System and method for providing a market-backed annuity with variable segment terms and automatic rollover

Abstract

The present invention provides a method and system for providing a market-backed annuity allowing for client-selected segment terms and automatic rollover. The method and system includes techniques for allowing an investor to specify a segment maturity date, specify a percentage of upside and downside protection, specify an underlying market index, and choose an amount of investment capital. By providing flexibility, the current invention increases the security and performance of market-backed annuity products.

We claim: 
     
         1 . A computerized method utilizing a processing device for providing an index-backed annuity, the method comprising:
 receiving an investor request for an index-backed annuity and a plurality of funds to be invested in the index-backed annuity;   receiving a selection of at least one investment segment associated with an underlying index, for each investment segment receiving a selection of a segment term, a performance cap rate, and a segment buffer rate;   electronically transferring, via a processing device, an initial segment investment from the plurality of funds to a segment account on a segment start date;   receiving a request to calculate a segment interim value of the segment account prior to maturity of the segment term for the segment account; and   electronically calculating, via the processing device, the segment interim value based at least on performance of the underlying index according to market volatility, interest rates, and pro-rata time to the maturity of the segment term, wherein investment gains of the initial segment investment in the segment interim value are limited to a prorated value based on the performance cap rate and investment losses of the initial segment investment are returned in the segment interim value up to a portion of the segment buffer rate.   
     
     
         2 . The method of  claim 1 , the investor request further comprises a selection of an index to back the index-backed annuity. 
     
     
         3 . The method of  claim 1 , wherein the performance cap rate is a maximum guaranteed investment return. 
     
     
         4 . The method of  claim 1 , wherein the segment buffer rate is a minimum guaranteed investment return. 
     
     
         5 . The method of  claim 1 , wherein receiving a request to calculate a segment interim value of the segment account prior to maturity of the segment term for the segment account includes receiving a request for at least one of a withdrawal and a surrender of the segment account. 
     
     
         6 . The method of  claim 1 , wherein the segment term is one of 1, 3, and 5 years. 
     
     
         7 . The method of  claim 1 , the method further comprises selecting an opt-out threshold. 
     
     
         8 . The method of  claim 1 , wherein the at least one investment segment is associated with a given indexed fund. 
     
     
         9 . The method of  claim 1 , the method further comprises purchasing one or more financial instruments using at least a portion of the plurality of funds transferred to the segment account. 
     
     
         10 . The method of  claim 1 , the method further comprises calculating a maturity value of the at least one investment segment upon determining that the segment term has matured. 
     
     
         11 . The method of  claim 10 , wherein the maturity value corresponds to the performance of the underlying index. 
     
     
         12 . The method of  claim 11 , the method further comprises adjusting the maturity value based on the performance cap rate and the segment buffer rate. 
     
     
         13 . The method of  claim 1  wherein the market volatility includes a current value of derivatives associated with the segment account. 
     
     
         14 . The method of  claim 13  wherein the current value of derivatives includes current market values of one or more underlying put and call options. 
     
     
         15 . The method of  claim 1  wherein the interest rates includes a current value of financial instructions associated with the segment account. 
     
     
         16 . The method of  claim 15  wherein the value of financial instruments includes current market values of one or more underlying fixed instruments. 
     
     
         17 . A system for providing an index-backed annuity, the system comprising:
 a processor; and   a memory having executable instructions stored thereon that when executed by the processor cause the processor to:
 receive an investor request for an index-backed annuity and a plurality of funds to be invested in the index-backed annuity; 
 receive a selection of at least one investment segment associated with an underlying index, for each investment segment receiving a selection of a segment term, a performance cap rate, and a segment buffer rate; 
 transfer an initial segment investment from the plurality of funds to a segment account on a segment start date; 
 receive a request to calculate a segment interim value of the segment account prior to maturity of the segment term for the segment account; and 
 calculate the segment interim value based at least on performance of the underlying index according to market volatility, interest rates, and pro-rata time to the maturity of the segment term, wherein investment gains of the initial segment investment in the segment interim value are limited to a prorated value based on the performance cap rate and investment losses of the initial segment investment are returned in the segment interim value up to a portion of the segment buffer rate. 
   
     
     
         18 . Non-transitory computer readable media comprising program code that when executed by a programmable processor causes execution of a method for providing an index-backed annuity, the computer readable media comprising:
 computer program code for receiving an investor request for an index-backed annuity and a plurality of funds to be invested in the index-backed annuity;   computer program code for receiving a selection of at least one investment segment associated with an underlying index, for each investment segment receiving a selection of a segment term, a performance cap rate, and a segment buffer rate;   computer program code for transferring an initial segment investment from the plurality of funds to a segment account on a segment start date;   computer program code for receiving a request to calculate a segment interim value of the segment account prior to maturity of the segment term for the segment account; and   computer program code for calculating the segment interim value based at least on performance of the underlying index according to market volatility, interest rates, and pro-rata time to the maturity of the segment term, wherein investment gains of the initial segment investment in the segment interim value are limited to a prorated value based on the performance cap rate and investment losses of the initial segment investment are returned in the segment interim value up to a portion of the segment buffer rate.