U.S. patent application number 10/360464 was filed with the patent office on 2003-06-26 for method and apparatus for determining additional benefits and costs for an annuity contract.
Invention is credited to Dady, Donald James, Preti, Charles Paul.
Application Number | 20030120573 10/360464 |
Document ID | / |
Family ID | 23363242 |
Filed Date | 2003-06-26 |
United States Patent
Application |
20030120573 |
Kind Code |
A1 |
Preti, Charles Paul ; et
al. |
June 26, 2003 |
Method and apparatus for determining additional benefits and costs
for an annuity contract
Abstract
A method for determining additional death benefits with respect
to an annuity contract, the annuity contract being stored in a
computer system. The method comprises generating data corresponding
to an annuity contract, at least a portion of the data
corresponding to information indicating whether an additional
beneficiary rider has been selected. If the additional beneficiary
rider has been selected in the annuity contract, calculating an
additional death benefit to be added to the payments to be provided
by the annuity contract.
Inventors: |
Preti, Charles Paul;
(Windsor, CA) ; Dady, Donald James; (Santa Rosa,
CA) |
Correspondence
Address: |
THOMAS, KAYDEN, HORSTEMEYER & RISLEY, LLP
100 GALLERIA PARKWAY, NW
STE 1750
ATLANTA
GA
30339-5948
US
|
Family ID: |
23363242 |
Appl. No.: |
10/360464 |
Filed: |
February 6, 2003 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
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10360464 |
Feb 6, 2003 |
|
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09347324 |
Jul 2, 1999 |
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Current U.S.
Class: |
705/35 |
Current CPC
Class: |
G06Q 40/02 20130101;
G06Q 40/10 20130101; G06Q 40/08 20130101; G06Q 30/0283 20130101;
G06Q 40/00 20130101 |
Class at
Publication: |
705/35 |
International
Class: |
G06F 017/60 |
Claims
What is claimed is:
1. A method for determining additional death benefits with respect
to an annuity contract, the annuity contract being stored in a
computer system, the method comprising: generating data
corresponding to an annuity contract, at least a portion of the
data corresponding to information indicating whether an additional
beneficiary rider has been selected; if the additional beneficiary
rider has been selected as part of the annuity contract,
calculating an additional death benefit to be added to the payments
to be provided by the annuity contract; adding the additional death
benefit to the current annuity death benefit to generate a total
death benefit.
2. The method of claim 1 further comprising: calculating a current
cost of the additional death benefit, if the additional beneficiary
rider has been selected as part of the annuity contract; and adding
the current cost to a current annuity cost that is charged to an
owner of the annuity contract.
3. The method of claim 2 wherein the step of calculating a current
cost of the additional death benefit comprises the steps of:
calculating a maximum monthly cost; calculating a charge value, the
charge value being approximately equal to a current percentage
charge value multiplied by the total cash value of the annuity
contract; and setting the current cost value to be the lesser of
the charge value and the maximum monthly cost.
4. The method of claim 3 wherein the step of calculating a maximum
current cost comprises the steps of: determining a mortality rate
value for the annuity contract; and multiplying the mortality rate
value by the total value of the additional death benefit available
as part of the annuity contract.
5. The method of claim 4 wherein the mortality rate value comprises
a 1980 Commissioners Standard Ordinary Male/Female Aggregate Age
Last Birthday Ultimate Rate.
6. The method of claim 1 wherein the step of calculating an
additional death benefit comprises the steps of: determining the
death benefit to be paid out according to the annuity contract;
determining the total of all of the premiums paid into the annuity
contract; determining the total of any withdrawals from the annuity
contract; subtracting the total of any withdrawals from the total
of all of the premiums paid into the annuity contract to generate a
first subtracted total; subtracting the first subtracted total from
the death benefit to be paid out according to the annuity contract
to generate a second subtracted total; if the second subtracted
total is greater than zero, setting the additional death benefit to
a value of the second subtracted total multiplied by a selected
percentage value; and if the second subtracted total is less than
or equal to zero, setting the additional death benefit value to
zero.
7. The method of claim 6 wherein the selected percentage value is .
approximately equal to 28%.
8. The method of claim 1 wherein the additional death benefit
comprises an additional income tax benefit.
9. The method of claim 1 wherein the additional death benefit
comprises an additional benefit for funeral expenses.
10. A method that determines tax benefits and costs for an annuity
contract comprising: generating an annuity contract; determining
whether the annuity contract includes a beneficiary rider selected
by the owner of the annuity contract; if the beneficiary rider has
been selected, calculating an additional death benefit for the
annuity contract; and adding the additional death benefit to a
death benefit to be paid out by the annuity contract.
11. The method of claim 10 further comprising calculating a cost of
the additional death benefit, if the beneficiary rider has been
selected and adding the cost value to an annuity cost value that is
charged to a holder of the annuity contract to generate a total
annuity cost.
12. The method of claim 11 wherein the step of calculating the cost
of the additional death benefit comprises the steps of: calculating
a maximum current cost; calculating a charge value, the charge
value being approximately equal to a percentage charge value
multiplied by the cash value of the annuity contract; and setting
the current cost to be the lesser of the charge value and the
maximum current cost.
13. The method of claim 12 wherein the step of calculating a
maximum current cost comprises the steps of: determining a
mortality rate value for the annuity contract; and multiplying the
mortality rate value by the total value of the additional death
benefit available as part of the annuity contract.
14. The method of claim 13 wherein the mortality rate value
comprises a 1980 Commissioners Standard Ordinary Male/Female
Aggregate Age Last Birthday Ultimate Rate.
15. The method of claim 10 wherein the step of calculating an
additional death benefit comprises the steps of: determining a
rider value based upon a death benefit to be provided by the
annuity contract; determining the total paid in value; and setting
the additional death benefit to the rider value.
16. The method of claim 15 wherein the step of determining a rider
value comprises the steps of: subtracting a total of any
withdrawals to date from a total of all of the premiums paid into
the annuity contract to generate the total paid in value;
subtracting the total paid in value from the additional death
benefit to be provided by the annuity contract to generate a total
value; determining if the second subtracted total is greater than
zero; if the second subtracted total is greater than zero, setting
the rider value to a value of the second subtracted total
multiplied by a percentage value; and if the second subtracted
total is less than or equal to zero, setting the rider value to
zero.
17. The method of claim 16 wherein the percentage value is
approximately equal to 28%.
18. The method of claim 10 wherein the additional death benefit
comprises an additional income tax benefit.
19. The method of claim 10 wherein the additional death benefit
comprises an additional benefit for funeral expenses.
20. An apparatus for calculating tax benefits and costs for an
annuity contract comprising: a storage device; and a processor
coupled to the storage device, the storage device storing
instructions that are utilized by the processor, the instructions
comprising: a receive instruction that instructs the processor to
receive data comprising an annuity contract; a determine
instruction that instructs the processor to determine whether the
annuity contract includes a beneficiary rider; a calculate
instruction that instructs the processor to calculate an additional
death benefit, if the annuity contract includes the beneficiary
rider; and combine instruction that instructs the processor to add
the additional benefit to the current annuity death benefit, if the
annuity contract includes the beneficiary rider.
21. The apparatus of claim 20 wherein the storage device further
comprises a cost instruction that instructs the processor to
calculate a current cost of the beneficiary rider.
22. The apparatus of claim 21 wherein the cost instruction
comprises: a first cost instruction that instructs the processor to
calculate a maximum current cost; a second cost instruction that
instructs the processor to calculate a charge value, the charge
value being approximately equal to a current percentage charge
value multiplied by the cash value of the annuity contract; and a
third cost instruction that instructs the processor to set the
current cost to be the lesser of the charge value and the maximum
current cost.
23. The apparatus of claim 22 wherein the first cost instruction
comprises a fourth cost instruction that instructs the processor to
determine a mortality rate value for the holder of the annuity
contract; and a fifth cost instruction that instructs the processor
to multiply the mortality rate value by the additional death
benefit value.
24. The apparatus of claim 23 wherein the mortality rate value
comprises a 1980 Commissioners Standard Ordinary Male/Female
Aggregate Age Last Birthday Ultimate Rate.
25. The apparatus of claim 20 wherein the calculate instruction
comprises: a first calculate instruction that instructs the
processor to determine a rider value based upon a death benefit to
be provided by the annuity contract and the total paid in value;
and a second calculate instruction that instructs the processor to
set the additional death benefit to the rider value.
26. The apparatus of claim 25 wherein the first calculate
instruction comprises: a third calculate instruction that instructs
the processor to subtract a total of any withdrawals to date from a
total of all of the premiums paid into the annuity contract to
generate the total paid in value; a fourth calculate instruction
that instructs the processor to subtract the total paid in value
from the death benefit to be provided by the annuity contract to
generate a total value; a fifth calculate instruction to determine
if the second subtracted total is greater than zero; and a sixth
calculate instruction to set the additional death benefit to a
value of the second subtracted total multiplied by a percentage
value and to set the additional death benefit value to zero
depending on if the subtracted total is greater than zero.
27. The apparatus of claim 26 wherein the percentage value is
approximately equal to 28%.
28. The method of claim 20 wherein the additional death benefit
comprises an additional income tax benefit.
29. The method of claim 20 wherein the additional death benefit
comprises an additional benefit for funeral expenses.
Description
BACKGROUND
[0001] 1. Field of the Invention
[0002] The present invention relates to a method and apparatus for
determining benefits and costs associated with annuities. Among
other things, the present invention relates to a method and
apparatus for determining additional benefits and costs related to
tax payments with respect to the death benefit of an annuity
contract.
[0003] 2. Background
[0004] Annuities have become a more attractive option for
retirement savings. Once, considered noncompetitive and inflexible,
annuities have become more popular as annuity providers have
introduced products with a variety of flexible tax deferred savings
options.
[0005] An annuity is a tax-deferred savings vehicle packaged as an
insurance product. In most cases when an annuity is bought, its
earnings are tax-deferred until the beginning of withdrawal of the
interest or other income earned. Because the owner is not paying
taxes along the way, the owner has the chance to earn gains on
untaxed money, which may grow more quickly than a taxable account
does.
[0006] There are two broad types of annuities: deferred and
immediate. A deferred annuity, allows the owner to wait a while and
let the annuity earn money before withdrawing from it; the
immediate annuity, begins paying the owner within the first year.
The owner may also be permitted to convert the annuity from a
deferred to an immediate annuity type.
[0007] A deferred annuity has two phases: the accumulation phase
and the distribution phase. During the accumulation phase, the
owner can contribute as much as he or she wants, subject to
Internal Revenue Service restrictions on certain qualified accounts
and the earnings in the annuity grow tax-deferred. During the
distribution phase, the owner can elect to receive a lump sum or
the owner can elect a settlement option.
[0008] A settlement option, also known as annuitization, means the
owner turns the annuity into a stream of periodic payments for life
or for a chosen certain period of time. If the payout phase of an
annuity is for life, it pays the owner during his or her entire
lifetime. The payments cease when he or she dies. If an annuity's
payout is "certain," it pays the owner for a specified period, and
if the owner dies before the period ends, then a beneficiary
receives the payments until the certain term ends. In other words,
if the annuity owner has a certain term, such as 7 years for an
annuity but receives only 5 years of payments before dying, then
the owner's beneficiary will receive payments for another 2 years,
and then after the additional 2 years the payments would cease. An
annuity can also be a combination of life and certain terms. For
example, the owner can purchase an annuity for "life," but with a
certain period of ten years. If the owner lives longer than the
ten-year period, the annuity continues to pay throughout the
owner's lifetime, and at the owner's death,.the payments cease. If
the owner dies before the certain term expires, the owner's
beneficiary will receive payments until the certain term ends. The
security of knowing the owner will get income for a specified
period, or for his or her life, is one of the real advantages of
electing annuitization. The gains distributed through settlement
option payments and withdrawals are generally subject to the income
tax. (Typically, with annuitizations only a percentage of each
payment is taxable.)
[0009] Annuities are further classified as either fixed and
variable. A fixed annuity provides a set minimum guaranteed rate of
return backed by an insurance company, much as a bank provides a
stated rate of return on a certificate of deposit. Although the
rate of return varies somewhat depending on the prevailing interest
rates, the minimum rate of return adds more stability than a
variable annuity. A variable annuity may invest in stocks, bonds,
or money market funds, depending upon the type of subaccount
chosen. Usually, the subaccount is selected based on the level of
risk and return wanted in the annuity, just as when purchasing a
mutual fund. The amount of return depends on the actual return of
the subaccount investment.
[0010] An annuity will vary depending upon the parameters of the
"product design." The product design defines the terms of the
annuity, including, whether it is fixed or variable, whether the
annuity's term is for a certain period or based on the life of the
annuitant, whether it is deferred or immediate, the annuity's death
benefit (if any), and surrender charges (if any).
[0011] Many annuities are set up so that the beneficiaries of the
annuity may receive money from the annuity when the owner dies. For
example, with a deferred annuity, if the annuitant dies while the
annuity is still in the accumulation phase (the phase before the
payout phase), the annuitant's beneficiaries will receive whatever
amount has accumulated in the annuity. The heirs will need to pay
income taxes on any gains, not to mention estate taxes, if the
entire estate amounts to more than the current limit (which is
currently $650,000). In other words, if $50,000 was contributed to
an annuity, and it has grown to $150,000, the heirs would receive
the principal plus $100,000 as taxable income if the owner died
before the payout phase began. Additionally, in some cases, the
insurance company may guarantee to pay the owner's beneficiary the
principal amount of the investment if it is greater than the
annuity's cash value. As noted before with a "certain" annuity when
the payout phase has begun, and the owner dies during the certain
period, the owner's beneficiary will receive payments until the end
of the certain period.
[0012] In the case of annuities that provide a death benefit, a
major problem of the heirs or beneficiaries of the annuity after
the death of the owner of the annuity is the payment of income
taxes; as the beneficiaries are responsible for paying taxes on the
gain in the annuity contract. Many heirs and beneficiaries receive
the death benefit and have a large portion of it be consumed by
income taxes.
SUMMARY OF THE INVENTION
[0013] The present invention provides a way for dealing with the
tax payment for the beneficiaries of a death benefit of an annuity
contract.
[0014] The present invention provides a method to determine the
additional benefits that may be needed for dealing with the tax
payments, funeral expenses and the like associated with the death
benefit of an annuity contract.
[0015] In one embodiment of the present invention, a method for
determining additional income tax benefits with respect to an
annuity contract, is provided with the annuity contract being
stored in a computer system. The method comprises generating data
corresponding to an annuity contract, with at least a portion of
the data corresponding to information indicating whether an
additional death benefit payment has been selected. If the
additional death benefit payment has been selected, an additional
death benefit is calculated.
[0016] In another embodiment of the present invention, a method
that determines the benefits and costs of an annuity contract
comprises determining whether an annuity contract includes a
beneficiary rider and if the beneficiary rider has been selected,
calculating an additional death benefit value.
[0017] In an additional embodiment of the present invention, an
apparatus for calculating the benefits and costs of an annuity
contract comprises a storage device and a processor coupled to the
storage device. The storage device stores instructions that are
utilized by the processor. The instructions comprise a receive
instruction that instructs the processor to receive data comprising
an annuity contract; a determine instruction that instructs the
processor to determine whether the annuity contract includes a
beneficiary rider; and a calculate instruction that instructs the
processor to calculate an additional death benefit value, if the
annuity contract includes the beneficiary rider.
[0018] Additional embodiments of the present invention include
methods and apparatus for calculating costs associated with
additional death benefits for the payment of taxes, funeral
expenses and the like by the beneficiaries on a death benefit of an
annuity contract.
BRIEF DESCRIPTION OF THE DRAWINGS
[0019] FIG. 1 illustrates an overview of a method that determines
the benefits and costs related to an annuity for an additional
death benefit according to a presently preferred embodiment of the
present invention;
[0020] FIG. 2 illustrates an apparatus that determines the benefits
and costs related to an annuity according to a presently preferred
embodiment of the present invention;
[0021] FIGS. 3 illustrates a method for determining additional
benefits for an additional death benefit for an annuity contract
according to a presently preferred embodiment of the present
invention;
[0022] FIG. 4 illustrates a method for determining the monthly cost
for an additional death benefit for annuity contract according to a
presently preferred embodiment of the present invention; and
[0023] FIG. 5 illustrates the presently preferred method for
determining the information necessary to calculate the benefits and
costs for a beneficiary rider according to the present
invention.
DESCRIPTION OF THE DRAWINGS
[0024] Turning now to FIG. 1, at step 10 an annuity contract is
provided. The annuity contract can be any annuity that has any
combination of terms, including any combination of, fixed or
variable, certain or life term annuity, deferred or immediate, any
type of death benefit, and surrender charges (if any). The annuity
contract has also as part of the data an indication if the annuity
contract provides a selection of whether the owner of the annuity
contract has selected an additional death benefit. The selection of
the additional death benefit, or beneficiary rider, can be selected
at any time during the existence of the annuity contract, but is
presently preferred to be limited only to the time when the annuity
contract is being created and agreed to by the owner. The annuity
contract can be stored as one or more records in one or more files
in a computer, such as a database entry having one or more records.
The selection of the beneficiary rider can be in the form of a
record entry in a database, a variable in a separate file, a check
box in a display, or any other means such that a computer or other
data processing equipment can determine whether the beneficiary
rider is selected. It is presently preferred that the beneficiary
rider provides no additional cash value to the contract; the
additional benefit occurs only upon the payment of the death
benefit to the beneficiary.
[0025] It should be noted that although the additional death
benefit is referred to as being part of a beneficiary rider, the
present invention does not limit the use of the additional benefit
to a rider or an amendment to an insurance or annuity contract. The
additional death benefit may also be an integrated part of an
original annuity or insurance contract, that is a stand alone
policy that is simply associated with an annuity or insurance
contract, or any similar arrangement.
[0026] At step 20, it is determined whether the beneficiary rider
has been selected. This is done by reading the record entry in a
database, variable in a separate file, check box in a display, or
other method that allows the computer or other data processing
equipment to determine whether the beneficiary rider is selected.
It is presently preferred that the data related to the beneficiary
rider is a binary choice of selection or non-selection of the
beneficiary rider, such that step 20 is either a "yes" or "no"
result. However, the present invention can be utilized so that step
20 determines which of a number of additional benefit levels is
selected, each corresponding to a different income tax level. In
this way the owner of the annuity can tailor the annuity for the
perceived needs of the beneficiaries of any death benefit, e.g.
their projected future tax bracket. In addition, the additional
death benefit may also include payments for funeral expenses, state
tax payments or the like. These can be taken into account by
adjusting the benefit level to be in line with estimated future
costs of each item.
[0027] At step 30, after having determined that no beneficiary
rider has been selected, the system calculates the value of the
death benefit and any costs associated with the annuity contract in
the standard method for which it has been established. If a
beneficiary rider has been selected then at step 40, the computer,
processor or the like calculates the value of the Additional Death
Benefit that is added because of the beneficiary rider. Next, at
step 50, the Additional Death Benefit at step 40 is added to the
Annuity Death Benefit as normally calculated by the system. Then,
at step 60, a New Total Death Benefit is generated which is equal
to the value added at step 50.
[0028] In a substantially parallel determination, at step 70, the
costs to be charged for the Additional Death Benefit of the
beneficiary rider is determined. Next, at step 80, the costs to be
charged for the Additional Death Benefit of the beneficiary rider
is added to the annuity cost. Then, at step 90, a new total cost is
generated which is equal to the value at step 80. It should be
noted that steps 70, 80 and 90 are presently preferred to occur; if
the annuity contract does not require the computation of an
additional cost, these steps do not have to be performed.
[0029] It should be noted that although steps 40, 50, 60, 70, 80
and 90 are depicted as occurring at substantially the same time
their timing need not be the same and can occur seconds, minutes,
hours or even days apart.
[0030] The above described process can be embodied as a computer
program that instructs a computer to perform the desired
determinations and calculations.
[0031] Referring to FIG. 2, an apparatus for performing the methods
of the present invention is depicted. An annuity contract database
100 contains the information regarding any number of annuity
contracts. A processor 110 performs the calculations and
determinations that are required with respect to the beneficiary
rider. Processor 110 also reads and writes from the annuity
contract database 100 in order to keep it updated and to write
values. The system memory 120 contains the instructions for
operating the processor. Although, the annuity database 100,
processor 110 and system memory 120 are depicted as separate
entities they can be part of a single computer, such as a personal
computer, work station, mainframe or other computing device.
Further, although system memory 120 is depicted as a disk array the
instructions may reside in a tape drive, hard drive, zip drive or
any other storage device that can be accessed by an appropriate
processor 110. In FIG. 2, steps 10, 20, 30, 40, 50, 60, 70. 80, and
90 of FIG. 1 can be embodied as instructions of a computer program
that instructs the processor to perform the desired operations.
[0032] Referring to FIG. 3, the Annuity Death Benefit to be paid is
determined at step 150. The Annuity Death Benefit is the monthly
value of the death benefit to be paid by the annuity contract as of
the current date that this operation is being performed, without
inclusion of the Additional Death Benefit. It should be noted that
although the preferred calculation is based upon the monthly value
of the annuity death benefit, this value can change on a daily
basis depending upon the interest credited and or deductions
processed from the annuity cash value. The calculation can also be
made upon the yearly value of the annuity death benefit, and then
can either be divided by twelve, for the twelve months, or can be
manipulated in any desired fashion. Next, at step 160, the Total
Premiums paid are determined. The Total Premiums paid equal the
dollar amount paid into the annuity contract by the owner of the
annuity. Then, at step 170, the Total Withdrawals from the annuity
are determined. Total Withdrawals are the sum of all partial
withdrawals, including any previously assessed surrender charges
and any applicable Total Return Adjustment that each result in the
Annuity Cash Value being less than the Certificate's Basis
immediately after each withdrawal. If the beneficiary rider is
elected prior to the Certificate's Effective Date, "Certificate's
Basis" is defined as the sum of the Net Premiums paid, adjusted for
the sum of all withdrawals (including any previously assessed
surrender charges and any applicable Total Return Adjustment) that
are in excess of the Certificate's gain. The Total Withdrawals also
include payments to the owner of the annuity, any surrender
charges, any total return adjustments,--or any administrative
charges or investment expense or other fees that have been deducted
from the annuity account either for its own maintenance or
maintenance of the crediting rate method. The Total Withdrawals
from the annuity are then subtracted from the total premium(s) paid
into the annuity at step 180. It should be noted that in a
preferred embodiment that the annuity utilized will not allow the
Total Withdrawals to be greater than the Total Premiums paid into
the annuity account and the value obtained at step 180 will not be
less than zero. Following this, at step 200, it is determined
whether value obtained at step 190 is greater than zero. Further,
at step 210, if the value obtained at step 190 is greater than zero
then an Additional Death Benefit is set to be the value obtained at
step 190 multiplied by an appropriate percentage. If the value
obtained at step 190 is less than or equal to zero then the
Additional Death Benefit is set to zero. The currently preferred
appropriate percentage can be a function of a perceived tax rate,
and is presently preferred to be set at 28%. The result of step 210
is returned as the result of step 40 in FIG. 1.
[0033] Referring to FIG. 4, at step 220 the Maximum Cost of the
beneficiary rider is determined. This is the maximum cost that will
be charged for the beneficiary rider. The Maximum Monthly cost is
presently preferred to be included as the part of the annuity
contract, but is not necessary and the present invention can
operate without a determination of a Maximum Monthly Cost. At step
230, a Monthly Charge Value is determined. The Monthly Charge Value
is presently preferred to be a percentage value multiplied by the
cash value of the annuity contract. Once the Monthly Charge Value
and the Maximum Monthly Cost are both determined, the lesser of the
two is determined at step 240. At step 250, if the Monthly Charge
Value is less than the Maximum Monthly Cost the Current Cost is set
to the Monthly Charge Value and if the Maximum Monthly Cost is less
than the Monthly Charge Value then the Current Cost is set to the
Maximum Monthly Cost. In this way, a limit to the cost charged for
the beneficiary rider is maintained. The result of step 250 is then
returned as the result of step 70 in FIG. 1.
[0034] The Maximum Monthly Cost is based upon a mortality rate
value multiplied by the proceeds that are currently available under
the beneficiary rider. The mortality rate value is presently
preferred to be the 1980 Commissioner's Standard Ordinary (CSO)
Male/Female Aggregate Age Last Birthday (ALB) Ultimate Rates. The
age used to determine which 1980 CSO Male/Female Aggregate ALB
Ultimate Rate to apply is the greater of the younger of A or B
where: A is the age of the younger owner on the rider's effective
date; and B is the age of the younger Annuitant on the rider's
effective date.
1 Issue Age Twelve Times the Current Percentage Charge 45 and below
0.09% 55 0.20% 65 0.45% 75 1.03% 85 and above 1.51%
[0035] The issue ages above refer to the age of the owner of the
policy. For issue ages not shown in the above table, a linear
interpolation to four decimal places by utilizing the closest two
issue ages.
[0036] Referring to FIG. 5, the Strategy Cash Value at the
Beginning of the Day is determined at Step 300. The Strategy Cash
Value, which is the value of the annuity, is determined iteratively
on a daily basis. It is increased by Premiums and interest credited
and decreased by Withdrawals and Transfers (including Loans). Each
of these activities is shown in steps 310, 320 and 330. At step 310
the cost of the beneficiary rider is determined and subtracted from
the Strategy Cash Value. At step 320 the Daily Premiums paid in are
added to the Strategy Cash Value. Further at step 330 any
withdrawals or transfers made that day are subtracted from the
strategy cash value. It should be noted that steps 310, 320 and 330
can be made in any order and not necessarily in the order depicted
in FIG. 5. During step 340 the Strategy Cash Value at the End of
the Day is determined after the calculations taken at steps 310,
320, and 330. Then at step 350 the Annuity Cash Value at the End of
the Day of the contract is determined by summing the Strategy Cash
Values at the End of the Day, after applying any applicable Total
Return Adjustment. The Death Benefit at the End of the Day for the
annuity contract is then determined in Step 360. This process
repeats itself each day with the result of Step 340 equaling the
value in Step 300 on the subsequent day.
[0037] While the invention has been disclosed in its preferred
forms, many modifications, additions, and deletions can be made
therein without departing from the spirit and scope of the
invention and its equivalents as set forth in the following
claims.
* * * * *