Abstract:
A method of providing a financial product includes providing a computer processor, determining, using the computer processor, a fluctuating interest rate using a sum of a securities-based interest rate and an additional interest rate, and generating, using the computer processor, a periodic payment product using the fluctuating interest rate, wherein the periodic payment product is characterized by a payment schedule. The method also includes generating, using the computer processor, a plurality of fluctuating periodic payments using the fluctuating interest rate and obtaining an indication to fix the fluctuating interest rate at a fixed interest rate. The method further includes thereafter, determining, using the computer processor, the fixed interest rate and generating a fixed periodic payment using the fixed interest rate.

Description:
CROSS-REFERENCES TO RELATED APPLICATIONS 
     This application is a continuation of U.S. patent application Ser. No. 12/838,257, filed on Jul. 16, 2010, which is a continuation of U.S. patent application Ser. No. 11/735,203, filed on Apr. 13, 2007, now issued as U.S. Pat. No. 7,783,550, which claims the benefit of U.S. Provisional Patent Application No. 60/919,775, filed Mar. 22, 2007. The contents of each of the above-referenced U.S. patent applications are hereby incorporated by reference in their entirety. 
    
    
     BACKGROUND OF THE INVENTION 
     The application relates generally to financial products known as annuities. An annuity is an insurance policy including a guarantee that the issuer will make a series of payments. This policy is usually given in exchange for a sum of money that the issuer may invest in short or long term investments. There are two types of annuities, immediate annuities and deferred annuities. An immediate annuity is an annuity where the annuitant receives payments immediately and a deferred annuity is one where the annuitant receives a lump sum at the end of a time period. The advantage of the deferred annuity is that generally the account is not taxed until the lump sum is paid. Generally immediate annuities are structured so that the payment varies with the performance of a specific set of investments, or an index. Typically, in prior art immediate annuities the interest rate used to calculate the varying payments is set at the time the annuity is purchased. Since the interest rate is fixed at the time of purchase, individuals who are thinking of purchasing an annuity will generally try to avoid buying one when interest rates are low because they will then be stuck with a low interest rate for the life of the annuity. 
     SUMMARY OF THE INVENTION 
     A single premium immediate annuity allows the annuitant to receive an adjustable payment based on a fluctuating interest rate until the annuitant exercises an option to fix the rate (e.g., when the interest rate is high, when the annuitant desires a set known payment, etc.). The annuity described more fully herein gives annuitants more options and more reasons to enter into annuity contracts even with the market may be considered to be currently unfavorable. 
     A fluctuating annuity payment is determined and generated, and that annuity payment is subsequently fixable. The fluctuating annuity payment may be based on an interest rate, such as the market yield of a 1-year U.S. Treasury adjusted to constant maturity, for example. The fluctuating annuity payment may be determined on a certain date, or periodically, for example. The annuity payment, while fluctuating, may have a predetermined floor or minimum threshold amount that is does not pay less than. At some point, a request may be received to fix the payment, and the fluctuating annuity payment is converted to a fixed annuity payment. The fixed annuity payment may be based on a long term interest rate, for example. After receiving a request to fix the annuity payment, a payment schedule may be determined based on the value of the remaining payments that are to be made. 
     The foregoing is a summary and thus contains, by necessity, simplifications, generalizations and omissions of detail. Those skilled in the art will appreciate that the summary is illustrative only and is not intended to be in any way limiting. 
    
    
     
       BRIEF DESCRIPTION OF THE DRAWINGS 
         FIG. 1  is a diagram of an example system in which example techniques for providing adjustable annuities may be implemented. 
         FIG. 2  illustrates an operational flow representing example operations related to providing adjustable annuities including additional optional operations. 
         FIG. 3  illustrates an operational flow representing example operations related to fixing a fluctuating annuity payment including additional optional operations. 
         FIG. 4  illustrates additional alternative embodiments of the example operational flow of  FIG. 3 . 
         FIG. 5  illustrates additional alternative embodiments of the example operational flow of  FIG. 3 . 
         FIG. 6  illustrates additional alternative embodiments of the example operational flow of  FIG. 3 . 
         FIG. 7  illustrates an operational flow representing example operations related to fixing a fluctuating annuity payment including an additional optional operation. 
         FIG. 8  illustrates additional alternative embodiments of the example operational flow of  FIG. 7 . 
         FIG. 9  illustrates additional alternative embodiments of the example operational flow of  FIG. 7 . 
     
    
    
     DETAILED DESCRIPTION OF THE INVENTION 
       FIG. 1  is a block diagram of an example system in which aspects of the invention may be embodied. The following paragraphs describe the elements in  FIG. 1  briefly, and the elements depicted in  FIG. 1  will be described in more detail within the context of the operational procedures described below. Those skilled in the art will note that some elements depicted in the block diagram are indicated in dashed lines which in general and throughout the disclosure, is indicative of the fact that they are considered optional. 
     One or more users  101  through  101 -N (where N is an integer greater than 1) utilizing associated computing devices  116 , referred to herein as clients, are desirably in communication with an annuity provider  150  via a network, such as the internet. The annuity provider  150  may include in some embodiments an application server  140 , e.g., a server computer operating in a computer network dedicated to running one or more software application programs including a website  115 . The application server  140  that is optionally located at the annuity provider&#39;s location  150  may be electronically connected to a database management module  102 , e.g., one or more software programs that operates and maintains databases  112 . The database management module  102  can be part of the annuity provider&#39;s database  104  that includes a list of users  101 - 101 -N and their associated annuities  106  and database of information  112 . 
     The annuity provider  150  may optionally have at its location one or more annuity agents  101 -A and their associated terminals  110 . The terminals may include an application program  108  that allows the agent  101 -A to access the database  112  and manipulate the data stored in the database  112 . Also shown in  FIG. 1  is remote host  114  which includes a database  112 . The database  112  may include interest rates currently available or, in some embodiments the database may include an index which is a statistical measure of change in an economy or a securities market. 
     One skilled in the art will recognize that the operational steps illustrated in  FIGS. 2-9  are examples and other embodiments exist. Those skilled in the art will note that some operations in  FIGS. 2-9  are indicated by dashed lines, which, in general, indicates that they are to be considered optional. More specifically, different implementations will typically employ one or more herein-described operations dependent upon context, and the selection of the appropriate operation(s) appropriate to the various context(s) is within the skill of one in the art in light of the teachings herein. 
       FIG. 2  illustrates example operations related to providing an income stream including operations  200 - 202 . Operation  200  begins an example operational process, typically at an annuity provider pursuant to making an annuity payment to the beneficiary of the annuity. Operation  202  illustrates generating a fluctuating annuity payment, wherein said annuity payment amount is subsequently fixable. For example, a database management module  102  of annuity database  104  generates a fluctuating annuity payment for a specific annuity  106  belonging to a specific user  101 . The database management module  102  may include database management software, e.g., software designed for the purpose of managing a database  104  such as one or more software programs included in a software package that controls the organization, storage, and retrieval of data in one or more databases. The database management software may additionally include one or more programs operable to perform various operations on the data stored in the database  104  including software to calculate a fluctuating annuity payment by receiving variables such as the annuitant&#39;s age and gender, the mortality factors, the value of the adjustment base on a measurement date. Desirably, computer software designed to manage a database of annuities calculates a payment to be transmitted to a user  101 . 
     In other example embodiments the operational flow  200  may include, for example, operation  204  that depicts determining the fluctuating annuity payment based on an interest rate. For example, database management module  102  determines a fluctuating annuity payment wherein the annuity payment is based on a changing interest rate. The database management module  102  may retrieve an interest rate from a database  112  (the database  112  may optionally be a hosted by a remote host  114  and may be connected to the annuity database  104  via a network connection such as the internet, or the annuity provider  150  may optionally include an database  112 ). The database  112  may include one or more interest rates of one or more securities at the time of calculation. As one skilled in the art will note, the interest rate utilized in operation  206  may be, for example, based on a combination of factors including but not limited to a combination of investments the provider  150  can purchase at the time, the provider&#39;s competitive strategy, the provider&#39;s expenses and capital structure. The database management module  102  may utilize a current interest rate retrieved from the database  112  in determining a fluctuating annuity payment for a specific annuity stored in a database of annuities  106 . 
     Additionally or alternately, the operational flow  200  may include operation  206  depicting determining the fluctuating annuity payment based on the market yield of a government security adjusted to constant maturity. For example, database management module  102  determines a fluctuating annuity payment wherein the annuity payment is based, for example on the initial interest rate and the change in the market yield of a 1-year U.S. Treasury adjusted to constant maturity. The database management module  102  may retrieve information from the Federal Reserve Bulletin Release H.15, for example, from the website www.federalreserve.gov and utilize the information in determining a fluctuating annuity payment. For example, computer software designed to manage a database of annuities retrieves market yield information from the internet and uses the information to calculate a fluctuating annuity payment. 
     Additionally or alternately, the operational flow  200  may include operation  208  which illustrates a generating fluctuating annuity payment that does not go below a predetermined minimum payment. In embodiments that include this operation a database management module  102  may check to see if the determined annuity payment is greater than an agreed upon minimum payment. For example, computer software may include a procedure for comparing the calculated fluctuating annuity payment to a minimum payment defined in a contract and determine what payment is greater. The greater payment is then provided to the user  101  or a user&#39;s beneficiary. In this manner, the user  101  or beneficiary is guaranteed to at least receive a minimum payment regardless of the factors that may be used in determining the fluctuating annuity payment. 
     Additionally or alternately, the operational flow  200  may include operation  210  which determines the fluctuating annuity payment on predetermined date. For example, database management module  102  may retrieve information from an insurance contract to determine a date, e.g., once a month or once a year, that the associated computer software is to calculate a fluctuating annuity payment. 
     As depicted by example operation  414  of  FIG. 2 , a request may be received, e.g., from the annuity purchaser or beneficiary, to fix the payment. In this manner, the fluctuating payment is fixed and no longer fluctuates. The fixed payment amount is determined by the provider  150 . For example, database management module  102  of annuity database  104  receives a request to fix a fluctuating annuity payment from a user  101  or an annuity provider&#39;s terminal  110  and generates a fixed annuity payment. 
     The database management module  102  may receive requests from one or more clients  116 . The clients may transmit a request to fix a payment over a network connection to a website  115  maintained by an application server  140 . The website  115  may be operable to receive requests to fix annuity payments by transmitting code such as html code to client  116  that is operable to generate one or more web pages including an option to fix an annuity payment. 
     The database management module  102  may receive requests from an annuity provider&#39;s terminal  110 . The annuity provider&#39;s terminal  110  may include an application program  108  that is operable to query the database management module  102  and submit requests to fix annuity payments. One skilled in the art will note that the invention is not limited to these disclosed embodiments and additional embodiments exist. 
     As depicted by operation  516  of  FIG. 2 , once the database management module  102  of annuity database  104  has received a request to fix an annuity payment, the database management module  102  may create a payment for the user  101  based on one or more factors such as the interest rates at the time the annuity payment is being fixed. In embodiments that include optional operation  516  the fixed annuity payment amount may be based on a long term interest rate, such as the long term interest rate of a long term fixed income security or the interest rate on a note or bond that matures in at least 10 years. 
       FIG. 3  illustrates example operations related to fixing a fluctuating annuity payment including operations  600 - 606 . Operation  600  begins an example operational process to fix a previously established fluctuating annuity payment. A request to fix the fluctuating annuity payment is received at, for example, a database management module  102 . The database management software  102  may have received the request from, for example, a user  101 , an agent  101 -A or any other user that has the ability to fix a periodic fluctuating annuity payment. The database may include a relational database, an object oriented database, or any electronic collection of records. For example, a database management system, e.g., computer software designed for the purpose of managing a database, receives a request to fix a fluctuating annuity payment from an insurance agent&#39;s terminal. 
     As depicted by operation  604  of  FIG. 3 , the value of one or more remaining adjusted payments is determined using an interest rate. In embodiments that include operation  604 , the interest rate may be equal to the rate utilized to calculate the most recent fluctuating payment. This rate may be retrieved and used, along with discounting the sum of the remaining payments utilizing the retrieved interest rate in order to determine the value of the remaining payments. 
     As depicted by  FIG. 3 , the operational procedure  600  may additionally include operation  606 . In embodiments that include operation  606  the fixed annuity payment amount is then generated from value determined at by operation  604 . For example, database management module  102  of annuity database  104  may create a fixed annuity payment from the sum of the remaining adjusted payments discounted to present value and the current interest rate appropriate for a fixed annuity. 
       FIG. 3  additionally depicts the example operational flow  600  including additional optional operations  708 ,  810 , and  812 . In example embodiments that include operation  708  the fluctuating annuity payment may be based on the market yield of a 1-year U.S. Treasury adjusted to constant maturity. In such a case, the payment fluctuates due to changes in the market yield of a 1-year U.S. Treasury adjusted to constant maturity. 
     As depicted by operations  810  and  812  of  FIG. 3 , the fixed annuity payment may be at least a predetermined minimum payment amount or based on a fixed interest rate  812 . If the fixed annuity payment is determined to be less than a predetermined minimum amount, then the fixed annuity payment is set equal to the predetermined minimum amount, and the payment amount that had been calculated based on the factors used (e.g., interest rates) is not used. The predetermined minimum amount may be have been determined when the annuity was first issued or may have been determined subsequent to the issuance of the annuity. 
     If the fixed annuity payment is to be based on a fixed interest rate, then for example, the interest rate used may be that used for a single premium annuity, at  914  of  FIG. 4 . For example, database management module  102  of annuity database  104  may create a fixed annuity payment from the sum of the remaining adjusted payments and an interest rate used for a single premium immediate annuity. 
     In some example embodiments of the operational procedure  600  the procedure may include operation  1016  as depicted by the operational procedure  600  of  FIG. 5 . In embodiments that include operation  1016 , the fluctuating annuity payment amount may be adjusted on a predetermined date, e.g., a certain date of each month or each year similar to operation  212  described above. 
     According to another embodiment, the operational procedure  600  may include operation  1118  as depicted by  FIG. 6 . In embodiments that include operation  1118 , the present value of the remaining adjusted payments may be placed into a long term investment. For example, database management module  102  may retrieve an amount of money equal to the present value of the sum of the remaining adjusted payments discounted to present value from a bank account controlled by the annuity provider  150 . This amount may be taken by the provider  150  and invested in a long term investment such as one or more fixed income securities. In this manner, the annuity provider  150  can strategically invest in long term investments knowing that the annuitant will receive a fixed income as opposed to a fluctuating payment for the rest of the contract. 
       FIG. 7  illustrates example operations related to fixing a fluctuating annuity payment including operations  1200 - 1204 .  FIG. 7  additionally depicts the example operational flow  7  including additional operations  1306  and  1408 . 
     Operation  1200  begins the operational process, e.g., pursuant to a request to create an annuity. In embodiments that include example operation  1202 , an annuity is created that includes a fluctuating annuity payment and an option to fix the fluctuating annuity payment in the future. Thus, the user  101  or beneficiary is able to convert the fluctuating annuity payment to a fixed payment in the future. 
     For example, an annuity provider  150  creates an annuity for a specific user  101 , the annuity including a provision for a fluctuating annuity payment and a provision that allows the user to fix the fluctuating annuity payment. The annuity provider  150  may include a database management module  102  of an annuity database  104  including data entries representing annuities  106  issued to users  101  in generating such an annuity. The database management module  102  may generate such an annuity after it receives a request for an annuity from, for example, an application program  108  residing on an annuity provider agent  101 -A terminal including a user&#39;s  101  or from an application server  140  that maintains a website  115  configured to receive requests for annuities from computer systems associated with users  101  through  101 -N. The application server  140  may transmit such requests to the database management module  102  for processing and in response the website  115  may transmit code operable to display the annuity on a user&#39;s computer system. The request may include information such as age, health, the premium paid, or any type of information an annuity provider would utilize in generating an annuity. 
     Operation  1204  illustrates setting a payment schedule for said fluctuating annuity payment. For example, an annuity provider  150  creates a payment schedule for the generated fluctuating annuity payment, e.g., setting whether the annuity payment will be monthly, quarterly, or semi-annually. The database management module  102  may optionally receive requests from an application program  108  residing on an annuity provider agent&#39;s terminal  110  to set a payment schedule for the fluctuating annuity payment. The database management module  102  may optionally receive requests from an application server  140  that maintains a website  115  configured to receive requests to set a payment schedule for a fluctuating annuity payment. 
     An additional operation  1306  illustrates receiving a request to fix said fluctuating annuity payment, and setting a payment schedule for a fixed annuity payment. For example, an annuity provider  150  including a database management module  102  receives a request indicating that a specific user  101  has exercised the option to fix the fluctuating annuity payment and in response to the request the annuity provider  150  sets a payment schedule for a fixed annuity payment. Database management module  102  may have received the request to fix the payment from, for example an application program  108  residing on an annuity provider agent&#39;s terminal  110  or an application server  140  that maintains a website  115  configured to receive requests to fix the fluctuating annuity payments from users  101  through  101 -N. In response to such a request, the database management module  102  may create a payment schedule for the fixed annuity payment, e.g., setting whether the annuity payment will be monthly, quarterly, or semi-annually. 
     An additional optional operation  1408  illustrates generating a fixed annuity payment based on the value of one or more remaining fluctuating annuity payments. For example, an annuity provider  150  including a database management module  102  generates a fixed annuity payment based on the value of sum of the remaining fluctuating annuity payments discounted to present value of the fluctuating annuity payments using, for example, an interest rate, and a long term interest rate. 
     An additional operation  1510  of  FIG. 8  illustrates setting a payment schedule for said fixed annuity payment based on a long term interest rate. For example, the annuity provider  150  creates a payment schedule for the fixed annuity payment, e.g., setting whether the annuity payment will be monthly, quarterly, or semi-annually wherein the fixed annuity payment is based on a long term interest rate. 
     In some example embodiments the operational procedure  1200  may include one or more of the additional operation  1612 ,  1614 , and/or  1616  as depicted by the operational flow in  FIG. 9 . In example embodiments that include operation  1612 , the annuity includes a provision providing for a fluctuating annuity payment where the payment based on a changing interest rate. Alternately or additionally, as depicted by operation  1614 , the payment may be based on the market yield of a 1-year U.S. Treasury adjusted to constant maturity. 
     Similar to that described above, operation  1616  illustrates that the fluctuating annuity payment may be at least a predetermined minimum payment amount. If the fluctuating annuity payment is determined to be less than a predetermined minimum amount, then the fluctuating annuity payment is set equal to the predetermined minimum amount, and the payment amount that had been calculated based on the factors used (e.g., interest rates) is not used. The predetermined minimum amount may be have been determined when the annuity was first issued or may have been determined subsequent to the issuance of the annuity. 
     The foregoing detailed description has set forth various embodiments of the systems and/or processes via the use of block diagrams, flowcharts, and/or examples. Insofar as such block diagrams, flowcharts, and/or examples contain one or more functions and/or operations, it will be understood by those within the art that each function and/or operation within such block diagrams, flowcharts, or examples can be implemented, individually and/or collectively, by a wide range of hardware, software, firmware, or virtually any combination thereof. 
     While particular aspects of the present subject matter described herein have been shown and described, it will be apparent to those skilled in the art that, based upon the teachings herein, changes and modifications may be made without departing from the subject matter described herein and its broader aspects and, therefore, the appended claims are to encompass within their scope all such changes and modifications as are within the true spirit and scope of the subject matter described herein.