be adapted to after the at least
one payment, reduce the sum assured so that the amount which will
be paid to the insured life or their nominated beneficiary in the
event of them suffering an insured event in the future is reduced.
[0021] The processor may further be adapted to reduce the sum assured
by an amount which is equivalent to the at least one payment made
to the insured life.
[0022] The processor may in addition be further adapted to make
periodic payments from the life insurer to the insured life when
the insured life reaches retirement age.
[0023] The processor may also further be adapted to make a lump
sum payout to the insured life at retirement.
BRIEF DESCRIPTION OF THE DRAWINGS
[0024] FIG. 1 illustrates graphically the operation of an example
of the present invention; and
[0025] FIG. 2 is a schematic system diagram of one embodiment of
the present invention.
DESCRIPTION OF AN EMBODIMENT
[0026] The aim of the present invention is to provide a life insurance
policyholder, being the insured life, with guaranteed income during
retirement by allowing them to redeem a portion of their sum assured
as income on a regular basis. The policyholder can elect to have
each redemption payment reduce the size of the sum assured and all
risk benefits will reduce accordingly.
[0027] Thus, the insured life defines a retirement age and when
the insured life reaches the retirement age, periodic payments are
made from the life insurer to the insured life and wherein after
each periodic payment the amount of the sum assured and hence the
cover available for risk benefits is reduced.
[0028] In addition, the insured life can select an option whereby
they receive a lump sum payment at retirement, which is equivalent
to a predetermined portion of the sum assured. This can be set at
one third of the value of the sum assured, for example. The above
is graphically illustrated in FIG. 1.
[0029] The amount of the sum assured will escalate by an interest
percentage, typically linked to the consumer price index (CPI),
for example.
[0030] In terms of the present invention, the insured life selects
various options regarding the income that they wish to receive in
retirement.
[0031] Firstly, the insured life nominates a percentage of the
sum assured that they will receive as income. The income will then
be calculated on the percentage of the sum assured at retirement
age after deducting the lump-sum payment.
[0032] The retirement income will grow in line with a chosen escalation
rate. Typically, the insured life will be provided with the option
to escalate income based on one of CPI, 50% of CPI or no escalation,
for example.
[0033] In addition, the insured life can select the payment frequency
and can select between receiving income on a monthly or annual basis,
for example.
[0034] The policy holder can choose benefit payment period (i.e.
the time over which the income will be paid), namely 10 years, 20
years or whole of life, for example.
[0035] Once the income commences, the income amount will not be
dependent on the size of the sum assured and will be paid until
the end of the chosen benefit payment period even if the sum assured
has dropped to zero. This is applicable to all the benefit payment
periods
[0036] Further to this is to also present an invention to provide
a life insurance policyholder, being the insured life, with guaranteed
fund at retirement that he can use to buy a range of annuities with.
This will provide him with an income during retirement. These income
amounts will be offset against the policy holder's sum assured and
all risk benefits will reduce accordingly.
[0037] Thus, the insured life defines a retirement age and also
the size of the monthly contribution. When the insured life reaches
the retirement age a guaranteed retirement fund will be available
which will be used to provide, periodic payments to the insured
life through the purchase of an annuity and wherein after each periodic
payment the amount of the sum assured and hence the cover available
for risk benefits is reduced.
[0038] In addition, the insured life can select an option whereby
they receive a lump sum payment at retirement from the guaranteed
retirement fund, which is equivalent to a portion of the guaranteed
retirement fund.
[0039] This annuity will provide a retirement income, payable on
a chosen frequency and/or monthly or annually. The income payments
will grow in line with a chosen escalation rate. The annuity offered
will provide the policyholder with the option to escalate income
based on one of CPI, 50% of CPI or no escalation or a fixed income
escalation, for example.
[0040] The insured life is able to select their retirement age
that may be one of 50, 55, 60, 65 or 70 or any age between 50 and
70, for example.
[0041] There will be a prerequisite that the insured life must
be a member of the life insurance policy for a minimum period such
as 10 years, for example, between the date of taking out the policy
and the chosen retirement age.
[0042] In one embodiment, the premium is divided into two portions,
one for the risk part of the life policy and the second being for
the retirement part of the life policy. The retirement portion could
also include the premium saving as a result of the reducing sum
assured. The premiums for this benefit can be in the form of a once
off single premium or in the form of regular premiums.
[0043] In the case of making regular premium payments, the premiums
for the risk part of the life policy will be payable over the lifetime
of the policy with the premiums for the retirement aspect only being
payable up to retirement age.
[0044] It is also possible to escalate the premiums for the retirement
part of the policy at a different rate than the premiums for the
risk part of the policy. Again, the insured life can be given a
choice of premium escalation patterns such as CPI or CPI plus two
% or an additional percentage that changes over age, for example.
[0045] The insured life can also be given tax structure options
for countries where retirement policies and life insurance policies
are taxed at different rates.
[0046] If the insured life selects a retirement policy tax structure,
the policy can be adjusted to comply with retirement funding regulations
whereas if the policy holder selects a life insurance policy tax
structure, the policy will be adjusted to comply with life insurance
policy regulations. The tax implications of this will differ from
country to country.
[0047] It will be appreciated that one aspect of the uniqueness
of the invention lies in the fact that the insured life uses at
least a portion of their sum assured to provide their retirement
benefits. A traditional retirement product provides retirement benefits
based on the accumulation of premiums with investment returns. This
effectively means that the level of retirement income will fluctuate
with investment returns and is never known until retirement age
is actually reached. However, under the present invention there
is no direct link between premiums paid and the retirement benefits
as the benefits for a defined premium is guaranteed. In addition,
in terms of the present invention, the insured life does not bear
any investment risk which is in contrast to traditional retirement
funding where the insured life bears all the risk of poor investment
returns. Thus, this invention provides guaranteed retirement income
for a guaranteed premium.
[0048] The following features and options are used to enhance the
retirement benefits payable:
[0049] Income Enhancement on Disability and/or Severe Illness
[0050] The benefit will provide additional income should the insured
life suffer a severe illness or disability and is a standard product
feature. The amount of additional income and the term of paying
the income amount will depend on the severity level of the incident.
The enhanced income payments will not reduce the sum assured.
[0051] Death Benefits
[0052] If the insured life dies before the retirement age, an income
will be payable to their beneficiaries from the date of death. Alternatively
a lump sum will be paid to the beneficiaries at the time of death.
The benefit on death, be it a lump sum or an income will be dependent
on the past premiums that were paid; accumulated at inflation, for
example.
[0053] The income payments are guaranteed to be paid to the insured
life for at least 5 years from retirement age even if the insured
life dies within 5 years after retirement, for example. The insured
life can choose to extend this guaranteed income term to 10 years
for an additional premium, for example.
[0054] Spouse's Pension on Death
[0055] The spouse's pension pays an income to the spouse upon the
insured life dying during the benefit payment term. The spouse's
pension commences upon the later of the insured life's death, and
the expiry of the guaranteed income term. The spouse's pension is
payable until the earlier of the end of the chosen benefit payment
period and the spouse's death, but it is subject to a minimum of
5 years and a maximum of 15 years, for example. The spouse's pension
is chosen by the insured life. It is for example allowed to be either:
[0056] 50% of principal income
[0057] 100% of principal income
[0058] Lapse Benefit Prior to Retirement Age
[0059] If the insured life stops paying premiums before retirement
age, an income will be payable to him from the original chosen retirement
age. The policyholder can also elect to take a lump sum at the time
of lapsing.
[0060] The benefit on lapsing be it a lump sum or an income will
be dependent on the past premiums that were paid; accumulated at
inflation, for example.
[0061] Protecting the Sum Assured from Reducing Due to Income Payments
[0062] The insured life can elect at retirement for the income
payments not to reduce their sum assured. Under this option the
sum assured will only start reducing with income payments and the
lump at an elected age after retirement. The size of that reduction
need not be exactly equal to the actual income and lump sum payments
and can be some multiple of it.
[0063] Minimum Protected Fund to Protect Fund Against Risk Claims
(MPF)
[0064] The insured life can choose to protect their risk cover
from claims on risk benefits. Under this option, the risk sum assured
will be restored back to the protected level after a risk claim.
[0065] Bonus Lump Sum Linked to Investment Performance
[0066] The insured life can choose to receive bonus retirement
benefits where the amount of the bonus is linked to the performance
of a global investment index or a local index or any other investment
portfolio. Thus, the retirement lump sum and/or the retirement income
will be increased by this bonus. These bonus retirement benefits
will not reduce the sum assured.
[0067] Bonus Lump Sum Linked to Health Claims, Credit Card Spend
or Any Other Loyalty Program
[0068] The insured life can choose to receive bonus retirement
benefits where the amount of the bonus is linked to his health claims,
credit card spend or the performance of the policyholder or his
family on any other loyalty program. Thus, the retirement lump sum
and/or the retirement income will be increased by this bonus. These
bonus retirement benefits will not reduce the sum assured.
[0069] Ill-Health Retirement
[0070] The insured life may choose to retire earlier than the chosen
retirement age due to ill health. They will receive an income based
on the past premiums that were paid; accumulated at inflation, for
example. sum assured adjusted for the fact that the benefit is paid
out earlier than the chosen retirement age. The earliest age from
which ill-health retirement is allowed is age 55, for example.
[0071] Waiver of Premium
[0072] The insured life may elect to have their premiums waived
on their entire policy should they suffer a disability or severe
illness. Under this benefit, the life insurer will pay their premiums
while in claim, but the premium increases covered are subject to
a maximum of 20% per annum, for example:
[0073] The client will have the choice whether they want the waiver
to cover:
[0074] a) only the premiums on their risk benefits; OR
[0075] b) only the premiums on their retirement benefits; OR
[0076] c) both the premiums on their risk and their retirement
benefits
[0077] FIG. 2 shows a diagrammatic representation of one example
of an electronic system for implementing the above methodology.
In one exemplary form the electronic system is a machine in the
form of a computer system 10 within which a set of instructions,
for causing the machine to perform any one or more of the methodologies
discussed herein. In alternative embodiments, the machine operates
as a standalone device or may be connected (e.g., networked) to
other machines. In a networked deployment, the machine may operate
in the capacity of a server or a client machine in server-client
network environment, or as a peer machine in a peer-to-peer (or
distributed) network environment. The machine may be a server computer,
a client computer, a personal computer (PC), a tablet PC, a set-top
box (STB), a web appliance, a network router, switch or bridge,
or any machine capable of executing a set of instructions (sequential
or otherwise) that specify actions to be taken by that machine.
[0078] Further, while only a single machine is illustrated, the
term "machine" shall also be taken to include any collection
of machines that individually or jointly execute a set (or multiple
sets) of instructions to perform any one or more of the methodologies
discussed herein.
[0079] The exemplary computer system 10 includes a processor 12
(e.g., a central processing unit (CPU) a graphics processing unit
(GPU) or both) and a memory 14.
[0080] The memory 14 is used for storing at least information relating
to the insured life, information relating to a predefined retirement
age of the insured life and information relating to a sum assured.
[0081] In another embodiment the memory may be in the form of a
database 18 in which case the database will be used for storing
information relating to relating to the insured life, information
relating to a predefined retirement age of the insured life and
information relating to a sum assured.
[0082] The processor 12 is in communication with the memory 14
via bus 16. The processor is adapted to pay at least one payment
from the life insurer to the insured life when the insured life
reaches the retirement age and after the at least one payment, to
reduce the sum assured so that the amount which will be paid to
the insured life or their nominated beneficiary in the event of
them suffering an insured event in the future is reduced.
[0083] The processor 12 is further adapted to reduce the sum assured
by an amount which is equivalent to the at least one payment made
to the insured life.
[0084] The electronic system 10 may further include a video display
unit 20 (e.g., a liquid crystal display (LCD) or a cathode ray tube
(CRT)), an alphanumeric input device 22 (e.g., a keyboard), a cursor
control device 24 (e.g., a mouse), a disk drive unit 26, a signal
generation device 28 (e.g., a speaker) and a network interface device
30 to connect to a network 40.
[0085] The disk drive unit 26 includes a machine-readable medium
32 on which is stored one or more sets of instructions (e.g., software
34) embodying any one or more of the methodologies or functions
described herein.
[0086] While the machine-readable medium 32 is shown to be a single
medium, the term "machine-readable medium" should be taken
to include a single medium or multiple media (e.g., a centralized
or distributed database, and/or associated caches and servers) that
store the one or more sets of instructions. The term "machine-readable
medium" shall also be taken to include any medium that is capable
of storing, encoding or carrying a set of instructions for execution
by the machine and that cause the machine to perform any one or
more of the methodologies of the present invention. The term "machine-readable
medium" shall accordingly be taken to include, but not be limited
to, solid-state memories, optical and magnetic media, and carrier
wave signals.
[0087] The processor 12 is further adapted to make periodic payments
from the life insurer to the insured life when the insured life
reaches retirement age.
[0088] Finally, the processor 12 is further adapted processor to
make a lump sum payout to the insured life at retirement.
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