Mortgage abstract
A computerized system for initiating, processing, preparing, storing,
and transmitting illustrations of life insurance in conjunction
with a mortgage, the illustrations being devoid of a cost containment
clause. A computer accesses a database into which data is written
and from which data is read, the data including information regarding
the life to be insured, general applicant information, insurance
information, mortgage information, and predetermined text data for
incorporation into insurance illustrations. The computer is operable
by connecting to the database and at least one PC, including input
and display apparatus, to permit data to be entered in and retrieved
from the database. The computer is also provided with the capability
of merging entered or stored data with the predetermined text data
to compile the data and text into output embodying an illustration
of life insurance in conjunction with a mortgage for the home buyer.
Mortgage claims
We claim:
1. A machine for producing an illustration of collateral completely
repaying an amount of a mortgage, the machine comprising:
a programmed digital electrical computer operably connected to
a terminal for receiving manually entered information and for converting
the manually entered information into electronic data conveyed to
the programmed digital electrical computer and to a printer for
receiving processed data generated by and conveyed from the programmed
digital electrical computer to print the processed data,
the programmed digital electrical computer being programmed to
respond to the electronic data representing the amount of the mortgage
by computing an amount of collateral for repaying the amount of
the mortgage and to electronically generate an illustration as the
processed data including the amount of the collateral owned by a
borrower, used at least partially instead of a down payment, and
completely repaying the amount of the mortgage.
2. The machine of claim 1, wherein the programmed digital electrical
computer is programmed so that the amount of collateral is an initial
amount of premium for a cash value life insurance policy having
a death benefit sufficient for completely repaying the amount of
the mortgage; and
wherein the illustration includes the mortgage being rolled over
until the death benefit repays the amount of the mortgage.
3. The machine of claim 2, wherein the programmed digital electrical
computer is programmed to use bracketing and iteration to find the
initial amount of premium for the life insurance policy.
4. The machine of claim 3, wherein the programmed digital electrical
computer is programmed to compute an additional amount of premium
sufficient to maintain cash value of the life insurance policy as
projected in electronically generating the illustration and in generating
documentation of the additional amount of premium.
5. The machine of claim 1, wherein the programmed digital electrical
computer is programmed so that the amount of collateral is an initial
amount of premium for a cash value life insurance policy sufficient
for repaying the amount of the mortgage with after-US-tax proceeds
from a surrender of the life insurance policy; and
wherein the programmed digital electrical computer is programmed
so that the illustration includes the proceeds repaying the amount
of the mortgage.
6. The machine of claim 5, wherein the programmed digital electrical
computer is programmed to use bracketing and iteration to find the
initial amount of premium for the life insurance policy.
7. The machine of claim 6, wherein the programmed digital electrical
computer is programmed to use compute an additional amount of premium
sufficient to maintain cash value of the life insurance policy as
projected in electronically generating the illustration and in generating
documentation of the additional amount of premium.
8. The machine of claim 1, wherein the programmed digital electrical
computer is programmed so that the amount of collateral is an initial
amount of premium for a cash value life insurance policy sufficient
for repaying the amount of the mortgage with a loan from the life
insurance policy, the life insurance policy for use in conjunction
with an investment for maintaining the life insurance policy until
the borrower's death; and
wherein the illustration includes the loan from the life insurance
policy repaying the amount of the mortgage.
9. The machine of claim 8, wherein the programmed digital electrical
computer is programmed so that the loan has a spread between a loaned
funds credited rate of the life insurance policy and a policy loan
rate of the life insurance policy, the spread being less than 300
basis points.
10. The machine of claim 8, wherein the programmed digital electrical
computer is programmed to use bracketing and iteration to find the
initial amount of premium for the life insurance policy.
11. The machine of claim 10, wherein the programmed digital electrical
computer is programmed to compute an additional amount of premium
sufficient to maintain cash value of the life insurance policy as
projected in the illustration and for generating documentation of
the additional amount of premium.
12. The machine of claim 1, wherein the programmed digital electrical
computer is programmed so that the amount of collateral is an initial
amount of premium for a cash value life insurance policy sufficient
to repay the amount of the mortgage by using loans from the life
insurance policy to pay interest on the amount of the mortgage and
a death benefit of the life insurance policy sufficient to repay
principal on the amount of the mortgage, the life insurance policy
for use in conjunction with investment for maintaining the life
insurance policy until the borrower's death; and
wherein the illustration includes repaying the mortgage principal
with the death benefit.
13. The machine of claim 12, wherein the programmed digital electrical
computer is programmed so that the loans each have a spread between
a loaned funds credited rate of the life insurance policy and a
policy loan rate of the insurance policy, the spread being less
than 300 basis points.
14. The machine of claim 12, wherein the programmed digital electrical
computer is programmed to use bracketing and iteration to find the
initial amount of premium for the life insurance policy.
15. A method for making a machine operable to produce an illustration
of an investment repaying an amount of a US mortgage, the method
comprising the steps of:
programming a digital electrical computer to make a digital electrical
computer programmed to receive an amount of a mortgage, the mortgage
being a US mortgage and to
generate, in response to receipt of the amount of the mortgage,
an illustration including an investment repaying the amount of the
mortgage; and wherein the step of programming is does not include
programming the digital electrical computer to electronically generate
the illustration as including a mortgage plan having a cost containment
clause.
16. The method of claim 15, wherein the investment includes a life
insurance policy and wherein the step of programming includes programming
the digital electrical computer to compute a Specified Amount of
the life insurance policy sufficient to completely repay the amount
of the mortgage.
17. The method of claim 15, wherein the investment includes a cash
value life insurance policy, and wherein the step of programming
includes programming the digital electrical computer to compute
DOWN1, representing an up-front payment amount for collateral for
the amount of the mortgage, as ##EQU40## wherein ANNPAY represents
an annual amount paid by an annuity, the amount paid being equal
to LIFPAY, representing an annual premium for the life insurance
policy, and wherein
NUM represents a number of payments made by the annuity, iA represents
an annual credited rate of the annuity expressed as a percentage,
iA.sub.M represents a monthly credited rate of the annuity, APCTOT
represents a total percentage of initial expense for purchasing
the annuity, AMTH represents 12.times.NUM, and AEXP(n), represents
a carrier's total fixed charge taken from a cash balance of the
annuity in month n.
18. The method of claim 15, wherein the investment includes a life
insurance policy and wherein the step of programming the digital
electrical computer includes programming the digital electrical
computer computer to electronically generate the illustration as
including an amount representing an annual premium for the life
insurance policy which would at least partially replace a down payment
for a conventional US mortgage.
19. The method of claim 15, wherein the step of programming the
digital electrical computer includes programming the digital electrical
computer to estimate LIFPAY, representing an amount of annual premium
for a life insurance policy as the investment, given LNUM, representing
a number of annual insurance premiums, in testing whether LSURR(MTH)=PRIN,
wherein LSURR(MTH) represents an after-US-tax cash surrender value
of the life insurance policy, MTH represents the last month of the
mortgage, and PRIN represents a sum borrowed.
20. The method of claim 15, wherein the step of programming the
digital electrical computer includes programming the digital electrical
computer to bracket and use iteration to find a premium amount for
a life insurance policy as the investment.
21. The method of claim 15, wherein the investment includes a cash
value life insurance policy, and wherein the step of programming
the digital electrical computer includes programming the digital
electrical computer to find an initial premium amount, and project
a cash value for, the life insurance policy; and
wherein the step of programming the digital electrical computer
includes programming the digital electrical computer to compute
an additional amount of premium sufficient to maintain the cash
value as projected in the illustration, and to electronically generate
documentation of the amount of additional premium.
22. The method of claim 15, wherein the step of programming the
digital electrical computer includes programming the digital electrical
computer for use by a plurality of users and to assess a level of
user authority to access information stored in a database accessible
to the digital electrical computer.
23. The method of claim 22, wherein the step of programming the
digital electrical computer includes programming the digital electrical
computer to link to one of a plurality of digital electrical computers
of respective lenders via respective open-end network gateways and
to obtain electronic data representing mortgage information for
customizing the illustration in response to a selection of a mortgage
offered by one of the lenders.
24. The method of claim 23, wherein the step of programming the
digital electrical computer includes programming the digital electrical
computer to link to one of a plurality of digital electrical computers
of respective securities brokers via respective open-end network
gateways and to obtain security information for customizing the
illustration in response to a selection of a security offered by
one of the securities brokers.
25. The method of claim 23, wherein the step of programming the
digital electrical computer includes programming the digital electrical
computer to link to one of a plurality of digital electrical computers
of respective life insurance carriers via respective open-end network
gateways and to obtain insurance information for customizing the
illustration in response to a selection of a life insurance policy
offered by one of the carriers as the investment.
26. The method of any one of claims 23, 24 or 25, wherein the step
of programming the digital electrical computer includes programming
the digital electrical computer to convey electronic mail to and
from each of the digital electrical computers.
27. The method of claim 26, wherein the step of programming the
digital electrical computer includes programming the digital electrical
computer to offer hypertext-linked help at each one of the digital
electrical computers.
28. A machine for producing an illustration of an amount of an
investment repaying an amount of a mortgage, the machine comprising:
a digital electrical computer programmed to receive an amount of
a mortgage and to electronically generate, in response to receipt
of the amount of the mortgage, an illustration including an amount
of an investment repaying the amount of the mortgage; and
wherein the programmed digital electrical computer is not programmed
to generate the illustration as including a mortgage plan having
a cost containment clause.
29. The machine of claim 28, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
including the amount of the investment owned by a borrower.
30. The machine of claim 28, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
wherein the investment is in a US-tax-favored investment plan.
31. The machine of claim 30, wherein the investment plan is an
individual retirement account investment plan.
32. The machine of claim 30, wherein the investment plan is a Keough
investment plan.
33. The machine of claim 30, wherein the investment plan is a 401K
plan.
34. The machine of claim 30, wherein the investment plan is a profit
sharing plan.
35. The machine of claim 28, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
wherein the investment is not in a US-tax-favored investment plan.
36. The machine of any one of claims 28-35, wherein the investment
includes a security.
37. The machine of any one of claims 28-35, wherein the investment
includes a life insurance policy.
38. The machine of any one of claims 28-35, wherein the investment
includes an annuity.
39. The machine of claim 28, wherein the programmed digital electrical
computer is programmed to electronically generate data for a Truth
in Lending disclosure.
40. The machine of claim 39, wherein the programmed digital electrical
computer is programmed to update the illustration stored in a database
accessible to the programmed digital electrical computer.
41. The machine of claim 40, wherein the programmed digital electrical
computer is programmed to electronically generate the amount of
the investment being sufficient to completely repay the amount of
the mortgage.
42. The machine of claim 41, wherein the programmed digital electrical
computer is programmed to convey electronic mail to and from each
of a plurality of digital electrical computers operably connected
to the programmed digital electrical computer.
43. The machine of claim 42, wherein the programmed digital electrical
computer is programmed to offer computerized help at each one of
the digital electrical computers.
44. The machine of claim 39, wherein the programmed digital electrical
computer is programmed to link to one of a plurality of digital
electrical computers of respective life insurance carriers via respective
open-end network gateways and to obtain insurance information to
customize the illustration in response to a selection of a life
insurance policy of one of the carriers as the investment.
45. The machine of claim 44, wherein the programmed digital electrical
computer is programmed to link to one of a plurality of digital
electrical computers of respective lenders via respective open-end
network gateways and to obtain mortgage information to customize
the illustration in response to a selection of a mortgage of one
of the lenders.
46. The machine of claim 39, wherein the programmed digital electrical
computer is programmed to link to one of a plurality of digital
electrical computers of respective securities brokers via respective
open-end network gateways and to obtain security information to
customize the illustration in response to a selection of a security
offered by one of the securities brokers as the investment.
47. The machine of claim 39, wherein the programmed digital electrical
computer is programmed to receive selection criteria for the investment
and, in response to receipt of the criteria, to find the best investment
from investments offered respectively by a plurality of providers.
48. The machine of claim 39, wherein the programmed digital electrical
computer is programmed to receive selection criteria for the mortgage
and, in response to receipt of the criteria, to find the best of
a plurality of mortgages offered respectively by a plurality of
lenders.
49. The machine of claim 39, wherein the programmed digital electrical
computer is programmed to receive selection criteria for a life
insurance policy as the investment, and in response to receipt of
the criteria, to find the best life insurance policy from a plurality
of life insurance policies offered respectively by a plurality of
carriers.
50. The machine of claim 28, wherein the investment is a cash value
life insurance policy; and
wherein the programmed digital electrical computer is programmed
to compute an amount of an additional premium for the life insurance
policy payable upon a shortfall in cash value of the life insurance
policy.
51. The machine of claim 50, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
including a premium structure of the life insurance policy computed
in response to a lump-sum prepayment designation.
52. The machine of claim 51, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
including the amount of the mortgage being repaid by after-US-tax
proceeds from a surrender of the life insurance policy.
53. The machine of claim 51, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
including the amount of the mortgage being repaid by a loan from
the life insurance policy.
54. The machine of claim 51, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
including the amount of the mortgage being repaid by a death benefit
of the life insurance policy after a roll over of the mortgage.
55. The machine of claim 50, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
including a premium structure of the life insurance policy computed
in response to a corporate guarantee designation.
56. The machine of claim 55, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
including the amount of the mortgage being repaid by after-US-tax
proceeds from a surrender of the life insurance policy.
57. The machine of claim 55, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
including the amount of the mortgage being repaid by at least one
loan from the life insurance policy.
58. The machine of claim 55, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
including the amount of the mortgage being repaid by a death benefit
of the life insurance policy after a roll over of the mortgage.
59. The machine of claim 50, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
including a premium structure of the life insurance policy computed
in response to an irrevocable letter of credit designation.
60. The machine of claim 59, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
including the amount of the mortgage being repaid by after-US-tax
proceeds from a surrender of the life insurance policy.
61. The machine of claim 59, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
including the amount of the mortgage being repaid by at least one
loan from the life insurance policy.
62. The machine of claim 59, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
including the amount of the mortgage being repaid by a death benefit
of the life insurance policy after a roll over of the amount of
the mortgage.
63. The machine of claim 28, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
including an amount of the investment for use as collateral for
the mortgage.
64. The machine of claim 63, wherein the investment includes a
cash value life insurance policy having an initial premium amount
and a projected cash value; and
wherein the programmed digital electrical computer is programmed
to compute an additional amount of premium sufficient to maintain
the cash value of the life insurance policy as projected in the
illustration and to electronically generate documentation of the
additional amount of premium.
65. The machine of claim 64, wherein the programmed digital electrical
computer is programmed for outputting loan/insurance product information
at an output device operably connected to the programmed digital
electrical computer.
66. The machine of claim 64, wherein the programmed digital electrical
computer is programmed for outputting loan rate information at an
output device operably connected to the programmed digital electrical
computer.
67. The machine of claim 64, wherein the programmed digital electrical
computer is programmed for outputting insurance premium information
at an output device operably connected to the programmed digital
electrical computer.
68. The machine of claim 64, wherein the programmed digital electrical
computer is programmed for generating the illustration as a generic
illustration including the mortgage using the cash value of the
life insurance policy as the collateral for a standard amount as
the amount of the mortgage.
69. The machine of claim 68, wherein the programmed digital electrical
computer is programmed to obtain, in generating the generic illustration,
data representing average loan rates and average closing costs.
70. The machine of claim 69, wherein the programmed digital electrical
computer is programmed for adjusting any of the data to reflect
an input value.
71. The machine of claim 63, wherein the programmed digital electrical
computer is programmed to compute and generate a reillustration,
at a time during the mortgage, to reflect a changed investment amount.
72. The machine of claim 28, wherein the programmed digital electrical
computer is programmed to compute and generate a reillustration,
at a time during the mortgage, to reflect a changed mortgage payment
amount.
73. The machine of claim 28, wherein the investment includes a
life insurance policy; and
wherein the programmed digital electrical computer is programmed
to compute an interest rate for the mortgage and a credited rate
for the life insurance policy, wherein the rates are computed from
one interest rate index.
74. The machine of claim 73, wherein the programmed digital electrical
computer is programmed to compute the interest rate index.
75. The machine of claim 64, wherein the programmed digital electrical
computer is programmed to receive mortgage application information
from the terminal and to electronically generate a customized mortgage
application form for the mortgage in response to receipt of the
mortgage application information and to direct the printer to print
the customized mortgage application form.
76. The machine of claim 64, wherein the programmed digital electrical
computer is programmed to receive borrower health information for
insurance underwriting.
77. The machine of claim 64, wherein the programmed digital electrical
computer is programmed to receive life insurance policy application
information and to a customized life insurance application form
for the life insurance policy in response to receipt of the insurance
application information and to direct the printer to print the customized
mortgage application form.
78. The machine of claim 28, wherein the programmed digital electrical
computer is programmed to receive brokerage account information
and to customized brokerage account application form in response
to receipt of the brokerage account application information and
to direct the printer to print the customized mortgage application
form.
79. The machine of claim 28, wherein the programmed digital electrical
computer is programmed to compute an amount of the amount of the
investment in response to a designation of a higher up-front payment
than an amount of premium for a life insurance policy as the investment,
the designation being input at the terminal, and the amount of premium
being solved for by iterative means; and
wherein the programmed digital electrical computer is also programmed
to compute in response to receipt of the designation, an allocation
of monies to a down payment and to the amount of premium.
80. The machine of claim 28, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
including a comparison of the mortgage and a conventional mortgage.
81. The machine of claim 28, wherein the programmed digital electrical
computer is programmed to be responsive to an input guarantor designation.
82. A machine for producing an illustration of an amount of a security
repaying an amount of a mortgage, the machine comprising:
a digital electrical computer programmed to receive an amount of
a mortgage and to electronically generate, in response to receipt
of the amount of the mortgage, an illustration including an amount
of a security repaying the amount of the mortgage; and
wherein the programmed digital electrical computer is not programmed
to generate the illustration as including a mortgage plan having
a cost containment clause.
83. The machine of claim 82, wherein the programmed digital electrical
computer is programmed to electronically generate the illustration
including the amount of the security used in conjunction with an
amount of a term life insurance policy for repaying the amount of
the mortgage.
84. The machine of claim 82, wherein the security is a zero coupon
bond.
85. The machine of claim 84, wherein the zero coupon bond is a
US Treasury derivative.
86. The machine of claim 84, wherein the zero coupon bond is a
municipal bond derivative.
87. The machine of claim 82, wherein the security is at least one
share in a mutual fund.
88. The machine of claim 82, wherein the security is a variable
annuity.
89. A machine for producing an illustration of a life insurance
policy repaying an amount of a mortgage, the machine comprising:
a digital electrical computer programmed to receive an amount of
a mortgage and to electronically generate, in response to receipt
of the amount of the mortgage, an illustration including an amount
of a life insurance policy for repaying the amount of the mortgage;
and
wherein the programmed digital electrical computer is not programmed
to generate the illustration as including a mortgage plan having
a cost containment clause.
90. The machine of claim 89, wherein the life insurance policy
is a term life insurance policy.
91. The machine of claim 89, wherein the life insurance policy
is a permanent life insurance policy.
92. The machine of claim 91, wherein the life insurance policy
is a universal life insurance policy.
93. The machine of claim 91, wherein the life insurance policy
is a single policy providing a death benefit for two insureds, at
least one of the insureds being a borrower under the mortgage.
94. The machine of claim 93, wherein the life insurance policy
is a joint life insurance policy.
95. The machine of claim 93, wherein the life insurance policy
is a joint and survivor life insurance policy.
96. The machine of claim 91, wherein the programmed digital electrical
computer is programmed so that the illustration includes the amount
of the life insurance policy for the borrower and a second amount
of a life insurance policy for a second insured, such that combined
death benefits of the life insurance policies are sufficient to
repay the amount of the mortgage and such that combined cash values
of the life insurance policies are sufficient to repay the amount
of the mortgage.
97. The machine of claim 91, wherein the life insurance policy
is a variable life insurance policy.
98. The machine of any one of claims 90 or 91, wherein the life
insurance policy has at least one rider.
99. The machine of any one of claims 90 or 91, wherein the life
insurance policy has a disability rider.
100. The machine of any one of claims 90 or 91, wherein the life
insurance policy has an income rider.
101. The machine of claim 91, wherein the programmed digital electrical
computer is programmed to iteratively solve for a premium amount
for the life insurance policy.
102. The machine of claim 101, wherein the programmed digital electrical
computer is programmed to compute a Specified Amount of the life
insurance policy sufficient for repaying the amount of the mortgage;
and
wherein the programmed digital electrical computer is programmed
so that the illustration includes the Specified Amount.
103. The machine of claim 102, wherein the programmed digital electrical
computer is programmed to test the Specified Amount against an Internal
Revenue Service Code definition of life insurance.
104. The machine of claim 103, wherein the programmed digital electrical
computer is programmed to test the Specified Amount against an amount
computed by using a Guideline Level Premium.
105. The machine of claim 103, wherein the programmed digital electrical
computer is programmed to test the Specified Amount against an amount
computed by using a Guideline Seven Pay Premium.
106. The machine of claim 103, wherein the programmed digital electrical
computer is programmed to test the Specified Amount against an amount
computed using a Guideline Single Premium.
107. The machine of claim 102, wherein the programmed digital electrical
computer is programmed to compute the Specified Amount as not less
than PRIN, representing the amount of the mortgage.
108. The machine of claim 91, wherein the programmed digital electrical
computer is programmed to compute MINS(n), representing an amount
of death benefit for month n, the death benefit in compliance with
an Internal Revenue Service Code ratio of insurance cash value to
death benefit.
109. The machine of claim 91, wherein the programmed digital electrical
computer is programmed to compute LSURR(MTH), representing an after-US-tax
cash surrender value of the life insurance policy, as not less than
PRIN, representing the amount of the mortgage, at MTH, representing
the last month of the mortgage.
110. The machine of claim 91, wherein the programmed digital electrical
computer is programmed to compute CV(n), representing end of month
life insurance policy cash value for month n, and LOAN(n), representing
an amount of a loan from the life insurance policy in the beginning
of month n.
111. The machine of claim 91, wherein the programmed digital electrical
computer is programmed to compute LOAN(MTH) equal to PRIN, wherein
LOAN(MTH) represents a life insurance policy loan in the beginning
of month MTH, MTH representing the last month of the mortgage, and
PRIN represents the amount of the mortgage.
112. The machine of claim 91, wherein the programmed digital electrical
computer is programmed to compute CV(n), representing end of month
life insurance cash value for month n, and TOTLOAN(n), representing
total policy loan borrowings in the beginning of month n, such that
an amount CV(n)-TOTLOAN(n) is always greater than zero through each
year of the illustration.
113. The machine of claim 91, wherein the programmed digital electrical
computer is programmed to compute MINS(n), representing an amount
of death benefit of the life insurance policy, which in all years
in the mortgage is not less than the total of PRIN, representing
the amount of the mortgage, and LOANBAL(n), representing a loan
balance of the life insurance policy, including accrued interest,
in the beginning of month n.
114. The machine of claim 91, wherein the programmed digital electrical
computer is programmed to compute LOAN(n), representing an amount
of a life insurance policy loan in the beginning of a month n, equal
to PRIN.times.iM, wherein PRIN represents the amount of the mortgage,
and iM represents an annual interest rate charged for the amount
of the mortgage.
115. The machine of claim 91, wherein the programmed digital electrical
computer is programmed to compute INTC(n), representing an amount
of life insurance policy interest credited, as including LOANBAL(n).times.iL.sub.m,
wherein iL.sub.m represents a monthly rate of interest and LOANBAL(n)
represents a loan balance of the life insurance policy, including
accrued interest, in the beginning of month 14 n.
116. The machine of claim 91, wherein the programmed digital electrical
computer is programmed to compute LPAY(n), representing an amount
of premium for month n for the life insurance policy.
117. The machine of claim 91, wherein the programmed digital electrical
computer is programmed to compute LPAY(n), representing an amount
of premium for month n for the life insurance policy such that the
life insurance policy illustrated is not treated as a modified endowment
contract for US tax purposes.
118. The machine of claim 91, wherein the programmed digital electrical
computer is programmed to compute a value for LPAY(n), representing
an amount of premium for month n for the life insurance policy,
and wherein the programmed digital electrical computer is programmed
so that the illustration includes the value as at least partially
replacing a down payment for a mortgage.
119. The machine of claim 118, wherein the programmed digital electrical
computer is programmed so that a value for ANNPAY, equalling LPAY(1),
is used to compute an amount DOWN1, representing an amount of an
up-front payment which includes LPAY(1), representing a first premium
payment combined with DOWN1A, representing an amount for purchasing
an annuity sufficient to pay scheduled premiums for the life insurance
policy for NUM years, NUM representing a specified number of years.
120. The machine of claim 118, wherein the programmed digital electrical
computer is programmed to compute DOWN1, representing an up-front
payment for collateral for the amount of the mortgage, as ##EQU41##
wherein ANNPAY represents an annual amount paid by an annuity, the
amount paid being equal to LPAY, representing an annual life insurance
premium, and wherein NUM represents a number of payments made by
the annuity, iA represents an annual credited rate of the annuity
expressed as a percentage, iA.sub.M represents a monthly credited
rate of the annuity, APCTOT represents a total percentage of initial
expense for purchasing the annuity, AMTH represents 12.times.NUM,
and AEXP(n), represents a carrier's total fixed charges taken from
a cash balance of the annuity in month n.
121. A machine for producing an illustration of an amount of an
annuity repaying an amount of a mortgage, the machine comprising:
a programmed digital electrical computer operably connected to
communicate electronically with a terminal and a printer, the electrical
digital computer being programmed to receive an amount of a mortgage
from the terminal, to electronically generate, in response to receipt
of the amount of the mortgage, an illustration including an amount
of an annuity repaying the amount of the mortgage, and to print
the illustration at the printer; and
wherein the programmed digital electrical computer is not programmed
to generate the illustration as including a mortgage plan having
a cost containment clause.
122. The machine of claim 121, wherein the programmed digital electrical
computer is programmed to compute the amount of the annuity for
an immediate annuity.
123. The machine of claim 121, wherein the programmed digital electrical
computer is programmed to compute the amount of the annuity for
an immediate annuity used in conjunction with an amount of a term
life insurance policy for repaying the amount of the mortgage.
124. The machine of claim 121, wherein the programmed digital electrical
computer is programmed to compute the amount of the annuity for
an immediate annuity for paying interest on the amount of the mortgage.
125. The machine of claim 121, wherein the programmed digital electrical
computer is programmed to compute the amount of the annuity for
an immediate annuity; and
wherein the amount of the mortgage includes an amount of a home
equity mortgage.
126. The machine of claim 121, wherein the programmed digital electrical
computer is programmed to compute the amount of the annuity for
an immediate annuity used in conjunction with an amount of a term
life insurance policy for repaying the amount of the mortgage, and
wherein the amount of the mortgage includes an amount of a home
equity mortgage.
127. The machine of claim 121, wherein the programmed digital electrical
computer is programmed to compute the amount of the annuity for
a deferred annuity.
128. The machine of claim 121, wherein the programmed digital electrical
computer is programmed to compute the amount of the annuity for
a deferred annuity used in conjunction with an amount of a term
life insurance policy for repaying the amount of the mortgage.
129. The machine of claim 127, wherein the programmed digital electrical
computer is programmed to compute the amount of the annuity for
a single premium deferred annuity.
130. The machine of claim 127, wherein the programmed digital electrical
computer is programmed to compute the amount of the annuity for
a level premium deferred annuity.
131. The machine of claim 127, wherein the programmed digital electrical
computer is programmed to compute the amount of the annuity for
a variable premium deferred annuity.
132. The machine of any one of claims 28, 82, 89, or 121, wherein
the amount of the mortgage is an amount of a first mortgage.
133. The machine of any one of claims 28, 82, 89, or 121, wherein
the amount of the mortgage includes an amount of a home equity mortgage.
134. The machine of any one of claims 28, 82, 89, or 121, wherein
the amount of the mortgage is an amount of a balloon payment mortgage.
135. The machine of any one of claims 28, 82, 89, or 121, wherein
the amount of the mortgage is an amount of a fixed interest mortgage.
136. The machine of any one of claims 28, 82, 89, or 121, wherein
the amount of the mortgage is an amount of a variable interest mortgage.
137. The machine of claim 28, wherein the programmed digital electrical
computer is programmed to compute amortization of the amount of
the mortgage when interest rates of the mortgage are low, and negative
amortization of the mortgage when interest rates of the mortgage
are high, such that earnings on the investment are an offset to
the negative amortization.
138. A method for using a machine to electronically produce an
illustration of an amount of an investment repaying an amount of
a mortgage, the method comprising the step of:
programming a digital electrical computer operably connected to
a terminal for receiving manually input information and for converting
the manually input information into input data electronically conveyed
to the programmed digital electrical computer to process the input
data into output data and operably connected to a printer for printing
the output data, the digital electrical computer being programmed
to compute, in response to an amount of a mortgage as a portion
of the input information, an amount of an investment sufficient
for repaying the amount of the mortgage and at least partially collateralizing
the amount of the mortgage, and to
generate an illustration, including the investment repaying the
amount of the mortgage, as a portion of the output information.
139. The method of claim 138, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration including an amount of the investment which would
at least partially be used instead of a down payment for a conventional
mortgage.
140. The method of claim 138, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration with the investment selected from a plurality of
investments offered respectively by a plurality of providers.
141. The method of claim 138, wherein the step of programming includes
programming the digital electrical computer to receive mortgage
selection criteria and, in response to receipt of the criteria,
to find the best mortgage of a plurality of mortgages.
142. The method of claim 138, wherein the investment is a cash
value life insurance policy, and wherein the step of programming
includes programming the digital electrical computer to receive
selection criteria for the life insurance policy at the terminal,
and in response to receipt of the criteria, to find the best life
insurance policy of a plurality of life insurance policies.
143. The method of claim 138, wherein the investment is a cash
value life insurance policy, and wherein the step of programming
includes programming the digital electrical computer to electronically
generate the illustration including a premium structure of the life
insurance policy computed in response to a lump-sum prepayment designation.
144. The method of claim 143, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration including the amount of the mortgage being repaid
by after-US-tax proceeds from a surrender of the life insurance
policy.
145. The method of claim 143, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration including the amount of the mortgage being repaid
by at least one loan from the life insurance policy.
146. The method of claim 143, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration including the amount of the mortgage being repaid
by a death benefit of the life insurance policy after a roll over
of the mortgage.
147. The method of claim 138, wherein the investment is a cash
value life insurance policy and wherein the step of programming
includes programming the digital electrical computer to electronically
generate the illustration including a premium structure of the life
insurance policy computed in response to a corporate guarantee designation.
148. The method of claim 147, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration including the amount of the mortgage being repaid
by after-US-tax proceeds from a surrender of the life insurance
policy.
149. The method of claim 147, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration including the amount of the mortgage being repaid
by at least one loan from the life insurance policy.
150. The method of claim 147, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration including the amount of the mortgage being repaid
by a death benefit of the life insurance policy after a roll over
of the mortgage.
151. The method of claim 138, wherein the investment is a cash
value life insurance policy and wherein the step of programming
includes programming the digital electrical computer to electronically
generate the illustration including a premium structure of the life
insurance policy computed in response to an irrevocable letter of
credit designation.
152. The method of claim 151, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration including the amount of the mortgage being repaid
by after-US-tax proceeds from a surrender of the life insurance
policy.
153. The method of claim 151, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration including the amount of the mortgage being repaid
by at least one loan from the life insurance policy.
154. The method of claim 151, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration including the amount of the mortgage being repaid
by a death benefit of the life insurance policy after a roll over
of the mortgage.
155. A method for electronically producing an illustration of a
cash value life insurance policy repaying an amount of a mortgage,
the method comprising the step of:
programming a digital electrical computer operably connected to
a terminal for receiving manually input information and for converting
the manually input information into input data electronically conveyed
to the programmed digital electrical computer to process the input
data into output data and operably connected to a printer for printing
the output data, the digital electrical computer being programmed
to compute, in response to an amount of a mortgage as a portion
of the input information, a Specified Amount of a life insurance
policy for repaying the amount of the mortgage, the life insurance
policy having a cash value at least partially collateralizing the
amount of the mortgage, and to electronically generate an illustration,
including the life insurance policy repaying the amount of the mortgage,
as a portion of the output information.
156. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to compute the Specified
Amount in response to a minimum number of premium payments required
by law to avoid treatment of the life insurance policy as a modified
endowment contract under US tax law.
157. The method of claim 155, further comprising the step of creating
a central database accessible to the programmed digital electrical
computer, the central database into which borrower information and
insurance information, along with data representing lenders' respective
mortgage rates and the illustration, are written by the programmed
digital electrical computer and from which the borrower information,
the insurance information, the data, and the illustration are read
by the programmed digital electrical computer.
158. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to output loan rate
information at an output device operably connected to the computer.
159. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to output insurance
premium information at an output device operably connected to the
digital electrical computer.
160. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to be responsive to
an input designation representing a guarantor of the amount of the
mortgage.
161. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to receive data representing
average loan rates and average closing costs.
162. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to compute the Specified
Amount as the greater of the amount of the mortgage and an amount
in compliance with an Internal Revenue Service Code guideline for
a minimum death benefit.
163. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to compute the Specified
Amount as not less than the amount of the mortgage.
164. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to estimate a tax benefit
to a borrower from a deductible interest expense of the amount of
the mortgage, and to electronically generate the illustration including
the tax benefit.
165. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration as a generic illustration, wherein the amount of
the mortgage is a standard amount.
166. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration including two insureds covered by the insurance
policy as a borrower and a co-borrower.
167. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration including a second life insurance policy, the respective
policies for separate insureds.
168. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration wherein the life insurance policy is a joint life
insurance policy.
169. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration wherein the life insurance policy is a joint and
survivor life insurance policy.
170. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to compute, and to electronically
generate the illustration including, an amount of cash value for
the life insurance policy sufficient to repay the amount of the
mortgage with after-US-tax proceeds from a surrender of the life
insurance policy.
171. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to compute, and to electronically
generate the illustration including, an amount of cash value for
the life insurance policy sufficient to repay the amount of the
mortgage with at least one loan from the life insurance policy for
use in conjunction with means for maintaining the life insurance
policy until death.
172. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to compute, and to electronically
generate the illustration including, an amount of cash value for
the life insurance policy sufficient to repay the amount of the
mortgage with a roll over of the mortgage for use in conjunction
with a death benefit of the life insurance policy.
173. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to compute, and to electronically
generate the illustration including an amount of cash value for
the life insurance policy sufficient to repay the amount of the
mortgage by use of at least one loan from the life insurance policy
to pay interest on the amount of the mortgage.
174. The method of claim 173, wherein the step of programming includes
programming the digital electrical computer to process the loans
such that each has a spread between a loaned funds credited rate
of the life insurance policy and a policy loan rate of the life
insurance policy, the spread being less than 300 basis points.
175. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to compute, and to electronically
generate a reillustration to reflect, a changed cash value amount
of the life insurance policy at a time during the mortgage.
176. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to compute, and to electronically
generate the illustration including, an additional amount of insurance
premium sufficient to maintain the cash value as projected in the
illustration.
177. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to compute an interest
rate for the amount of the mortgage and a credited rate for the
life insurance policy, wherein the interest rate and the credited
rate are computed from one interest rate index.
178. The method of claim 177, wherein the step of programming includes
programming the digital electrical computer to compute the interest
rate index.
179. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to print at the printer
a customized mortgage application form for the mortgage in response
to receipt of information used to produce the illustration and to
receipt of input mortgage application form completion data.
180. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to print at the printer
a customized life insurance policy application form for the life
insurance policy in response to receipt of information used to produce
the illustration and to receipt of input insurance application form
completion data.
181. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to print at the printer
a customized brokerage account application form in response to receipt
of information used to produce the illustration and to receipt of
input brokerage account application form completion data.
182. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration in response to receipt of an input indication that
the life insurance policy is a corporate-sponsored life insurance
policy.
183. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to iteratively solve
for an amount of premium necessary to accumulate sufficient cash
value to repay the amount of the mortgage at a specified time.
184. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to compute, in response
to receipt of an input designation of a higher up-front payment
than a minimum amount of premium necessary to repay the amount of
the mortgage, an allocation of monies to a down payment and to a
premium payment and to electronically generate the illustration
including the allocation.
185. The method of claim 155, wherein the step of programming includes
the step of programming the digital electrical computer to electronically
generate the illustration including a comparison of the mortgage
with the life insurance policy as collateral and a conventional
mortgage.
186. The method of claim 155, wherein the step of programming includes
programming the digital electrical computer to electronically generate
the illustration including a comparison of after-US-tax cost of
a monthly payment for the amount of the mortgage using the life
insurance policy as collateral and a conventional mortgage.
187. A method for using a machine comprising a programmed digital
electrical computer to produce an illustration of collateral completely
repaying an amount of a mortgage, the method comprising the steps
of:
inputting an amount of a mortgage to a digital electrical computer
programmed to compute, in response to receipt of the amount of the
mortgage, an amount of collateral sufficient for completely repaying
the amount of the mortgage; and
generating with the programmed digital electrical computer an illustration
including the collateral owned by a borrower, at least partially
replacing a down payment, and completely repaying the amount of
the mortgage.
188. The method of claim 187, wherein the step of generating is
carried out with the digital electrical computer being programmed
to use the amount of collateral as a cash value life insurance policy
sufficient for repaying the amount of the mortgage, after a roll
over of the mortgage, with a death benefit, and wherein the illustration
includes the death benefit repaying the amount of the mortgage.
189. The method of claim 188, wherein the step of generating is
carried out with the digital electrical computer being programmed
to use bracketing and iteration to find an initial premium amount
for the life insurance policy.
190. The method of claim 189, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
an additional amount of insurance premium sufficient to maintain
the cash value of the life insurance policy as projected in the
illustration and to electronically generate documentation of the
additional amount of insurance premium.
191. The method of claim 187, wherein the step of generating is
carried out with the digital electrical computer being programmed
to use the amount of collateral as an amount of a cash value life
insurance policy sufficient for repaying the amount of the mortgage
with after-US-tax proceeds from a surrender of the life insurance
policy, and wherein the illustration includes the proceeds repaying
the amount of the mortgage.
192. The method of claim 191, wherein the step of generating is
carried out with the digital electrical computer programmed to use
bracketing and iteration to find an initial premium amount for the
life insurance policy.
193. The method of claim 192, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
an additional amount of insurance premium sufficient to maintain
the cash value of the life insurance policy as projected in the
illustration and to electronically generate documentation of the
additional amount of insurance premium.
194. The method of claim 187, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
the amount of the collateral being an amount of a cash value life
insurance policy sufficient for repaying the amount of the mortgage
with a loan from the life insurance policy, the life insurance policy
for use in conjunction with means for maintaining the life insurance
policy until the borrower's death, and wherein the illustration
includes the loan from the life insurance policy repaying the amount
of the mortgage.
195. The method of claim 194, wherein the step of generating is
carried out with the digital electrical computer being programmed
to use the loan as computed to have a spread between a loaned funds
credited rate of the life insurance policy and a policy loan rate
of the life insurance policy, the spread being less than 300 basis
points.
196. The method of claim 194, wherein the step of generating is
carried out with the digital electrical computer programmed to use
bracketing and iteration to find an initial premium amount for the
life insurance policy.
197. The method of claim 196, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
an additional amount of insurance premium sufficient to maintain
the cash value of the life insurance policy as projected in the
illustration and to electronically generate documentation of the
additional amount of insurance premium.
198. The method of claim 187, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
the amount of the collateral as an amount of a cash value life insurance
policy sufficient to repay the amount of the mortgage using loans
from the life insurance policy sufficient to pay interest on the
amount of the mortgage and a death benefit of the life insurance
policy sufficient to repay principal on the amount of the mortgage,
the life insurance policy for use in conjunction with means for
maintaining the life insurance policy until the borrower's death,
and wherein the illustration includes repaying the principal on
the amount of the mortgage with the death benefit.
199. The method of claim 198, wherein the step of generating is
carried out with the digital electrical computer being programmed
to use the loans as computed as so that each has a spread between
a loaned funds credited rate of the life insurance policy and a
policy loan rate of the life insurance policy, the spread being
less than 300 basis points.
200. The method of claim 198, wherein the step of generating is
carried out with the digital electrical computer programmed to use
bracketing and iteration to find an initial premium amount for the
life insurance policy.
201. The method of claim 200, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
an additional amount of insurance premium sufficient to maintain
the cash value of the life insurance policy as projected in the
illustration and to electronically generate documentation of the
additional amount of insurance premium.
202. A method for using a machine comprising a programmed digital
electrical computer to produce an illustration of an amount of an
investment repaying an amount of a US mortgage, the method comprising
the steps of:
entering an amount of a mortgage into a digital electrical computer
programmed to receive the amount from a terminal;
generating, in response to receipt of the amount, an illustration
including an investment for repaying the amount of the mortgage,
wherein the mortgage is a mortgage as defined under US law, and
wherein the digital electrical computer is not programmed to generate
the illustration as including a mortgage plan having a cost containment
clause; and
printing the illustration at a printer.
203. The method of claim 202, wherein the step of generating is
carried out with the digital electrical computer programmed to electronically
generate data for a Truth in Lending disclosure.
204. The method of claim 203, wherein the step of generating is
carried out with the digital electrical computer programmed to update
the illustration after the illustration has been stored in a database
accessible to the programmed digital electrical computer.
205. The method of claim 204, wherein the step of generating is
carried out with the digital electrical computer programmed to electronically
generate the illustration including an amount of the investment
sufficient to completely repay the amount of the mortgage.
206. The method of claim 203, wherein the step of generating is
carried out with the digital electrical computer programmed to convey
electronic mail to and from each of a plurality of digital electrical
computers operably connected to the programmed digital electrical
computer to obtain the illustration.
207. The method of claim 206, wherein the step of generating is
carried out with the digital electrical computer programmed to offer
hypertext-linked help at each of the plurality of digital electrical
computers.
208. The method of claim 202, wherein the step of generating is
carried out with the digital electrical computer programmed to link
to one of a plurality of digital electrical computers of respective
life insurance carriers via respective open-end network gateways
and to obtain insurance information to customize the illustration
in response to a selection of a life insurance policy offered by
one of the carriers as the investment.
209. The method of claim 202, wherein the step of generating is
carried out with the digital electrical computer programmed to link
to one of a plurality of digital electrical computers of respective
lenders via respective open-end network gateways and to obtain mortgage
information to customize the illustration in response to a selection
of a mortgage offered by one of the lenders.
210. The method of claim 202, wherein the step of generating is
carried out with the digital electrical computer programmed to link
to a plurality of digital electrical computers of respective securities
brokers via respective open-end network gateways and to obtain securities
information to customize the illustration in response to a selection
of a security offered by one of the securities brokers as the investment.
211. The method of claim 202, wherein the step of generating is
carried out with the digital electrical computer programmed to receive
selection criteria for the investment and, in response to receipt
of the criteria, to find the best investment from a plurality of
investments.
212. The method of claim 202, wherein the step of generating is
carried out with the digital electrical computer programmed to receive
selection criteria for the mortgage and, in response to receipt
of the criteria, to find the best mortgage from a plurality of mortgages.
213. The method of claim 202, wherein the investment is a cash
value life insurance policy, and wherein the step of generating
is carried out with the digital electrical computer programmed to
receive selection criteria for the life insurance policy and, in
response to receipt of the criteria, to find the best life insurance
policy from a plurality of life insurance policies.
214. The method of claim 213, wherein the step of generating is
carried out with the digital electrical computer being responsive
to a designation representing a corporate-sponsored purchase of
the life insurance policy.
215. The method of claim 202, wherein the illustration electronically
generated by the programmed digital electrical computer includes
an amount of the investment for use as collateral for the mortgage.
216. The method of claim 202, wherein the investment is a cash
value life insurance policy, and wherein the step of generating
is carried out with the digital electrical computer programmed to
electronically generate the illustration including the amount of
the mortgage being repaid by after-US-tax proceeds from a surrender
of the life insurance policy.
217. The method of claim 202, wherein the investment is a cash
value life insurance policy, and wherein the step of generating
is carried out with the digital electrical computer programmed to
electronically generate the illustration including the amount of
the mortgage being repaid by at least one loan from the life insurance
policy.
218. The method of claim 202, wherein the investment is a cash
value life insurance policy, and wherein the step of generating
is carried out with the digital electrical computer programmed to
electronically generate the illustration including the amount of
the mortgage being repaid by a death benefit of the life insurance
policy after a roll over of the amount of the mortgage.
219. The method of any one of claims 216, 217, or 218, wherein
the step of generating is carried out with the digital electrical
computer programmed to electronically generate the illustration
including the life insurance policy having a premium structure computed
for a lump-sum prepayment of the life insurance policy.
220. The method of any one of claims 216, 217, or 218, wherein
the step of generating is carried out with the digital electrical
computer programmed to electronically generate the illustration
including the life insurance policy having corporate-guaranteed
premium payments.
221. The method of claim 216, 217, or 218, wherein the step of
generating is carried out with the digital electrical computer programmed
to electronically generate the illustration including the life insurance
policy having premium payments secured by an irrevocable letter
of credit.
222. The method of claim 202, wherein the investment is a cash
value life insurance policy, and wherein the step of generating
is carried out with the digital electrical computer programmed for
generating the illustration as a generic illustration including
the amount of the mortgage using the life insurance policy as collateral
for a standard amount of the mortgage.
223. The method of claim 202, wherein the step of generating is
carried out with the digital electrical computer programmed to obtain,
in generating the illustration as a generic illustration, data representing
average loan rates and average closing costs.
224. The method of claim 223, wherein the step of generating is
carried out with the digital electrical computer programmed for
adjusting any of the data to reflect an input value.
225. The method of claim 202, wherein the step of generating is
carried out with the digital electrical computer programmed for
computing an interest for the mortgage and a credited rate for the
life insurance policy, wherein the rates are computed from one interest
rate index.
226. The method of claim 225, wherein the step of generating is
carried out with the digital electrical computer programmed for
computing the interest rate index.
227. The method of claim 202, wherein the method further comprises
the step of generating a reillustration with the programmed digital
electrical computer, at a time during the mortgage, to reflect a
changed monthly mortgage payment.
228. The method of claim 202, wherein the investment is a cash
value life insurance policy, and wherein the step of generating
is carried out with the digital electrical computer programmed for
computing, and generating the illustration showing, an additional
amount of insurance premium sufficient to maintain cash value of
the life insurance policy as projected in the illustration.
229. The method of claim 228, wherein the step of generating is
carried out with the digital electrical computer programmed for
outputting loan/insurance product information at an output device
operably connected to the digital electrical computer.
230. The method of claim 228, wherein the step of generating is
carried out with the digital electrical computer programmed for
outputting loan rate information at an output device operably connected
to the digital electrical computer.
231. The method of claim 228, wherein the step of generating is
carried out with the digital electrical computer programmed for
outputting insurance premium information at an output device operably
connected to the digital electrical computer.
232. The method of claim 228, wherein the step of generating is
carried out with the digital electrical computer programmed for
receiving input mortgage application information and, in response
thereto, generating with the digital electrical computer a customized
mortgage application form for the mortgage.
233. The method of claim 228, wherein the step of generating is
carried out with the digital electrical computer programmed for
receiving input health information for insurance underwriting.
234. The method of claim 228, wherein the step of generating is
carried out with the digital electrical computer programmed for
receiving input insurance application information and, in response
thereto, generating with the digital electrical computer a customized
life insurance application form for the life insurance policy.
235. The method of claim 228, wherein the step of generating is
carried out with the digital electrical computer programmed for
receiving input brokerage account information and, in response thereto,
generating with the digital electrical computer a customized brokerage
account application form.
236. The method of claim 202, wherein the investment is a cash
value life insurance policy, and wherein the step of generating
is carried out with the digital electrical computer programmed for
bracketing and iteratively solving for an amount of premium for
the life insurance policy necessary to accumulate sufficient cash
value to repay the amount of the mortgage at a specified time.
237. The method of claim 236, wherein the step of generating is
carried out with the digital electrical computer programmed for
computing in response to receipt of an input designation of a higher
up-front payment than the amount of the cash value solved for, an
allocation of monies to a down payment amount and to the amount
of the life insurance premium, and wherein the illustration includes
the allocation.
238. The method of claim 228, wherein the step of generating is
carried out with the digital electrical computer programmed for
generating the illustration including a comparison of the mortgage
and a conventional mortgage.
239. The method of claim 228, wherein the step of generating is
carried out with the digital electrical computer programmed for
generating the illustration including a comparison of after-US-tax
cost of a monthly payment for the amount of the mortgage with the
investment as collateral and a conventional mortgage.
240. The method of claim 202, wherein the step of generating is
carried out with the digital electrical computer programmed for
generating the illustration including the investment owned by a
borrower.
241. The method of claim 202, wherein the step of generating includes
generating the illustration wherein the investment is in a US-tax-favored
investment plan.
242. The method of claim 202, wherein the step of generating includes
generating the illustration wherein the investment is in an individual
retirement account investment plan.
243. The method of claim 202, wherein the step of generating includes
generating the illustration wherein the investment is in a Keough
investment plan.
244. The method of claim 202, wherein the step of generating includes
generating the illustration wherein the investment is in a 401K
plan.
245. The method of claim 202, wherein the step of generating includes
generating the illustration wherein the investment is in a profit
sharing plan.
246. The method of claim 202, wherein the step of generating includes
generating the illustration wherein the investment is not in a US-tax-favored
investment plan.
247. The method of any one of claims 202, or 241-246, wherein the
step of generating is carried out with the investment being a security.
248. The method of any one of claims 202, or 241-246, wherein the
step of generating is carried out with the investment being a life
insurance policy.
249. The method of any one of claims 202, or 241-246, wherein the
step of generating is carried out with the investment being an annuity.
250. A method for using a machine to electronically generate an
illustration of an amount of a security repaying an amount of a
mortgage, the method comprising the steps of:
entering an amount of a mortgage into a digital electrical computer
programmed to receive the amount from a terminal;
generating, in response to receipt of the amount, an illustration
including a security as an investment repaying the amount, wherein
the digital electrical computer is not programmed to generate the
illustration including a mortgage plan having a cost containment
clause; and
printing the illustration at a printer.
251. The method of claim 250, wherein the step of generating includes
generating the illustration including the security used in conjunction
with term life insurance for repaying the amount of the mortgage.
252. The method of claim 250, wherein the step of generating includes
generating the illustration including the security as a zero coupon
bond.
253. The method of claim 250, wherein the step of generating includes
generating the illustration including the security as a zero coupon
bond, the zero coupon bond being a US Treasury derivative.
254. The method of claim 250, wherein the step of generating includes
generating the illustration including the security as a zero coupon
bond, the zero coupon bond being a municipal bond derivative.
255. The method of claim 250, wherein the step of generating includes
generating the illustration including the security being as at least
one share in a mutual fund.
256. A method for using a machine to electronically generate an
illustration of an amount of a life insurance policy repaying an
amount of a mortgage, the method comprising the steps of:
entering an amount of a mortgage into a digital electrical computer
programmed to receive the amount from a terminal;
generating, in response to receipt of the amount, an illustration
including an amount of a life insurance policy as an investment
repaying the amount of the mortgage;
wherein the digital electrical computer is not programmed to generate
the illustration for a mortgage plan having a cost containment clause;
and
printing the illustration at a printer.
257. The method of claim 256, wherein the step of generating is
carried out with the life insurance policy being a term life insurance
policy.
258. The method of claim 256, wherein the step of generating is
carried out with the life insurance policy being a permanent life
insurance policy.
259. The method of claim 256, wherein the step of generating is
carried out with the life insurance policy being a universal life
insurance policy.
260. The method of claim 258, wherein the step of generating is
carried out with the life insurance policy being a single policy
providing a death benefit for two insureds, at least one of the
insureds being a borrower under the mortgage.
261. The method of claim 260, wherein the step of generating is
carried out with the life insurance policy being a joint life insurance
policy.
262. The method of claim 260, wherein the step of generating is
carried out with the life insurance policy being a joint and survivor
life insurance policy.
263. The method of claim 258, wherein the step of generating is
carried out with the digital electrical computer programmed to electronically
generate the illustration including the amount of the life insurance
policy for a borrower, and a second amount of a life insurance policy
for a second insured, such that combined death benefits of the life
insurance policies are sufficient to repay the amount of the mortgage
and such that combined cash values of the life insurance policies
are sufficient to repay the amount of the mortgage.
264. The method of claim 258, wherein the step of generating is
carried out with the life insurance policy being a variable life
insurance policy.
265. The method of claim 258, wherein the step of generating is
carried out with the life insurance policy having at least one rider.
266. The method of claim 258, wherein the step of generating is
carried out with the life insurance policy having a disability rider.
267. The method of claim 258, wherein the step of generating is
carried out with the life insurance policy having an income rider.
268. The method of claim 258, wherein the step of generating is
carried out with the digital electrical computer programmed to iteratively
solve for an initial premium amount for the life insurance policy.
269. The method of claim 268, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
a Specified Amount of the life insurance policy providing an amount
of life insurance sufficient for repaying the amount of the mortgage,
and wherein the illustration includes the Specified Amount.
270. The method of claim 269, wherein the step of generating is
carried out with the digital electrical computer programmed to test
the Specified Amount against an amount computed using an Internal
Revenue Service Code definition of life insurance.
271. The method of claim 270, wherein the step of generating is
carried out with the digital electrical computer programmed to test
the Specified Amount against an amount computed using a Guideline
Level Premium.
272. The method of claim 270, wherein the step of generating is
carried out with the digital electrical computer programmed to test
the Specified Amount against an amount computed using a Guideline
Seven Pay Premium.
273. The method of claim 270, wherein the step of generating is
carried out with the digital electrical computer programmed to test
the Specified Amount against an amount computed using a Guideline
Single Premium.
274. The method of claim 270, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
the Specified Amount as not less than the amount of the mortgage.
275. The method of claim 268 wherein the step of generating is
carried out with the digital electrical computer programmed to compute
an amount of death benefit which is in compliance with an Internal
Revenue Service Code ratio of insurance cash value to death benefit.
276. The method of claim 268, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
an after-US-tax cash surrender value of the life insurance policy
for the last month of the mortgage as not less than the amount of
the mortgage.
277. The method of claim 268, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
an end of month life insurance cash value and an amount of a loan
from the life insurance policy in the beginning of a month.
278. The method of claim 268, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
a loan from the life insurance policy equal to the amount of the
mortgage.
279. The method of claim 268, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
an end of month cash value of the life insurance policy as always
greater than total loans from the life insurance policy in any month
through each year of the illustration.
280. The method of claim 268, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
an amount of death benefit which, in all years in the mortgage,
is not less than the sum of the amount of the mortgage and a loan
balance of the life insurance policy, including accrued interest,
in any month through each year of the illustration.
281. The method of claim 268, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
an amount of a life insurance policy loan in any month equal to
the amount of the mortgage multiplied by an annual interest rate
charged for the amount of the mortgage.
282. The method of claim 268, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
an amount of interest credited on the life insurance policy as including
a rate of interest credited on the life insurance policy multiplied
by a loan balance of the life insurance policy, including accrued
interest.
283. The method of claim 268, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
an annual amount of premium for the life insurance policy.
284. The method of claim 268, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
a schedule of premium payment amounts for the life insurance policy,
such that the life insurance policy is not a modified endowment
contract.
285. The method of claim 268, wherein the step of generating is
carried out with the digital electrical computer programmed to compute,
and wherein the illustration includes, the amount of the premium
for the life insurance policy as at least partially replacing an
amount of a down payment for a mortgage.
286. The method of claim 268, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
the initial premium amount for the life insurance policy and to
compute an amount of an up-front payment which includes the initial
premium amount combined with an amount for purchasing an annuity,
the annuity being sufficient to pay scheduled premiums for the life
insurance policy for a specified number of years.
287. The method of claim 285, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
an up-front payment amount for the mortgage based on: an annual
payment for an annuity, the annual payment being equal to the initial
premium amount; a specified number of payments for the annuity;
an annual credited rate of the annuity expressed as a percentage;
a monthly interest rate of the annuity; a total percentage of initial
expense charged by a carrier; a number of months in the annuity;
and a total of fixed charges by the carrier taken from a cash balance
of the annuity in any given month.
288. A method for using a machine to produce an illustration of
an amount of an annuity repaying an amount of a mortgage, the method
comprising the steps of:
entering an amount of a mortgage into a digital electrical computer
programmed to receive the amount from a terminal;
generating, in response to receipt of the amount, an illustration
including an amount of an annuity as an investment repaying the
amount of the mortgage, wherein the digital electrical computer
is not programmed to generate the illustration as including a mortgage
plan having a cost containment clause; and
printing the illustration at a printer.
289. The method of claim 288, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
the amount of the annuity as an amount of an immediate annuity.
290. The method of claim 288, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
the amount of the annuity as an amount of an immediate annuity used
in conjunction with a term life insurance policy for repaying the
amount of the mortgage.
291. The method of claim 288, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
the amount of the annuity as an amount of an immediate annuity for
paying interest on the amount of the mortgage.
292. The method of claim 288, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
the amount of the annuity as an amount of an immediate annuity used
in conjunction with a term life insurance policy for repaying the
amount of the mortgage, and wherein the amount of the mortgage is
an amount of a home equity mortgage.
293. The method of claim 288, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
the amount of the annuity as an amount of a deferred annuity.
294. The method of claim 288, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
the amount of the annuity as an amount of a deferred annuity used
in conjunction with a term life insurance policy for repaying the
amount of the mortgage.
295. The method of claim 293, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
the amount of the annuity as an amount of a single premium deferred
annuity.
296. The method of claim 293, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
the amount of the annuity as an amount of a level premium deferred
annuity.
297. The method of claim 293, wherein the step of generating is
carried out with the digital electrical computer programmed to compute
the amount of the annuity as an amount of a variable premium deferred
annuity.
298. The method of any one of claims 250, 256, or 288, wherein
the step of generating is carried out with the amount of the mortgage
as an amount of a first mortgage.
299. The method of any one of claims 250, 256, or 288, wherein
the step of generating is carried out with the amount of the mortgage
as an amount of a home equity mortgage.
300. The method of any one of claims 250, 256, or 288, wherein
the step of generating is carried out with the amount of the mortgage
as an amount of a balloon payment mortgage.
301. The method of any one of claims 250, 256, or 288, wherein
the step of generating is carried out with the amount of the mortgage
as an amount of a fixed interest mortgage.
302. The method of any one of claims 250, 256, or 288, wherein
the step of generating is carried out with the amount of the mortgage
as an amount of a variable interest mortgage.
303. The method of any one of claims 250, 256, or 288, wherein
the step of generating is carried out with the digital electrical
computer programmed to compute amortization of the amount of the
mortgage when interest rates are low, and negative amortization
of the mortgage when interest rates are high, such that earnings
on the investment are an offset to the negative amortization.
304. A machine for producing an illustration of an investment for
repaying an amount of a mortgage, the machine comprising:
a terminal and a printer each operably connected to a digital electrical
computer programmed to electronically generate, in response to an
amount of a mortgage input at the terminal and a selection input
at the terminal of an investment made from any two of the investments
of a group consisting of a life insurance policy, a security, and
an annuity, as collateral owned by a borrower under the mortgage,
an illustration including the selected investment repaying the mortgage
amount.
305. The machine of claim 304, wherein the selection is made from
all three of the group.
306. The machine of claim 304, wherein the selection includes a
second investment selected from all three of the group.
307. A method for using a machine for producing an illustration
of an investment for repaying an amount of a mortgage, the method
comprising:
entering an amount for a mortgage at a terminal to be electronically
conveyed to a digital electrical computer programmed to compute,
in response to receipt of the entered amount for the mortgage and
a selection of an investment made at the terminal, the selection
made from any two of the investments from a group consisting of
a life insurance policy, a security, and an annuity, as collateral
repaying the amount of the mortgage; and
generating with the digital electrical computer an illustration
including the selected investment as collateral repaying the amount
of the mortgage for printing at a printer.
308. The machine of claim 307, wherein the selection is made from
all three of the group.
309. The machine of claim 307, wherein the selection includes a
second investment selected from all three of the group.
Mortgage description
I. BACKGROUND OF THE INVENTION
A. Technical Field of the Invention
This invention concerns an electrical computer and a data processing
system, and methods involving the same, applied to the financial
fields of insurance and mortgages. More particularly, this invention
relates to a computer system for preparing, processing and transmitting
life insurance premium quotes as part of a mortgage calculation
in support of a new financial product. In the new financial product,
life insurance is used as collateral and a means for repayment of
a mortgage, and facilitates the purchase of real estate without
(or with a greatly reduced) down payment. The invention includes
automated aspects of the use of premiums paid on life insurance
as a substitute for the initial down payment on a mortgage, the
use of life insurance policy death benefits to retire the mortgage
upon the death of the borrower, the use of accumulated cash values
to retire the outstanding principal on a mortgage in the event of
the borrower's survival, and the services of storage and transmission
of data for all of the foregoing.
B. Description of the Background Art
In the United States, the declining supply of low-cost housing
and the inability of many low-income renters to save enough money
to make a down payment has forced many potential home buyers out
of the housing market, according to a study released Mar. 17, 1988,
by the Harvard University Joint Center for Housing Studies. (Reported
in the Mar. 28, 1988, Bureau of National Affairs Banking Report.)
To address this problem in the United Kingdom, a way has been found
to combine life insurance and a mortgage into what is known as an
"endowment mortgage."
A UK endowment mortgage is a balloon payment mortgage combined
with an endowment life insurance contract. A UK endowment life insurance
policy provides life insurance coverage and tax-free accumulation
of premium dollars invested in the life insurance policy over a
stipulated time period--usually between twenty and forty years.
The lender and the insurance company work in concert to engineer
a balloon payment mortgage linked to an endowment life insurance
policy so that, at the end of the mortgage period, the cash value
accumulated via the life insurance is sufficient to repay the mortgage
in a single, lump-sum "balloon" repayment.
A home buyer financing the purchase of a home with a UK endowment
mortgage pays no principal to the lender over the term of the mortgage.
Monthly loan payments are limited to interest only. The mortgage
principal is repaid separately by using the life insurance policy.
This principal accumulates in an endowment life insurance policy--a
universal life insurance policy with a level death benefit equal
to the purchase price of the home. The premium dollars invested
grow over the term of the mortgage to meet the amount of the principal
borrowed to purchase the home. In the last year of the mortgage,
the life insurance policy "endows," and the homeowner
uses a one-time tax-free distribution from the life insurance policy
to repay the mortgage.
The endowment mortgage has numerous advantages to UK borrowers
and lenders. First, it is more tax-efficient for borrowers than
a conventional amortization mortgage. This is because monthly payments
include only interest and are therefore 100 percent tax deductible.
Second, principal payments, made in the form of premium payments
to the endowment policy (less the cost of mortality and insurance
charges), accumulate tax free. This causes endowment policy assets
to grow more rapidly, and in turn allows lenders to lower the amount
of the required down payment. Third, it is a more secure lending
vehicle for the lender. The lender has collateral rights to both
the mortgaged property and the insurance policy. Fourth, because
of the insurance component of the endowment mortgage, the homeowner
has built-in security that so long as he or she maintains the mortgage
payments, the survivors will inherit the mortgaged property free
of the mortgage.
Subsequent generations of products have expanded on the endowment
mortgage concept in the UK. Derivative versions of the product include
the so-called Pension Mortgage and Personal Equity Plan (PEP) Mortgage.
Both products link the UK equivalent of an Individual Retirement
Account or Keough Account, term insurance, and a balloon payment
mortgage. These financial products include all of the characteristics
of an endowment mortgage (full deductibility of mortgage interest
payments, life coverage, and tax-free accumulation of principal).
The term insurance provides the life coverage component of the endowment
mortgage, the Pension or PEP provides the tax-free accumulation
of principal, and the balloon payment mortgage provides fully deductible
loan interest. In addition, both the PEP and Pension mortgages have
the additional benefit of offering at least a partially deductible
principal repayment. Both PEP and Pension contributions are tax-deductible
up to certain limits.
Endowment mortgages dominate the residential mortgage market in
the UK. For example, approximately 82 percent of all mortgages underwritten
in the UK in 1988 were endowment, pension, or PEP type mortgages.
Conventional amortization type mortgages, similar to those commonly
available in the United States, are also available in the UK, but
these accounted for only 18 percent of new mortgage sales in 1988.
Despite their great success in the UK, endowment type mortgages
have not similarly dominated the United States residential mortgage
market, apparently largely due to the different laws of each nation.
In the United States, federal statutes forbid most lenders from
selling life insurance. Also, most states have laws forbidding tie-in
sales of mortgages. A tie-in sale occurs when a lender insists that
a borrower buy a particular insurance product from a particular
life insurance company. Legal impediments also exist for life insurers
wishing to lend money as an inducement to sell insurance. Further,
in the United States the tax treatment of life insurance is different
from that in the United Kingdom. In the United States, policyowners
must pay taxes on policy distributions in excess of the basis (for
US tax purposes, the basis is equal to cumulative premium payments)
in the contract. In the UK, distributions from endowment type insurance
contracts are tax free.
Thus, in the US there is a unique problem of how to lawfully combine
a mortgage and life insurance and additionally make a viable financial
product. Accordingly, it is not surprising that computer systems
to illustrate such a financial product have been lacking in the
United States.
A proposal to combine life insurance and a mortgage, implemented
by means of a computer system, has been made in U.S. Pat. No. 4,876,648,
titled "System and Method for Implementing and Administrating
a Mortgage Plan" (Charles Lloyd) (hereinafter "LLOYD"),
issued on Oct. 24, 1988. Under LLOYD's mortgage scheme, as it is
presently understood, each year the lender charges some percent
over the standard interest rate to cover the cost of insurance premiums
($100,000.times.1%=$1,000 in LLOYD's example). These insurance premium
payments buy an insurance policy that is owned by the lender as
the means by which the mortgage principal is repaid. At five-year
intervals, the homeowner may receive a rebate of this extra interest
paid (and deducted) by exercising a cost containment clause. At
the execution of this clause, the lender makes a distribution equal
to the policy premiums to the homeowner. For example, in year 20,
the distribution would be equal to $20,000 for a total of 20 annual
premiums of $1,000. By exercising the cost containment clause to
obtain the $20,000 distribution and using that distribution to buy
the life insurance policy from the lender at the lender's basis
in the policy, $20,000, the homeowner can pay down the mortgage.
That is, the homeowner now owns an insurance policy with a cash
value of $40,648, which may be used to pay down the mortgage.
However, there are a number of significant problems with the LLOYD
approach. These problems seem to center on the mechanism for getting
the money out of the insurance policy to retire the mortgage, i.e.,
the cost containment clause. One significant problem that may be
real or perceptual is the possibility that the financial product
could be viewed as constituting an unlawful discrimination based
on age and sex. That is, if the lender builds the cost of the policy
premium into the mortgage interest rate, then there will be the
appearance of charging different interest rates to different individuals
based on their age and sex. Such pricing differences are lawful
in a life insurance transaction because these factors relate to
the insurance risk. But age and sex discrimination in lending is
generally forbidden under the Equal Credit Opportunity Act, 15 U.S.C.
.sctn.1691(a)(1), which pr |