Patent ID: 7895101

Claim:
A computer-based method for determining a set of equity-indexed crediting parameters C for a selectable-term equity-indexed deposit product also having a set of profitability requirements R, a principal amount P, an account value A, a maximum term T, a set of lock-in formulas F, a selected term T′, an immediate credit I, and a guaranteed rate G, with R, P, A, T, C, and F determined at the time of product purchase and T′<=T determined by the purchaser after the time of purchase and I and G determined by the seller at T′ according to the set of formulas F, with the immediate credit I being added to the account value A at time T′ and interest being credited to the account value A at the rate G from time T′ to time T, comprising, using a processor in at least one specially programmed computer: generating a set of yield curve and equity index scenarios consistent with valuation parameters; generating a set of values for T′, one for each yield curve and equity index scenario in the set of yield curve and equity index scenarios; setting a trial value C i for the set of equity-indexed crediting parameters C for said selectable-term equity-indexed deposit product; calculating values for I and G for each yield curve and equity index scenario in the set of yield curve and equity index scenarios; calculating the observed distribution D of profitability using said yield curve and equity index scenarios in the set of yield curve and equity index scenarios; comparing D with R; and, based on the comparison of D with R, computing a revised trial value C i+1 for the set of equity-indexed crediting parameters C for said selectable-term equity-indexed deposit product to determine values of the immediate credit I and the guaranteed rate G that achieves the profitability requirements R according to the set of lock-in formulas F, wherein the set of lock-in formulas F determine a value of the guaranteed rate G at a time T′ when lock-in is initiated, said lock-in indicates to credit interest to the account value A at the rate G from time T′ to time T, wherein the set of lock-in formulas F include the following parameters: equity indexed allocation earnings, declared rate allocation earnings, a rider premium charge, an asset expense charge based on the account value of the policy, and time remaining in the term.