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Insurance Abstract
A method of structuring a life insurance product includes: selecting
one or more insureds from a pool of applicants; collecting at least
one premium payment, the at least one premium payment comprising
a charge for cost of insurance; issuing at least one policy covering
the one or more insureds, the at least one policy having a cash
value and a death benefit; placing the at least one premium payment
into an account, thereby populating the account with assets; investing
the assets thereby generating a rate of return; tying the cash value
and death benefit amounts to the rate of return; creating a mortality
fluctuation reserve, adding the mortality fluctuation reserve to
the account, and investing the reserve; and calculating a mortality
experience credit upon satisfying certain criteria. Associated data
processing methods and systems are also described.
Insurance Claims
1. A method of structuring a life insurance product, the method
comprising: selecting one or more insureds from a pool of applicants;
collecting at least one premium payment, the at least one premium
payment comprising a charge for cost of insurance; issuing at least
one policy covering the one or more insureds, the at least one policy
having a cash value and a death benefit; placing the at least one
premium payment into an account, thereby populating the account
with assets; investing the assets thereby generating a rate of return;
tying the cash value and death benefit amounts to the rate of return;
creating and funding a mortality fluctuation reserve to stabilize
the mortality experienced under the at least one policy, the reserve
comprising the amount of funding less a net amount paid for death
benefits, adding the mortality fluctuation reserve to the account,
and investing the reserve; and periodically paying a mortality experience
credit in the event that the actual mortality rate is more favorable
than a predicted mortality rate, and to the extent that the mortality
fluctuation reserve exceeds a maximum threshold value.
2. The method of claim 1, further comprising aggregating at least
one thousand polices together.
3. The method of claim 1, wherein the death benefit comprises at
least $250,000.
4. The method of claim 3, wherein the death benefit is payable
upon death of the insured, prior to age one hundred.
5. The method of claim 1, wherein the cash value is payable upon
termination of the policy or upon the insured reaching age one hundred.
6. The method of claim 1, wherein the premium is paid with a single
payment.
7. The method of claim 1, further comprising the insured assigning
their rights in the policy to a non-profit or charitable organization,
a supporting organization of the non-profit or charitable organization,
or an entity with insurable interest rights.
8. The method of claim 7, wherein the premium is paid by the non-profit
or charitable organization, a supporting organization of the non-profit
or charitable organization, or an entity with insurable interest
rights.
9. The method of claim 7, wherein the non-profit or charitable
organization, or agent thereof directs the allocation of the assets
among a plurality of investments.
10. The method of claim 1, further comprising determining the premium
based on the 1980 Commissioner's Standard Ordinary Male and Female
Tables, the at least one insured's age, and 4 percent interest.
11. The method of claim 1, further comprising issuing an interest
crediting rate on a periodic basis, wherein the crediting rate is
equal to the anticipated gross investment return rate for the at
least one account, less investment expense and a margin of profit.
12. The method of claim 1, further comprising deducting a percentage
from the gross returns on the invested assets before applying the
returns to the cash value.
13. The method of claim 12, wherein the deduction is made on a
monthly basis.
14. The method of claim 1, further comprising deducting a mortality
risk charge from the at least one account.
15. The method of claim 14, wherein the mortality risk charge decreases
with increasing age of the policy.
16. The method of claim 15, wherein the mortality risk charge comprises
3% for years 1-10 of the policy, 1% for years 11-20, and 0% thereafter.
17. The method of claim 16, wherein the mortality risk charge is
deducted annually, at the end of the year.
18. The method of claim 1, further comprising assessing a one-time
charge to the cash value upon initiation of the policy.
19. The method of claim 18, wherein the one-time charge decreases
with an increasing number of insureds.
20. The method of claim 19, further comprising deducting a fee
from the cash value of the policy at the beginning of each policy
year for the first twenty years of the policy.
21. The method of claim 1, further comprising calculating a cost
of insurance charge and deducting said charge from the cash value
of the at least one policy on an annual basis, at the end of the
year.
22. The method of claim 1, wherein the death benefit is payable
only at the end of the calendar policy year
23. The method of claim 1, further comprising adjusting the face
value of the policy in order to maintain qualification of the at
least one policy as a modified endowment contract.
24. The method of claim 1, wherein the mortality experience credit
is paid annually.
25. The method of claim 1, wherein the maximum threshold value
is approximately two-times the cost of insurance.
26. The method of claim 1, further comprising the one or more insureds
granting consent to a nonprofit or charitable organization, a supporting
organization of a non-profit or charitable organization, or an entity
with insurable interest rights, to have the policy issued to cover
their lives, and assigning all rights in the policy to the organization
or entity.
27. A data processing method for initiating, structuring and managing
an insurance product, the method comprising: providing a data processing
device comprising an input device, an output device, a processor
and a memory; inputting information from a pool of insurance applicants
into the data processing device via the input device; selecting
one or more insureds from the pool of inputted applicants by comparison
of the inputted information from each applicant stored in the memory
using predetermined criteria; calculating the amount of at least
one premium payment using, at least in part, cost of insurance information
stored in the memory; generating at least one policy document utilizing,
at least in part, the output device, the policy document comprising
cash value and a death benefit information; associating the at least
one premium payment with an account, the account being invested
to generate a rate of return; inputting the rate of return into
the memory, and calculating at least one cash value and death benefit
value based, at least in part, on the rate of return; calculating
a mortality fluctuation reserve to stabilize the mortality experienced
under the at least one policy, the reserve comprising an amount
of funding less a net amount paid for death benefits, and associating
the reserve with the account; and periodically calculating a mortality
experience credit in the event that the actual mortality rate is
more favorable than a predicted mortality rate, and to the extent
that the amount of the mortality fluctuation reserve that exceeds
a maximum threshold amount.
28. The method of claim 27, further comprising aggregating at least
one thousand polices together.
29. The method of claim 27, wherein the calculated death benefit
comprises at least $250,000.
30. The method of claim 27, wherein the premium payment is calculated
as a single payment.
31. The method of claim 27, further comprising the insured assigning
their rights in the policy to a non-profit or charitable organization,
a supporting organization of the non-profit or charitable organization,
or an entity with insurable interest rights.
32. The method of claim 31, wherein the premium is paid by the
non-profit or charitable organization, a supporting organization
of the non-profit or charitable organization, or an entity with
insurable interest rights
33. The method of claim 31, wherein the non-profit or charitable
organization, or agent thereof directs the allocation of the assets
among a plurality of investments.
34. The method of claim 27, further comprising calculating the
premium based on information contained in the memory comprising,
at least in part, the 1980 Commissioner's Standard Ordinary Male
and Female Tables, the at least one insured's age, and 4 percent
interest.
35. The method of claim 27, further comprising calculating an interest
crediting rate on a periodic basis, wherein the crediting rate is
equal to the anticipated gross investment return rate for the at
least one account, less investment expense and a margin of profit.
36. The method of claim 27, further comprising a calculation comprising
deducting a percentage from the gross returns on the invested assets
before applying the returns to the cash value.
37. The method of claim 36, wherein the deduction is made on a
monthly basis.
38. The method of claim 27, further comprising a calculation comprising
deducting a mortality risk charge from the at least one account.
39. The method of claim 38, wherein the mortality risk charge decreases
with increasing age of the policy.
40. The method of claim 39, wherein the mortality risk charge comprises
3% for years 1-10 of the policy, 1% for years 11-20, and 0% thereafter.
41. The method of claim 38, wherein the mortality risk charge is
deducted annually, at the end of the year.
42. The method of claim 27, further comprising a calculation comprising
deducting a one-time charge to the cash value upon initiation of
the policy.
43. The method of claim 42, wherein the one-time charge decreases
with an increasing number of insureds.
44. The method of claim 43, further comprising a calculation comprising
deducting a fee from the cash value of the policy at the beginning
of each policy year for the first twenty years of the policy.
45. The method of claim 27, further comprising calculating a cost
of insurance charge and deducting said charge from the cash value
of the at least one policy on an annual basis, at the end of the
year.
46. The method of claim 27, wherein the death benefit is payable
only at the end of the calendar policy year
47. The method of claim 27, further comprising recalculating the
face value of the policy in order to maintain qualification of the
at least one policy as a modified endowment contract.
48. The method of claim 27, wherein the mortality experience credit
is calculated annually.
49. The method of claim 27, wherein the maximum threshold value
is approximately two-times the cost of insurance.
50. The method of claim 27, further comprising the one or more
insureds granting consent to a nonprofit or charitable organization,
a supporting organization of a non-profit or charitable organization,
or an entity with insurable interest rights, to have the policy
issued to cover their lives, and assigning all rights in the policy
to the organization or entity.
51. A data processing system comprising a data processing device,
the device comprising means for: inputting information from a pool
of insurance applicants into the data processing device; selecting
one or more insureds from the pool of inputted applicants by comparison
of the inputted information from each applicants using predetermined
criteria; calculating the amount of at least one premium payment
using, at least in part, cost of insurance information; generating
at least one policy document utilizing, at least in part, the output
device, the policy document comprising cash value and death benefit
information; associating the at least one premium payment with an
account, the account being invested to generate a rate of return;
inputting the rate of return, and calculating at least one cash
value and death benefit value based, at least in part, on the rate
of return; calculating a mortality fluctuation reserve to stabilize
the mortality experienced under the at least one policy, the reserve
comprising an amount of funding less a net amount paid for death
benefits, and associating the reserve with the account; periodically
calculating a mortality experience credit in the event that the
actual mortality rate is more favorable than a predicted mortality
rate, and to the extent that the mortality fluctuation reserve exceeds
a maximum threshold amount.
Insurance Description
FIELD OF THE INVENTION
[0001] The presented invention is directed to insurance products,
methods and related systems.
BACKGROUND OF THE INVENTION
[0002] In the following discussion certain articles and methods
will be described for background and introductory purposes. Nothing
contained herein is to be construed as an "admission"
of prior art. Applicant expressly reserves the right to demonstrate,
where appropriate, that the articles and methods referenced herein
do not constitute prior art under the applicable statutory provisions.
[0003] There are many forms of life insurance available on the
market. Once such form of insurance is often referred to as a "variable
life insurance policy." This type of policy often has flexible
premium and an adjustable death benefit. The cash values and death
proceeds are usually linked to the investment results and expenses
of the company that issued the policy.
[0004] While most purchase an insurance policy to preserve their
family's financial security, these financial products have a number
of other uses. One such use is within a charitable fundraising system
or method. Commonly owned International Patent Application Serial
No. PCT/US2005/08102, as well as commonly owned U.S. patent application
Ser. Nos. 10/382,947 and 10/798,551 disclose such a systems or methods.
The content of these two disclosures are incorporated herein by
reference, in their entirety.
[0005] These methods generally involve a donor, or group of donors,
who agree to be insured by and/or for the benefit of the organization,
and who assign their rights in the policies to the charitable and/or
nonprofit organization (NPO). The organization holds the policies
in a passive vehicle. A lender provides capital to the organization
in the form of a loan that is secured by the policies. The lender
is repaid from the proceeds of the policies via the passive vehicle
[0006] There is a need for insurance products and methods structured
to provide advantages over current products and methods, and in
particular, which are structured to maximize performance within
methods and systems of the type described above. There is also a
need for data processing methods and systems for accurately administering
such products in a time-efficient and accurate manner.
SUMMARY OF THE INVENTION
[0007] It is, therefore, an object of this invention to provide
insurance products, methods and/or systems that having beneficial
features that make them optimal for use in certain situations, such
as incorporation into a method for raising funds. According to certain
alternative embodiments of the present invention, such methods for
raising funds may optionally involve one or more donors who consent
to be insured by, and/or for the benefit of, a charitable or NPO,
and who grant whatever rights they may be deemed to have in the
insurance product to the charitable or NPO. It is also an objective
of the present invention to provide data processing methods and
systems for accurately administering such products in a time-efficient
manner.
[0008] According to one aspect of the present invention, there
is provided a method of structuring a life insurance product, the
method comprising: selecting one or more insureds from a pool of
applicants; collecting at least one premium payment, the at least
one premium payment comprising a charge for cost of insurance; issuing
at least one policy covering the one or more insureds, the at least
one policy having a cash value and a death benefit; placing the
at least one premium payment into an account, thereby populating
the account with assets; investing the assets thereby generating
a rate of return; tying the cash value and death benefit amounts
to the rate of return; creating and funding a mortality fluctuation
reserve to stabilize the mortality experienced under the at least
one policy, the reserve comprising the amount of funding less a
net amount paid for death benefits, adding the mortality fluctuation
reserve to the account, and investing the reserve; and periodically
paying a mortality experience credit in the event that the actual
mortality rate is more favorable than a predicted mortality rate,
and to the extent that the mortality fluctuation reserve exceeds
a maximum threshold value.
[0009] According to a further aspect, the present invention provides
a data processing method for initiating, structuring and managing
an insurance product, the method comprising: providing a data processing
device comprising an input device, an output device, a processor
and a memory; inputting information from a pool of insurance applicants
into the data processing device via the input device; selecting
one or more insureds from the pool of inputted applicants by comparison
of the inputted information from each applicant stored in the memory
using predetermined criteria; calculating the amount of at least
one premium payment using, at least in part, cost of insurance information
stored in the memory; generating at least one policy document utilizing,
at least in part, the output device, the policy document comprising
cash value and a death benefit information; associating the at least
one premium payment with an account, the account being invested
to generate a rate of return; inputting the rate of return into
the memory, and calculating at least one cash value and death benefit
value based, at least in part, on the rate of return; calculating
a mortality fluctuation reserve to stabilize the mortality experienced
under the at least one policy, the reserve comprising an amount
of funding less a net amount paid for death benefits, and associating
the reserve with the account; and periodically calculating a mortality
experience credit in the event that the actual mortality rate is
more favorable than a predicted mortality rate, and to the extent
that the amount of the mortality fluctuation reserve exceeds a maximum
threshold amount.
[0010] According to yet another aspect, the present invention provides
a data processing system comprising a data processing device, the
device comprising means for: inputting information from a pool of
insurance applicants into the data processing device; selecting
one or more insureds from the pool of inputted applicants by comparison
of the inputted information from each applicants using predetermined
criteria; calculating the amount of at least one premium payment
using, at least in part, cost of insurance information; generating
at least one policy document utilizing, at least in part, the output
device, the policy document comprising cash value and death benefit
information; associating the at least one premium payment with an
account, the account being invested to generate a rate of return;
inputting the rate of return, and calculating at least one cash
value and death benefit value based, at least in part, on the rate
of return; calculating a mortality fluctuation reserve to stabilize
the mortality experienced under the at least one policy, the reserve
comprising an amount of funding less a net amount paid for death
benefits, and associating the reserve with the account; periodically
calculating a mortality experience credit in the event that the
actual mortality rate is more favorable than a predicted mortality
rate, and to the extent that the equal to the amount of the mortality
fluctuation reserve exceeds a maximum threshold amount.
BRIEF DESCRIPTION OF THE DRAWINGS
[0011] The preferred embodiments are illustrated in the drawings
in which like reference numerals refer to the like elements and
in which:
[0012] FIG. 1 is a schematic illustration of a system, method and
data processing device according to the principles of the present
invention.
DETAILED DESCRIPTION OF THE INVENTION
[0013] An insurance product and its associated methods and systems
are structured to comprise one or more of the following characteristics.
[0014] A prospective insured may provide consent to be insured
and may meet minimum standards of good health, which can vary and
are to be determined at the discretion of the insurer and/or administrator
of the program. To be eligible for coverage, at policy issue an
insured should optionally be at least age 21, and not older than
65.
[0015] According to one embodiment, a policy covering each individual
is structured to have an initial death benefit of, for example,
$250,000. The individual policies can be aggregated into pools.
The number of policies in the pool(s) can vary. For example, one
or more pools of approximately 1,000 lives or more can be formed.
The policies can be structured to qualify as an insurance contract
under U.S. tax law.
[0016] The policy can generally comprise a group flexible premium,
adjustable death benefit, variable life insurance policy. Death
benefits can be made payable upon the death of an insured prior
to age 100. The insurance company may guarantee death benefits as
long as the policy remains in force. Cash values can be made payable
to the owner upon policy termination or upon the insured living
to age 100. Premium payments can be flexible as to timing and amount,
subject to minimum and maximum limitations, but it is expected that
the policies can be funded by a single premium. All values and benefits
of the policy can be based upon investment performance of a separate
account(s), which are variable and are not guaranteed. According
to one optional embodiment, the policy is structured as a Modified
Endowment Contract (MEC). The MEC can be funded with a single premium,
although the single premium can be paid with one or more payments.
[0017] Qualified non-profit organizations (NPO), including but
not limited to educational, religious and charitable organizations
can be responsible for premium payments, can designate itself as
the beneficiary of policy benefits or name another beneficiary,
have the right to direct the allocation of assets among the separate
account(s), or appoint an entity or assignee to direct allocation
of assets. There are no restrictions on the NPO to transfer rights
of ownership to other parties.
[0018] According to certain embodiments of the present invention,
the premium may comprise a single lump sum. The policy owner can
make a single, one-time payment at issuance of the policy. Alternatively,
the premium may be paid in multiple installments. The amount of
the premium may be determined by any suitable methodology, such
as utilizing actuarial tables like the 1980 Commissioner's Standard
Ordinary Male and Female Tables or the Table 2 contained herein,
each insured's age at their nearest birthday, and 4% interest.
[0019] According to the principles of the present invention, the
charitable or non-profit organization, a supporting organization
of the charitable or non-profit organization, an entity with insurable
interest rights, or an agent thereof, can be responsible for payment
of the premium. The supporting organization, entity with insurable
interest rights, or agents thereof are not necessarily controlled
by the charitable or non-profit organization. The supporting organization,
entity with insurable interest rights, or agents thereof need not
be based in the United States or its territories.
[0020] According to certain aspects of the present invention, an
NPO can pay the premium by making an initial payment of, for example,
$1,000 to initiate policy and coverage on a block of lives with
remainder of the premium being paid by a separate installment(s)
due within a set period of time, such as 5-10 business days. If
premium is not paid, policy is retroactively canceled and the insurer
is not liable for any payments. Once full payment is made, the policy
is effective as of the date of the initial payment and any deaths
that may have occurred after the payment date are payable by the
insurer. When utilized within the United States, the policy is optionally
a MEC pursuant to the requirements of Internal Revenue Code Section
7702 for U.S. Federal Income Tax purposes. Additional premiums will
not be required if the policy cash value is sufficient to cover
expenses and cost of insurance for the year. Depending upon the
investment performance of the underlying separate account, future
premiums may be required to be paid in order to keep the policy
in full force.
[0021] As noted above, death benefits may increase or decrease
with the underlying performance of the separate account. Death benefits
may be increased to comply with the cash value accumulation test
or corridor test under section 7702 of the United States Internal
Revenue Code. Cash value accumulation test factors are based on
the same mortality and interest assumptions used to determine the
premium, and the insured's age at determination.
[0022] According to additional optional aspects of the present
invention, assets supporting the liabilities of the life insurance
policy can be invested in a separate account(s) of an insurance
company (the "Company"). Assets of the separate account
are the property of the Company but may not be chargeable with the
liabilities arising out of any other business the Company may conduct.
Policy values in the separate account are not guaranteed and will
fluctuate commensurate with the value of assets in the separate
account. Separate account investment performance may be provided
on a monthly basis. Policy values may be updated on an annual basis.
The Company will preferably offer several investment options within
the separate account, each with its own investment objectives. The
NPO may have the right to direct the allocation of assets among
the available funds. Preferably, the policy will not prohibit the
owner from assigning the right to direct allocation of assets to
an entity or assignee, and will not restrict the owner from assigning
to the investor the right to select the entity or assignee directing
the allocation of assets. Moreover, the policy should not restrict
the investor to which the original NPO transferred the right to
select the third party directing the allocation of assets from subsequently
assigning this right to another organization, institution or individual,
or to restrict such organization, institution or individuals from
successively assigning such rights. If such assignment occurs, proper
notification should normally be given to the Company.
[0023] A fixed investment return option may also be available through
the general account. The NPO or authorized investment manager may
decide to invest some or all of the policies' assets in the general
account of the insurance company. Interest on such assets will be
credited to the policy cash values on an annual basis. Once each
quarter the company will declare an interest-crediting rate based
upon its expectations as to future investment performance. The interest
crediting rate can be equal to the anticipated gross investment
return rate less investment expenses and a margin for profit.
[0024] The company can make certain deductions from the separate
account, premiums and from cash values. The policy owner may also
incur other expenses associated with the purchase of the policy.
A percentage of the assets allocated to the separate account may
be deducted from the gross returns of the account on a monthly basis
before being applied to the policy cash values. The monthly charge
can be one-twelfth of the annual percentage (n/12) where one (n)
is the annual percentage (See Table 1 below). The monthly charge
can be applied to the asset value in a separate account on the valuation
date, generally defined as the last business day of the month. If
another valuation date is required during a month due to a distribution,
transfer, or account activity requiring a valuation of assets, the
asset charge can be applied on a pro-rata basis consistent with
the above methodology.
[0025] A mortality risk charge can also be deducted at end of each
year based upon a percentage of the cost of insurance charges. For
example, the percentages may be 3% for years 1 through 10, 1% for
years 11 through 20, and 0%, thereafter.
[0026] Optionally, there is no, or a minimal, up-front sales charge
deducted before applying the premium to the policy cash values.
[0027] A one time set-up charge can be deducted from each insured's
cash value at the time coverage becomes effective and for inclusion
of each additional insured added in the future. The fee can vary
by the number of units (each unit represents 1,000 lives) purchased,
as shown in the following table. TABLE-US-00001 TABLE I Schedule
of Fees and Charges Number of Notes 1 2+ Number of Lives 1,000 2,000+
ASSET EXPENSE CHARGE TOTAL 50 BASIS PTS 50 BASIS PTS Initial Issue
Charge TOTAL $100 EACH LIFE $45 EACH LIFE >1000 Administrative
Fee $25 $25 (1.sup.st 20 years)
[0028] An administrative fee can be deducted from each insured's
cash value at the beginning of each policy year. The fee may optionally
be applied for the first 20 policy years, and can be zero thereafter.
[0029] According to certain embodiments of the present invention,
charges for the cost of insurance may be determined and deducted
from cash value annually for each insured. Alternatively, this can
be done quarterly, monthly, or at some other predetermined period
of time. The charge may be determined by applying the cost of insurance
rates to the difference between the death benefit and the cash value
at the beginning of each year, or other predetermined period of
time. The cost of insurance will be periodically deducted from the
account values on the assumption that death benefits are paid out
at the end of the year or other predetermined period of time. For
instance, if death benefits are paid monthly or quarterly, then
the cost of insurance will be calculated and deducted on a monthly
or quarterly basis. Cost of insurance charges in excess of amounts
needed by the company to pay death benefits, due to fewer deaths
than anticipated, can be credited to a mortality fluctuation reserve
which will remain invested in the underlying separate accounts.
A mortality experience credit will be paid when the reserve exceeds
a predetermined threshold amount, such as two (2) times the cost
of insurance, for a policy year. According to one embodiment of
the present invention, cost of insurance rates should not exceed
those illustrated in the following Table 2. TABLE-US-00002 TABLE
2 Cost of Insurance Rates Age Male Female 20 0.00190 0.00105 21
0.00191 0.00107 22 0.00189 0.00109 23 0.00186 0.00111 24 0.00182
0.00114 25 0.00177 0.00116 26 0.00173 0.00119 27 0.00171 0.00122
28 0.00170 0.00126 29 0.00171 0.00130 30 0.00173 0.00135 31 0.00178
0.00140 32 0.00183 0.00145 33 0.00191 0.00150 34 0.00200 0.00158
35 0.00211 0.00165 36 0.00224 0.00176 37 0.00240 0.00189 38 0.00258
0.00204 39 0.00279 0.00222 40 0.00302 0.00242 41 0.00329 0.00264
42 0.00356 0.00287 43 0.00387 0.00309 44 0.00419 0.00332 45 0.00455
0.00356 46 0.00492 0.00380 47 0.00532 0.00405 48 0.00574 0.00433
49 0.00621 0.00463 50 0.00671 0.00496 51 0.00730 0.00531 52 0.00796
0.00570 53 0.00871 0.00615 54 0.00956 0.00661 55 0.01047 0.00709
56 0.01146 0.00757 57 0.01249 0.00803 58 0.01359 0.00847 59 0.01477
0.00894 60 0.01608 0.00947 61 0.01754 0.01013 62 0.01919 0.01096
63 0.02106 0.01202 64 0.02314 0.01325 65 0.02542 0.01459 66 0.02785
0.01600 67 0.03044 0.01743 68 0.03319 0.01884 69 0.03617 0.02036
70 0.03951 0.02211 71 0.04330 0.02423 72 0.04765 0.02687 73 0.05264
0.03011 74 0.05819 0.03393 75 0.06419 0.03824 76 0.07053 0.04297
77 0.07712 0.04804 78 0.08390 0.05345 79 0.09105 0.05935 80 0.09884
0.06599 81 0.10748 0.07360 82 0.11725 0.08240 83 0.12826 0.09253
84 0.14025 0.10381 85 0.15295 0.11610 86 0.16609 0.12929 87 0.17955
0.14332 88 0.19327 0.15818 89 0.20729 0.17394 90 0.22177 0.19075
91 0.23698 0.20887 92 0.25345 0.22881 93 0.27211 0.25151 94 0.29590
0.27931 95 0.32996 0.31732 96 0.38455 0.37574 97 0.48020 0.47497
98 0.65798 0.65585 99 1.00000 1.00000
[0030] As noted above, a mortality fluctuation reserve ("reserve")
can be established to stabilize the mortality experience under the
policy. The maximum reserve can vary. According to one embodiment
of the present invention, the maximum reserve is two times the cost
of insurance for the policy year. The reserve can be funded through
the cost of insurance deductions made from the policy during a policy
year less the net amount at risk paid for death benefits during
the year. The reserve may be held in the policy's separate accounts
and credited with any earnings under the separate account(s). Amounts
in excess of the maximum reserve can be released to cash value as
an experience credit. Upon termination of the policy, any available
reserve is paid to the policy owner.
[0031] As noted above, mortality experience credit may be payable
if mortality is more favorable than anticipated, and the mortality
fluctuation reserve exceeds the threshold amount that the company
determines is necessary to stabilize mortality (e.g., two times
cost of insurance for the year). A mortality risk charge may optionally
be applied before any credit is determined. Experience credits,
when applicable, are periodically determined and applied on policy
anniversaries or at other predetermined periods of time. Unless
otherwise elected, experience credits for the group may be applied
to the insured's cash value in the same proportion that an insured's
mortality fluctuation reserve bears to the total. The owner may
elect to have the experience credits paid in cash.
[0032] A U.S. Federal Excise Tax may be is assessed against life
insurance premiums paid to non-U.S. taxpaying insurance companies
at the prevailing rate (presently of 1% of premium). The tax applies
to a U.S. taxpayer paying the premiums. The policy may or may not
make any provision to reimburse the policy owner for such expense.
[0033] The present invention is also directed to data processing
methods and systems that provide accurate and time-efficient ways
of initiating, structuring and managing the above-described insurance
products and techniques. FIG. 1 is a schematic illustration of exemplary
data processing methods, systems and devices 10 of the present invention.
[0034] A data processing method for initiating, structuring and
managing an insurance product, according to the present invention
may include providing a data processing device comprising one or
more of an input device 20, an output device 40, and a processing
unit 30 that comprises a memory 32 and a processor 34. The input
device is illustrated as a keyboard, however, alternative input
devices and techniques are possible, including voice recognition
hardware and software, and electronic data transfer via a network
connection. The memory 32 can comprise one or more conventional
memory devices such as ROM, RAM and EEPROM devices. The memory 32
can contain data, software, executable instructions, scripts and
other common memory elements or components. The processor 34 is
in communication with the memory 32, and functions therewith in
a typical manner to, for example, retrieve data, execute calculations
and other instructions, and provide control and system functions.
[0035] According to the data processing method, information from
a pool of insurance applicants is entered via the input device 20.
Such information may include health-related information (e.g., age
and weight), as well as identifying information (e.g., address,
drivers license number, etc.). One or more insureds from the pool
of inputted applicants may be selected by comparison of the inputted
information from each applicant using predetermined criteria stored
in the memory 32. For example, the processor 34 retrieves data from
the memory 32 and compares that data using instructions and/or software
executed by the processor 34.
[0036] The amount of at least one premium payment may be calculated
using, at least in part, cost of insurance information stored in
the memory 32. The output device 40 can generate at least one policy
document 62. The output device 40 can comprise one or more of a
visual and/or audible output device 50 (e.g., a monitor), and a
printer 60. Other output devices are contemplated. For example,
the output may be a conventional electronic transfer via a network
connection. The policy document 62 preferably comprises cash value
and death benefit information.
[0037] The data processing device and method preferably associates
the at least one premium payment with an account, the account being
invested to generate a rate of return. This association may be performed
manually or the association may be automatically executed via software
or other instructions executed by the processor 34. The method may
further include inputting the rate of return into the memory 32,
and calculating at least one cash value and death benefit value
based, at least in part, on the rate of return. These operations
may also be performed manually via the input device 20, or automatically,
as described above.
[0038] The method can include calculating a mortality fluctuation
reserve, and associating the reserve with the account. A mortality
experience credit may also be calculated. The various features of
the mortality reserve and mortality reserve credit have already
been described in some detail above. These operations may be performed
manually or automatically.
[0039] A data processing system is also comprehended by the present
invention. The system preferably comprises a data processing device
10, the device comprising means for: inputting information from
a pool of insurance applicants into the data processing device;
selecting one or more insureds from the pool of inputted applicants
by comparison of the inputted information from each applicants using
predetermined criteria; calculating the amount of at least one premium
payment using, at least in part, utilizing cost of insurance information;
generating at least one policy document utilizing, at least in part,
the output device, the policy document comprising a cash value and
a death benefit; associating the at least one premium payment with
an account, the account being invested to generate a rate of return;
inputting the rate of return, and calculating at least one cash
value and death benefit value based, at least in part, on the rate
of return; calculating a mortality fluctuation reserve, and associating
the reserve with the account; and calculating a mortality experience
credit. The means that can be provided to carry out the above functions
are preferably chosen from one or more of the input devices 20,
central units 30, memory components 32, processors 34, output devices
40, visual and/or audible displays 50 and printers 60 having those
features, components and functionality described above.
[0040] While this invention is satisfied by embodiments in many
different forms, as described in detail in connection with preferred
embodiments of the invention, it is understood that the present
disclosure is to be considered as exemplary of the principles of
the invention and is not intended to limit the invention to the
specific embodiments illustrated and described herein. Numerous
variations may be made by persons skilled in the art without departure
from the spirit of the invention. The scope of the invention will
be measured by the appended claims and their equivalents. The abstract
and the title are not to be construed as limiting the scope of the
present invention, as their purpose is to enable the appropriate
authorities, as well as the general public, to quickly determine
the general nature of the invention. In the claims that follow,
unless the term "means" is used, none of the features
or elements recited therein should be construed as means-plus-function
limitations pursuant to 35 U.S.C. .sctn.112, 6
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