US 2008/0168007 A1 · Systems and Methods for Implementing An Index-Linked Insurance Product

Abstract

An index-linked insurance product having an annual guarantee is implemented having a maximized hedged investment budget. A net premium payment is allocated to a fixed income investment and an annual fixed income yield is projected. The maximized hedged investment budget is determined by deducting from the projected annual fixed income a product spread and an estimated cost of the annual guarantee. The estimated cost of the annual guarantee is allocated to a risk fund. The maximized hedged investment budget is allocated to a hedged investment designed to generate proceeds for supporting index-linked earnings credited to the insurance product. Upon expiration of the product term, if the amount credited based on the index-linked earnings does not equal to at least the compounded annual guarantee, the amount credited is increased to be equal to the compounded annual guarantee. The increased credit may be supported using funds from the risk fund and other reserves.

Claims20

Dependent claims

A method for implementing an index-linked insurance product comprising:

investing a net premium payment in a fixed income investment;
determining an investment budget from projected fixed income yield of the fixed income investment;
determining a crediting budget by subtracting from the investment budget a product spread;
based on a historical analysis, determining a historical average cost of the annual guarantee;
determining a hedged investment budget by subtracting from the crediting budget the historical average cost of the annual guarantee;
creating a segment of the index-linked insurance product having a term, an annual guarantee, an annual minimum growth rate, an annual capped growth rate, and an initial index-linked value equal to the hedged investment budget;
investing the hedged investment budget in a hedged investment;
determining an initial index value;
and
at the end of each one year period for the duration of the term:
determining the performance rate of the index,
liquidating any profits earned by the hedged investment,
determining a current index-linked value of the segment by crediting to the initial index-linked value the greater of the annual minimum growth rate or the performance rate of the index limited by the annual capped growth rate, and
resetting the initial index-linked value of the segment to be equal to the current index-linked value.

11 more elements

Dependencies are inferred from the claim text.

Systems and Methods for Implementing An Index-Linked Insurance Product

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Systems and Methods for Implementing An Index-Linked Insurance Product

Life of this patent

Abstract

Claims20