Patent Issued for System and method for providing a financial instrument with an asset transfer feature (USPTO 11295387): The Prudential Insurance Company of America
2022 APR 21 (NewsRx) -- By a
The patent’s inventors are Berardis, Jr., Nicholas (
This patent was filed on
From the background information supplied by the inventors, news correspondents obtained the following quote: “There are numerous financial instruments available on the market and people invest in them for a variety of reasons. Some investors are interested in obtaining high rates of return on their investments, while others are willing to forego high rates of return in exchange for a reduced level of financial risk. Some investors are interested in obtaining a steady income stream for a period of years or possibly for life. When making decisions regarding the selection of a financial instrument, there are multiple tradeoffs. Typically, the lower the risk is, the lower the expected rate of return will be. There are also numerous tax consequences that may be considered in selecting a financial instrument.
“An annuity is one form of financial instrument. A typical annuity is used to pay a certain sum of money at specified intervals, with the payment amount being based on a given amount of principal. There are many different types of annuities. For example, annuities can be immediate or deferred, fixed or variable, and single payment or multiple payment.
“In a typical immediate annuity, a lump sum of money is exchanged for a stream of payments to begin immediately. In a typical deferred annuity, an investment is made with the anticipation that it will grow and a stream of payments based upon the value of the account at a future time will begin at some point in the future. A fixed annuity is one in which the rate of return is specified at the time the annuity is purchased. A variable annuity typically allows the purchaser to select from a group of potential investments and the rate of return depends upon the performance of the selected investments.
“In some cases, annuities are offered for sale with a variety of electable options. Upon election, these options may provide additional guaranteed benefits such as death benefits, living benefits, cash surrender benefits, or joint and survivor income payment options.”
Supplementing the background information on this patent, NewsRx reporters also obtained the inventors’ summary information for this patent: “According to one embodiment of the invention, a financial instrument includes an account, a first guarantee, a second guarantee, and an agreement. The account has an account balance that changes over time, wherein at least part of the account balance may be discretionarily withdrawn, wherein the initial account balance is based upon an initial deposit amount, and wherein the initial account balance is invested in one or more investments selected by the account holder. The first guarantee is a guarantee of a protected value, the protected value including at least an amount based upon the initial account balance growing at a minimum positive growth rate for at least a defined period of time or until one or more defined events occur, whichever is sooner. The second guarantee is a guarantee that a beneficiary may receive a transfer of an amount of money, wherein the amount comprises a percentage of the protected value at the time of a particular event, wherein the percentage of the protected value is fixed upon an effective date of the second guarantee, and wherein the transfer may be due to withdrawal from the account or due to one or more benefit payments made to the beneficiary, the transfer amount being limited by a particular limit. The agreement is an agreement to allow at least a portion of the account balance to be transferred from the one or more selected investments to one or more alternative investments in response to a triggering event.
“Certain embodiments of the present invention may provide various technical advantages. For example, certain embodiments may allow an account holder to maintain liquidity in an account while at the same time receiving a guarantee of lifetime income and a guaranteed growth rate. Certain embodiments may also allow an account holder to receive the potentially higher rates of return associated with variable annuities while at the same time avoiding the associated risk of loss by obtaining a guaranteed growth rate. Certain embodiments may also allow an account holder to retain control over certain investment decisions while at the same time mitigating the risk to the issuer associated with one or more guarantees. Certain embodiments may provide improved alternatives for balancing the security associated with guaranteed or fixed return investments with the potential financial benefits associated with variable return investments.
“Other technical advantages of the present invention will be readily apparent to one skilled in the art from the following figures, descriptions, and claims. Moreover, while specific advantages have been enumerated above, various embodiments may include all, some, or none of the enumerated advantages.”
The claims supplied by the inventors are:
“1. A non-transitory computer-readable medium comprising software stored thereon, the software operable, when executed by one or more processors, to: receive, from a guarantee recipient, order data indicative of a request for a financial instrument and a payment corresponding to the financial instrument; process the payment by implementing one or more security provisions, the one or more security provisions including at least one of: a digital signature; a digital certificate; a password; or an encryption scheme; upon processing the payment for the financial instrument, generate an account comprising a plurality of assets allocated to one or more investments selected by the guarantee recipient, the account corresponding to the financial instrument; storing information corresponding to the account in a memory device; update a balance of the account based on market performance of the one or more investments selected by the guarantee recipient, wherein the account is subject to a first guarantee of a protected value, a second guarantee entitling a beneficiary to receive a transfer of an amount of money, and an agreement to allow at least a portion of the account balance to be transferred in response to a triggering event; and using a minimum positive growth rate stored in one or more memory devices, calculate a protected value such that the calculated protected value is at least equal to an initial deposit into the account growing at the stored minimum positive growth rate, wherein: the minimum positive growth rate is a fixed rate between four percent and six percent; the minimum positive growth rate is based on a consumer price index; and the calculated protected value represents a guaranteed positive rate of return regardless of market performance of the one or more investments; detect an event trigger corresponding to one or more events selected from the group consisting of: a decrease in the balance of the account below a specified threshold; a decrease in the balance of the account at a rate greater than a specified threshold rate; a change in one or more credit ratings of one or more entities associated with one or more variable investments; and a change in a calculated risk associated with the account; in response to the detected event trigger, transfer at least a portion of the plurality of assets of the account from at least one of the one or more investments selected by the guarantee recipient to at least one alternative investment selected by a guarantor of the first and second guarantees, such that after the transfer the account comprises the portion of the plurality of assets transferred to the at least one alternative investment, the at least one alternative investment is negatively correlated with the at least one of the one or more investments selected by the guarantee recipient; calculate on a daily basis a periodic value as the greater of the account balance and the periodic value from a preceding period increased according to the minimum positive growth rate, wherein the calculated protected value is at least equal to a maximum of the calculated periodic values; and in response to determining that the balance of the account cannot be withdrawn, delete, from the memory device, the information regarding the account.
“2. The non-transitory computer-readable medium of claim 1, wherein the amount of money comprises a percentage of the protected value at the time of a particular event, wherein the percentage of the protected value comprises all or a portion of the protected value and is fixed upon an effective date of the second guarantee, and wherein the transfer is either due to withdrawal from the account or due to one or more benefit payments made to the beneficiary, the transfer amount being limited by a particular limit.
“3. The non-transitory computer-readable medium of claim 1, wherein the calculated protected value is at least equal to the initial deposit into the account growing at the stored minimum positive growth rate for at least a defined period of time or until one or more defined events occur, whichever is sooner.
“4. The non-transitory computer-readable medium of claim 1, wherein the transfer comprises either a one-time withdrawal or a one-time benefit payment.
“5. The non-transitory computer-readable medium of claim 1, wherein the transfer comprises a periodic benefit payment for a term of years.
“6. The non-transitory computer-readable medium of claim 1, wherein: the beneficiary comprises the guarantee recipient; and the guarantee recipient comprises an account holder of the account.
“7. The non-transitory computer-readable medium of claim 1, wherein the at least one alternative investment has a lower risk than the at least one of the one or more investments selected by the guarantee recipient.
“8. The non-transitory computer-readable medium of claim 1, wherein the software is further operable, when executed by one or more processors, to process the transfer of the amount of money to the beneficiary entitled by the second guarantee.
“9. A non-transitory computer-readable medium comprising software stored thereon, the software operable, when executed by one or more processors, to: receive, from a customer, order data indicative of a request for a financial instrument and a payment corresponding to the financial instrument; process the payment by implementing one or more security provisions, the one or more security provisions including at least one of: a digital signature; a digital certificate; a password; or an encryption scheme; upon processing the payment for the financial instrument, generate an account corresponding to the financial instrument, the account comprising a plurality of assets allocated to one or more investments selected by the customer; storing information corresponding to the account in a memory device; update a balance of the account based on market performance of the one or more investments selected by the customer, wherein the account is subject to a first guarantee of a protected value, a second guarantee entitling a beneficiary to receive a transfer of an amount of money, and an agreement to allow at least a portion of the account balance to be transferred in response to a triggering event; and using a minimum positive growth rate stored in one or more memory devices, calculate a protected value such that the calculated protected value is at least equal to an initial deposit into the account growing at the stored minimum positive growth rate, wherein: the minimum positive growth rate is a fixed rate between four percent and six percent; the minimum positive growth rate is based on a consumer price index; and the calculated protected value represents a guaranteed positive rate of return regardless of market performance of the one or more investments; detect an event trigger corresponding to a decrease in the balance of the account below a specified threshold; in response to the detected event trigger and while the balance of the account is below the specified threshold, transfer at least a portion of the plurality of assets of the account from at least one of the one or more investments selected by the customer to at least one alternative investment selected by a guarantor of the first and second guarantees, such that after the transfer the account comprises the portion of the plurality of assets transferred to the at least one alternative investment, the at least one alternative investment is negatively correlated with the at least one of the one or more investments selected by the customer; calculating on a daily basis a periodic value as the greater of the account balance and the periodic value from a preceding period increased according to the minimum positive growth rate, wherein the calculated protected value is at least equal to a maximum of the calculated periodic values; and in response to determining that the balance of the account cannot be withdrawn, deleting, from the memory device, the information regarding the account.
“10. The non-transitory computer-readable medium of claim 9, wherein the software is further operable, when executed by one or more processors, to: update the balance of the account, the update based on market performance of the at least one alternative investment selected by the guarantor of the first and second guarantees.
“11. The non-transitory computer-readable medium of claim 9, wherein the portion of the plurality of assets of the account are transferred from at least one of the one or more investments selected by the customer to at least one alternative investment selected by a guarantor of the first and second guarantees while the balance of the account is below the specified threshold.”
There are additional claims. Please visit full patent to read further.
For the URL and additional information on this patent, see: Berardis, Jr., Nicholas. System and method for providing a financial instrument with an asset transfer feature.
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