System and method for creating a retirement plan funded with a variable life insurance policy and/or a variable annuity policy

Abstract

A retirement plan is created using variable life insurance contracts and / or variable annuity contracts. Actuarial data used to create the retirement plan is entered via at least one user interface and processed. Based on the actuarial data, a variable life insurance policy and / or a variable annuity policy is generated for the purpose of funding the retirement plan. Additionally, a separate agreement is created that either extra-contractually modifies the variable life insurance policy and / or the variable annuity policy, or defines the terms under which the variable life insurance policy and / or the variable annuity policy is to be used in the retirement plan.

Description

CROSS-REFERENCE TO RELATED APPLICATION [0001] This application is a divisional of copending U.S. application Ser. No. 10 / 086,924 filed Feb. 28, 2002, the entire disclosure of which is incorporated herein by reference. [0002] This application claims the benefit of U.S. Provisional Application No. 60 / 296,173, filed Jun. 6, 2001, entitled “System and Method for Creating a Defined Benefit Pension Plan Funded With Variable Life Insurance and Generating a Policy Thereof.”BACKGROUND OF THE INVENTION [0003] Internal Revenue Code Section 412(i) covers defined benefit plans that are funded solely by annuity contracts and / or insurance contracts, including retirement income endowment contracts. A defined benefit plan is a retirement plan sponsored by an employer, such as a pension plan, in which a retired employee receives a specific monetary disbursement based on salary history and years of service, or both. A 412(i) plan is a defined benefit plan wherein the funding (annual contribution) is c...

AI Technical Summary

Benefits of technology

"The present invention is a method and system for using variable life insurance contracts and / or variable annuity contracts to fund a 412(i) defined benefit plan. The invention allows for the creation of a pension plan that operates similar to a traditional whole life insurance policy, providing death benefit coverage for life as long as scheduled premiums are paid. The invention uses a computer-implemented data-processing scheme to create a defined benefit pension plan by entering actuarial data and generating a separate agreement that modifies the policy. The invention also allows for the allocation of funds between a General Account and a Variable Account. The technical effects of the invention include increased flexibility and efficiency in creating and funding pension plans."

Problems solved by technology

Generally, although such contracts have a guaranteed rate of return (usually 4.5% per annum or less), the potential upside investment performance is very limited because of conservative investments made by insurance companies.

Limited upside performance has impaired consumer demand for whole life contracts, in general; and this has also impaired demand for 412(i) plans.

However, the conventional belief is that one cannot use a variable life insurance policy and / or a variable annuity policy to fund a 412(i) defined benefit plan.

Images