Computer based method of pricing equity indexed annuity product with lock-in

Abstract

The present invention broadly comprises a computer-based method for determining a set of equity-indexed crediting parameters C for a selectable-term equity-indexed deposit product also having a set of profitability requirements R, a principal amount P, an account value A, a maximum term T, a set of lock-in formulas F, a selected term T′, an immediate credit I, and a guaranteed rate G, with R, P, A, T, C, and F determined at the time of product purchase and T′<=T determined by the purchaser after the time of purchase and I and G determined by the seller at T′ according to the set of formulas F, with the immediate credit I being added to the account value A at time T′ and interest being credited to the account value A at the rate G from time T′ to time T.

Description

CROSS-REFERENCE TO RELATED APPLICATIONS[0001]This application claims the benefit under 35 U.S.C. §119(e) of U.S. Provisional Application No. 60 / 758,787 filed Jan. 13, 2006.REFERENCE TO COMPUTER PROGRAM LISTING / TABLE APPENDIX[0002]The present application includes a computer program listing appendix on compact disc. Two identical compact discs are provided herewith. Each compact disc contains an ASCII text file of the computer program listing as follows:[0003]Filename: apl.lst[0004]Size: 5,903,224 bytes[0005]Date Created: Jan. 11, 2006[0006]Filename: LMM1.DPR[0007]Size: 38,517 bytes[0008]Date Created: Jan. 11, 2006[0009]Filename: Rmem4p.dpr[0010]Size: 29,371 bytes[0011]Date Created: Jan. 11, 2006[0012]Filename: SIMPLX.CPP[0013]Size: 4,445 bytes[0014]Date Created: Jan. 11, 2006The computer program listing appendix is hereby expressly incorporated by reference in the present application.FIELD OF THE INVENTION[0015]The present invention relates to an equity indexed annuity with a simple ...

AI Technical Summary

Benefits of technology

"The Balance Plus Annuity (BPA) is a new and innovative product that provides a simple and effective way to invest in equities while avoiding the limitations of traditional index funds. It offers a unique balance of earnings and flexibility, with no early withdrawal charges and a minimum guaranteed earnings amount. The BPA incorporates a balanced allocation of earnings that capitalizes on the well-established benefits of index funds without adding complexity or limiting growth. It also provides a level of control and flexibility that other products in the market do not offer. The BPA takes advantage of the benefits of a balanced allocation of earnings and death benefits to enhance the value of the product. The method described in the patent text allows for the determination of the equity index credit based on a set of equity-indexed crediting parameters and the desired policy year. The equity index credit is calculated using a percentage of increase in the equity index and can be adjusted based on the individual's needs. Overall, the BPA offers a simple and effective way to invest in equities while avoiding the limitations of traditional index funds."

Problems solved by technology

Unfortunately, with today's low interest rates, an investor needs to put almost all the money in fixed interest, leaving very little in stocks.

As a result, the Capital Preservation concept is no longer workable in its traditional format.