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Insurance Abstract
A system and method for insurance portfolio analysis is provided.
More specifically, a web based system is disclosed for managing
user sessions over the Internet. The user can provide data relating
to present and proposed insurance policies and receive access to
a summary and various comparison graphs.
Insurance Claims
1. A method for insurance portfolio analysis comprising: (a) obtaining
data from an insurance company's present in-force policy ledgers
for at least one present policy; (b) processing said data from an
insurance company present in-force policy ledgers to prepare a present
insurance policy analysis report for at least one present insurance
policy; (c) designating proposed changes to said in-force policy
ledgers for at least one present insurance policy; (d) obtaining
in-force policy ledgers with proposed changes to said at least one
present insurance policy; (e) processing said data from said insurance
company proposed insurance policy ledgers for said at least one
present policy to prepare a proposed insurance policy analysis report;
and (f) combining the present insurance policy report analysis report
and the present proposed insurance policy analysis report to provide
an insurance portfolio analysis summary.
2. The method of claim 1 wherein a present consolidated insurance
policy analysis report is prepared for at least two present policies.
3. The method of claim 1 wherein said insurance portfolio analysis
summary includes a death benefit comparison graph.
4. The method of claim 1 wherein said insurance portfolio analysis
summary includes a cash value comparison graph.
5. The method of claim 1 wherein said insurance portfolio analysis
summary includes a total annual costs for mortality and expenses
graph.
6. The method of claim 1 wherein said insurance portfolio analysis
summary includes a net risk shifting analysis graph for at least
one present insurance policy.
7. The method of claim 1 wherein said insurance portfolio analysis
summary includes a net risk shifting analysis graph for at least
one present proposed insurance policy.
8. The method of claim 1 further comprising the step of: (a) designating
at least one new proposed policy; (b) processing data from said
at least one new proposed policy to prepare a new policy analysis
report; and (c) combining the present insurance policy analysis
report, the present proposed insurance policy analysis report and
the new policy analysis report to provide an insurance portfolio
analysis summary.
9. A method to select an insurance policy based on a comparison
of net risk of an insurer versus a policy owner for at least one
present insurance policy comprising: (a) charting an insurer's net
amount at risk for a specified death benefit at a specified age
of an insured for at least one present insurance policy; (b) charting
the policy cash value for a specified death benefit at a specified
age of an insured for at least one present insurance policy; and
(c) identifying at least one insurance policy where the insurer's
net risk is greater than the policy cash value at a specified age
of an insured.
10. A computer system for preparing an insurance portfolio analysis
summary comprising a process manager connected to a plurality of
task modules wherein said modules include: (a) a data processing
module configured to prepare a present insurance policy analysis
report, to prepare a proposed insurance policy analysis report for
a present insurance policy, to prepare new policy insurance policy
analysis reports and configured to prepare an insurance portfolio
analysis summary; and (b) web access module configured to allow
a remote user to provide data and receive at least one report wherein
said at least one report includes an insurance portfolio analysis
summary.
11. The system of claim 10 wherein said insurance portfolio analysis
summary includes a death benefit comparison graph.
12. The system of claim 10 wherein said insurance portfolio analysis
summary includes a cash value comparison graph.
13. The system of claim 10 wherein said insurance portfolio analysis
summary includes a total annual cost for mortality and expenses
graph.
14. The system of claim 10 wherein said insurance portfolio analysis
summary includes a net risk shifting analysis graph for the present
program.
15. The system of claim 10 wherein said insurance portfolio analysis
summary includes a net risk shifting analysis graph for the proposed
policy.
16. The system of claim 10 wherein said at least one report is
an individual present insurance policy analysis report.
17. The system of claim 10 wherein said at least one report is
an individual proposed insurance policy analysis report.
18. A web-based insurance portfolio analysis system for a user
to receive an insurance portfolio analysis over the Internet, said
user using a client browser application located at a user work station
for communicating with an insurance portfolio analysis system, said
system comprising: (a) at least one secure server for managing user
sessions over the Internet, the secure server enabling communication
between the user browser and the secure server; (b) an insurance
policy data presentation device for enabling presentation of insurance
policy data for at least one existing policy; (c) an insurance policy
data server device for receiving insurance policy data for at least
one existing policy wherein the insurance policy data server device
prepares a present consolidated insurance policy analysis report;
(d) an insurance policy data server device for providing a present
consolidated insurance portfolio analysis report; (e) an insurance
policy data presentation device for enabling presentation of proposed
insurance policy data for a proposed policy; (f) an insurance policy
data server device for receiving said proposed insurance policy
data for a proposed policy; (g) an insurance policy data server
device for receiving proposed insurance policy data for a proposed
device wherein said insurance policy data server prepares an insurance
portfolio analysis comparison summary; and (h) an insurance policy
data server device for providing said summary to said user.
19. The web-based insurance system of claim 18 further comprising
an insurance policy server device providing a death benefit comparison
graph.
20. The web-based insurance system of claim 18 further comprising
an insurance policy server device providing a cash value comparison
graph.
21. The web-based insurance system of claim 18 further comprising
an insurance policy server device providing a total annual cost
for mortality and expense graph.
22. The web-based insurance system of claim 18 further comprising
an insurance policy server device providing net risk shifting analysis
graph.
23. The web-based insurance system of claim 22 wherein said net
risk shifting analysis graph is for an existing policy.
24. The web-based insurance system of claim 22 wherein said net
risk shifting analysis graph is for a proposed policy.
25. A method to select an insurance policy for sale to a secondary
market from a plurality of insurance policies comprising: (a) obtaining
data from an insurance company present in-force ledgers for a plurality
of insurance policies; (b) preparing present insurance policy analysis
reports for a plurality of insurance policies; (c) preparing a death
benefit comparison for said plurality of insurance policies; (d)
preparing a cash value comparison for said plurality of insurance
policies; (e) preparing a total annual cost for mortality/expense
comparison for said plurality of policies; (f) preparing net risk
shifting analysis comparisons for said plurality of policies; and
(g) reviewing said comparison to select a policy saleable on a secondary
market.
Insurance Description
RELATED APPLICATIONS
[0001] This application claims the benefit of U.S. Provisional
Application Ser. No. 60/626,016 filed Nov. 8, 2004, under 35 U.S.C.
.sctn. 119 (hereby specifically incorporated herein by reference
in its entirety)
FIELD OF THE INVENTION
[0002] The present invention relates, in general, to a method and
system for insurance portfolio analysis.
BACKGROUD OF THE INVENTION
[0003] Individuals purchase a variety of life insurance policy
types. Some policies offer greater value, while others offer lower
risk. For example, permanent insurance total death benefit is typically
allocated between the insurer's net amount at risk and the policy
holder's policy cash value. It is in the best interest of the policy
holder to pay no more premium than is necessary to keep the policy
in force while minimizing his/her portion at risk and to maximize
the insurer net amount at risk. It is difficult to compare one policy
to another as there are so many variables. Moreover, it is even
more difficult to compare a group of policies held by a policy holder
as a portfolio.
[0004] Therefore, a substantial need exists for a method and system
which analyzes an insurance portfolio for various features; such
as, to determine the cost of insurance based on a stated value of
money, the annual rates of return, and the insurer's net amount
at risk to the policy holder's beneficiary. To accomplish the above,
a standard template for analyzing insurance policies must be used
because an insurer's in-force ledgers vary in format for different
type policies and often have varying formats for same types of policies
that are of a different generation.
SUMMARY OF THE INVENTION
[0005] The current invention provides a method for both individual
policy and insurance portfolio analysis. This method includes the
steps for processing data acquired from insurance company in-force
policy ledgers of present policies to prepare individual insurance
policy analysis reports that are consolidated to create an insurance
portfolio analysis report of present policies with present policy
options; processing data acquired from ledgers for the same present
in-force policies (which incorporate proposed policy option changes)
to prepare individual insurance policy analysis reports that are
consolidated to create an insurance portfolio analysis report of
present policies with proposed policy option changes. The new proposed
insurance policy analysis is then consolidated with the present
in-force policies (which may incorporate proposed policy option
changes) to generate a proposed insurance portfolio analysis report.
The proposed insurance portfolio analysis report is then integrated
with the present insurance portfolio analysis report (with present
policy options) to generate the insurance portfolio analysis summary
which compares the present insurance portfolio (with present policy
options) and the proposed insurance portfolio (present policies
with proposed policy option changes and the proposed additional
insurance). The financial data is summarized and presented in graphic
format.
[0006] This invention relates to a computer system for preparing
an insurance portfolio analysis summary through a process manager
connected to a plurality of task modules. The modules include a
data processing module configured to prepare a present insurance
policy analysis report, to prepare a proposed insurance policy analysis
report for a present insurance policy, to prepare an insurance policy
analysis report for a new policy and configured to prepare an insurance
portfolio analysis summary; and web access module configured to
allow a remote user to provide data and receive individual insurance
policy analyses and insurance portfolio analysis summary.
[0007] This invention also includes a web-based insurance portfolio
analysis system for a user to receive an insurance portfolio analysis
over the Internet using a client browser application located at
a user work station for communicating with a portfolio analysis
system. This system includes at least one secure server for managing
user sessions over the Internet, the secure server enabling communication
between the user browser and the secure server; an insurance policy
data presentation device for enabling presentation of insurance
policy data for at least one existing policy; an insurance policy
data server device for receiving insurance policy data for at least
one existing policy wherein the insurance policy data server device
prepares a present consolidated insurance portfolio analysis report;
an insurance policy data server device for providing a present consolidated
insurance portfolio analysis report; an insurance policy data presentation
device for enabling presentation of proposed insurance policy data
for a proposed policy; an insurance policy data server device for
receiving the proposed insurance policy data for a proposed policy;
an insurance policy data server device for receiving proposed insurance
policy data for a proposed device wherein the insurance policy data
server prepares an insurance portfolio analysis comparison summary;
and an insurance policy data server device for providing the summary
to the user.
[0008] This invention relates to a method to select an insurance
policy for sale to a secondary market from a plurality of insurance
policies. This method includes obtaining data from an insurance
company present in-force ledgers for a plurality of insurance policies;
preparing present insurance policy analysis reports for a plurality
of insurance policies; preparing a death benefit comparison for
the plurality of insurance portfolio; preparing cash value comparison
for the plurality of insurance portfolio; preparing total annual
cost for mortality/expense comparison for the plurality of policies;
preparing net risk shifting analysis comparison for the plurality
of policies; and reviewing the comparison to select a policy saleable
on a secondary market based on projected annual rates of return
for potential buyers in the secondary market.
DETAILED DESCRIPTION OF THE FIGURES
[0009] FIG. 1 is a flow chart of insurance portfolio analysis of
present policies.
[0010] FIG. 2 is a flow chart of data entry detail to generate
an insurance policy analysis report for each policy.
[0011] FIG. 3 is an example of a present insurance policy analysis
report.
[0012] FIG. 4 is an example of a present insurance policy analysis
report.
[0013] FIG. 5 is an example of a proposed change to a present policy.
[0014] FIG. 6 is an example of a present consolidated insurance
portfolio analysis report.
[0015] FIG. 7A is a flow chart of insurance portfolio analysis
of present policies.
[0016] FIG. 7B is a flow chart of insurance portfolio analysis
of present policies with a new policy added.
[0017] FIG. 8 is an example of an insurance policy analysis of
a new proposed policy.
[0018] FIG. 9 is an example of a proposed consolidated ledger insurance
portfolio analysis.
[0019] FIG. 10 is an example of an insurance portfolio analysis
summary.
[0020] FIG. 11 is a death benefit comparison graph.
[0021] FIG. 12 is a cash value comparison graph.
[0022] FIG. 13 is a total annual costs for mortality and expenses
graph.
[0023] FIG. 14 is a net risk shifting analysis graph (present program).
[0024] FIG. 15 is a net risk shifting analysis graph (proposed
program).
[0025] FIG. 16 is a block diagram of the insurance portfolio analysis
system.
DETAILED DESCRIPTION OF THE INVENTION
Definitions
[0026] "Annual costs" is the combination of (1) after
tax outlay, (2) after tax outlay x net savings rate and (3) beginning
net cash value x net savings rate. The net savings rate is the insurer's
illustrated interest rate or value of money.
[0027] "Annual yield" is the combination of (1) dividends
in excess of premiums and (2) net cash value increase.
[0028] "Annual cost per K" is the difference between
Costs and Yields divided by the Per Thousand Dollars of Death Benefit.
[0029] "Annual cost of mortality/expenses" is annual
cost per k multiplied by the per thousand dollars of death benefit
provided.
[0030] "Cumulative excess payment" is the premium payments
that exceed the annual premium due and/or dividends in excess of
premiums due invested at the annual illustrated interest rate on
the insurer's in-force policy ledger.
[0031] "Annual rate of return" is the beginning net cash
values plus net payments divided into the ending net cash values
minus 1.
[0032] "In force policy ledgers" is an insurer's year-to-year
summary of an in-force policy's projected performance based on the
insurer's assumed expenses, mortality costs, earnings and in some
instances potential policy lapses. Based on the type of policy,
the in-force ledger shows the projected dividends, annual cash value
increases, total cash value, policy loans, policy loan interest,
dividend accumulation values, dividend paid-up-addition death benefit
values, paid-up-addition cash values, base policy death benefit
values, policy rider values (e.g. term riders), annual premium payments
for the base policy and in some instances the cost of policy riders
(e.g. term riders, waiver of premium, etc.).
[0033] "Insurance program" is one or more insurance policies
of an insured.
[0034] "Internet" is the vast collection of inter-connected
networks that all use the TCP/IP protocols and that evolved from
the ARPANET of the late 60's and early 70's. The Internet now (July
1995) connects roughly 60,000 independent networks into a vast global
internet.
[0035] "Out-of-Pocket Payments" is the sum of: a.) premiums
due; b.) loan interest paid; c.) annual dividends received; d.)
annual withdrawals from cash values and/or; e.) combinations of
any of the above; and f.) partial combinations of any of the above
to have a designated payment or withdrawal.
[0036] "Out-of-Pocket Payment Savings" is the difference
between the present and proposed out-of-pocket payments invested
at the insurer's average illustrated interest rate.
[0037] "Policy cash value" is the net cash value available
which is the surrender cash values that include paid up addition
cash values, dividend accumulations and/or any policy riders that
accumulate cash.
[0038] "Policy death benefit" is the net death benefit
payable.
[0039] "Web" is a system of Internet servers that uses
HTTP to transfer specially formatted documents. The documents are
formatted in a language called HTML (Hypertext Mark-up Language)
that supports links to other documents, as well as graphics, audio,
and video files. One can jump from one document to another simply
by clicking on hyperlinks.
[0040] Now referring to FIG. 1, the insurance portfolio analysis
process is shown for present policies. Data from insurance company
present in-force policy ledgers are obtained and entered into the
insurance policy analysis program (data required to analyze the
insurance policy is set out in FIG. 2). The insurance policy analysis
program converts data from insurer's in-force ledger to a standard
comparable format. Data from insurance companies can be provided
by any means, such as electronic or printed format. In the example
shown in FIG. 1, two policies 11 and 12 are submitted for analysis;
however, any number of policies can be analyzed. The data obtained
from the present in-force policy ledger is processed to obtain a
present insurance policy analysis report. The term processed means
the data from the present in-force policy is extracted from the
in-force ledger, to obtain the report shown in FIGS. 3 and 4. A
present insurance policy analysis report is prepared for at least
one present insurance policy 13. Examples of present insurance policy
reports are shown in FIGS. 3 and 4. The present insurance policy
report provides information a policy holder would need to know to
evaluate a policy based on the insurer's illustrated values and
interest/earnings rate. This data can include: policy year, age
of policy holder, premium outlay, annual cash value increase, total
gross/net cash value increase, total gross/net cash value, new policy
loan, total policy loan, annual interest outlay, gross annual outlay,
annual after tax outlay, net cash value remaining, cumulative excess
payments, net death benefits, annual cost per K, total annual cost
for mortality and expenses and annual rate of return.
[0041] The data is processed to prepare a present consolidated
insurance portfolio analysis report 14 which shows performance of
all policies combined as a portfolio program. This report is shown
in FIG. 6. Data from the consolidated reports are formatted as the
insurance portfolio analysis summary 31. This report is shown in
FIG. 10. The term present insurance policy means that an insurance
policy is in existence and it is owned by a policy holder. A present
insurance policy can include proposed changes and then it would
be a proposed present insurance policy.
[0042] A user, such as an insurance agent, can review the insurance
portfolio analysis summary 31 and rebalance an insurance portfolio
and evaluate the purchase of life insurance based on the financial
data shown in fields such as: (1) policy death benefits; (2) net
saving rate; (3) annual rate of return on policy values; (4) net
cash value remains; (5) total annual cost for mortality and insurance;
(6) present and proposed risk shifting (total policy death benefit
in excess of policy cash values). The user then can, based on his
or her judgment, designate proposed changes to the in-force policy
ledgers for at least one present insurance policy.
[0043] The next step is to obtain in-force policy ledgers of present
policies with proposed changes from the insurance company and enter
the appropriate ledger data into the insurance policy analysis program
for each policy 20. The appropriate policy data can be either manually
entered by referencing the insurer's in-force policy ledger or entered
from an electronic data file provided by the insurer (data required
to analyze the proposed change in the existing policy is set out
in FIG. 2). In the example shown in FIG. 1, only one policy is changed.
The New York Life policy shown in FIG. 4 is tax-free exchanged while
the Northwestern Mutual policy options shown in FIG. 3 are changed.
A proposed insurance policy analysis 24 report is prepared. If two
present policies are changed then a proposed consolidated insurance
portfolio analysis report which shows performance of all policies
combined is prepared 25.
[0044] Additionally, as shown in FIGS. 7A and 7B, an analysis can
be conducted of the present policies with a new policy 40 added.
A new proposed policy proposal 40 is generated from an insurer's
current illustration software program, such as MassMutual's Prism
software. Data from the new policy illustration is entered into
the insurance policy analysis program 41. The required field as
set out in FIG. 2. A proposed new policy insurance policy analysis
43 report is produced.
[0045] The proposed consolidated insurance portfolio analysis report
is produced which includes the new policy 43. This report shows
the performance of all policies (both present policies with proposed
changes & new proposed policy) combined as a portfolio or program.
This report may include some or all of the policies (e.g. one or
both of the present policies may be performing poorly and it is
proposed that the client do a tax-free 1035 exchange to purchase
new insurance). The present consolidated insurance portfolio analysis
report 14, the proposed consolidated insurance portfolio analysis
25 and the new proposed consolidated insurance policy analysis 43
are combined into the insurance portfolio analysis summary 31 as
shown in FIG. 10. The summary shows the present insurance program
versus the proposed insurance program in terms of: age, out-of-pocket
payments, policy cash value, policy death benefit, annual cost per
K, annual costs for mortality/expenses, and annual rate of return.
In this way, an insurance program can be evaluated like an investment.
The Insurance Portfolio Analysis Summary Program 15 takes the data
from a variety of insurance policies and organizes the data into
a variety of charts 32-36. Using these reports and charts, a remote
user 140 (FIG. 16), such as an insurance agent, can propose changes
to the existing insurance policies.
[0046] More specifically, graphs are prepared based on this summary
that show death benefit comparison graph 32 (FIG. 11); cash values
comparison 33 (FIG. 12); total annual costs for mortality/expenses
34 (FIG. 13); net risk shifting analysis of present program 35 (FIG.
14). The top curve shows the insurer's net amount at risk, while
the bottom curve shows the policy cash value 5.
[0047] This chart (FIG. 14) can be compared to chart 36 (FIG. 15),
which shows the risk shifting analysis of the proposed program.
The top portion shows the insurer's net amount of risk, while bottom
portion shows the policyholder's policy cash values. A comparison
of FIG. 14 and FIG. 15 shows that the proposed program 25 focuses
shifting the risk to the insurer--this shift of risk being beneficial
to a policy holder. An insurance policy can be selected by a comparison
of charts showing net risk of an insurer versus a policy owner for
at least one present insurance policy. This method includes the
step of obtaining data from an insurance company's present in-force
policy ledgers for at least one present policy. It also includes
the step of processing the data from an insurance company present
in-force policy ledgers to prepare a present insurance policy analysis
report for at least one present insurance policy. Another step is
identifying changes to the in-force policy ledgers for at least
one present insurance policy. Another step is obtaining in-force
policy ledgers with proposed changes to the at least one present
insurance policy. Finally, the last step is processing the data
from the insurance company proposed insurance policy ledger from
the at least one present policy to prepare a proposed consolidated
insurance portfolio analysis report. The term "charting"
means to use charts or figures to identify the insurer's net risk.
[0048] Now referring to FIG. 16, a flow chart of a computer system
for preparing an insurance portfolio analysis summary is shown.
The computer system includes a process manager 120 connected to
a plurality of modules. More specifically, the process manager 120
is connected to a data processing module 130. In the data processing
module 130 data obtained from remote user 140 via a web access module
150 is used to prepare a variety of insurance policy analysis reports.
Additionally, a variety of graphs are also prepared 155 and delivered
to the process manager 120 for delivery through web based module
150 to a remote user 140.
[0049] More specifically, at least one secure server for managing
user sessions over the internet is provided. This secure server
enables communication between the user browser and the secure server.
Additionally, this system includes an insurance policy data presentation
device for enabling presentation of the insurance policy data for
at least one policy. Additionally, this system includes an insurance
policy data server device for receiving insurance policy data for
at least one policy. More specifically, the insurance policy data
server device prepares a present consolidated insurance policy analysis
report. Additionally, an insurance policy data server device for
enabling presentations of a proposed insurance policy data for a
proposed policy is included. Additionally, an insurance policy data
server device for receiving the proposed insurance policy data for
a proposed device is included. More specifically, the insurance
policy data server prepares an insurance portfolio analysis comparison
summary. Finally, this system includes an insurance policy data
server device for providing the summary to the user.
[0050] This computer system can be web based through a web access
module 150. The web based insurance portfolio analysis system allows
a user 140 to receive an insurance portfolio analysis over the internet.
The user 140 uses a client browser application located at a user
work station to communicate with the insurance portfolio analysis
system. In an alternative embodiment, the reports and graphs can
be delivered via email to the remote user 140.
[0051] In another embodiment of this invention, the method can
be used to select marketable insurance policies (MIP) for sale to
the secondary market for insurance policies. The purchaser's of
marketable insurance policies are not only high net worth individuals,
but also institutional investors, such as mutual funds and provident
funds looking for high yield instruments in view of low interest
rates. More specifically, data would be obtained from insurance
company present in-force ledgers for a plurality of insurance policies.
Present insurance policy analysis reports can be prepared for the
plurality of policies. Based on these reports, graphs can be generated
of: death benefit, cash value, total annual cost for mortality/expenses,
and net risk shifting. These graphs can be made available to a remote
user, such as by accessing a secure web site, and the remote user
can use the report and graphs to select those policies which are
saleable on a secondary market. An example of an insurance policy
that is saleable on a secondary market is typically one with significantly
low cash value, moderate required premiums payments to projected
mortality and/or one in which the risk can be significantly shifted
to the insurer.
[0052] Although the foregoing invention has been described in some
detail by way of illustration and example for purposes of clarity
of understanding, it will be obvious that certain changes and modifications
can be made which are within the full scope of the invention. Further
technical aspects of the computer system and the method of the invention
are the subject matter of further dependent claims. |