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

[0019]The Balance Plus Annuity (BPA) is founded on a simple concept and provides a clear structure that highlights the potential rewards of indexing while providing access to funds without onerous penalties and clawbacks of accrued index benefits. There is no product on the market with the features incorporated in BPA. The Balanced Plus Annuity takes these advantages and adds a level of flexibility and control that currently doesn't exist making it one of the most consumer friendly products on the market today.

[0020]BPA incorporates a unique balanced allocation of earnings that capitalizes on the well established time proven balanced allocation strategies. This crediting rate strategy eliminates the modifiers that add complexity and limit growth. In addition, BPA has unique liquidity features and death benefits. This balanced approach and combination of benefits sets it apart from any other EIA in the market place today. The product has indexing terms of 4 years. Key features and benefits of BPA include: principal guarantee, less early withdrawal charges; minimum guaranteed earnings; simple balanced allocation strategy offering the opportunity for index growth without complicated formulas and modifiers; lock-in privilege that can be triggered at any time; and a unique rollup death benefit enhancement rider.

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.