Computer system for producing an illustration of an investment repaying a 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.

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.

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 provides that "It shall be unlawful for any creditor to discriminate against any applicant with respect to any aspect of a credit transaction--(1) on the basis of race, color, religion, national origin, sex or marital status, or age . . . ."

It remains undecided whether a court would view the higher interest rate charged as an interest payment, and therefore subject to the regulations regarding equal treatment for all borrowers with the same credit rating, or as an insurance premium. Nonetheless, there may be a perception that there is some risk that whoever attempts to sell the LLOYD financial product would be sued and would lose, and the penalties for unlawful interest rate discrimination are considerable: 15 U.S.C. .sctn.1691(e)(a) provides for class action suits; subsection (b) provides for punitive damages; and subsection (c) provides for recovery of attorney fees and costs. In the end, though, the perception of discrimination may be the real Achilles heel of the LLOYD financial product, as the lender would have to offer different rates based on age and sex.

Another drawback of the LLOYD approach is that it has potentially adverse tax consequences. It is unclear if the incremental interest in the LLOYD financial product is tax deductible as home mortgage interest or non-tax deductible as an insurance policy premium payment. That is, if the homeowner has taken a deduction for the incremental interest paid of $1,000 per year over the term of the mortgage, and the cost containment clause is exercised, it is not clear what the tax treatment of the rebate would be. Certainly the IRS will not permit the homeowner to take a deduction for an interest payment for money that is later rebated, and LLOYD acknowledges the possibility of a tax problem with his financial product. See Col. 16, lines 6-20.

For example, in order to buy the policy from the lender at its cost of $20,000, the LLOYD homeowner will have to pay the difference between the cost of the policy and the after-tax proceeds from the interest rebate. This amounts to about $14,000, assuming that the individual is in a 30 percent tax bracket.

Still another drawback to the LLOYD approach is its lack of flexibility. While LLOYD mentions the use of variable and fixed rate mortgages the borrower makes only fixed cost containment clause payments, and there exists no mechanism for adjusting the amount of the payments in the event of declining interest rates. The borrower is therefore financing the repayment of a fixed obligation (i.e., the mortgage) with a variable asset (i.e., an interest-sensitive universal life insurance policy). Thus, in the event of declining interest rates, there is no assurance that the cash value accumulated in the cost containment clause will be sufficient to completely repay the mortgage. Furthermore, if the individual wants to sell the home at any time other than at the precise five-year intervals required by the cost containment clause, he or she will lose the value of the incremental interest payments. It is undoubtedly cumbersome to have to retire the mortgage (i.e., exercise the cost containment clause) "only during the fifth, tenth, fifteenth, etc., years of the mortgage." See LLOYD at Col. 7, line 47-Col. 8, line 6.

Yet another problem with the LLOYD approach is that, under some circumstances, it appears that the lender may end up with either the incremental insurance payments or the insurance policy after the mortgage is retired. For example, if the home buyer missed the 30-day deadline required for the cost containment clause anniversary in year 20, even if the home buyer happens to have $20,000 and buys the policy outright, he or she will receive a policy worth $60,648. But because the home buyer has already invested $20,000 over the previous twenty years, the lender is $20,000 richer, and the homeowner $20,000 poorer, for the exchange.

In addition, there appears to be a potential problem with the approach of LLOYD under circumstances where the mortgage is paid off with cash, such as when the mortgaged property is sold. Assume a $100,000 mortgage is retired with cash at the end of the mortgage term. Under LLOYD, the borrower apparently must pay an additional $30,000 to purchase the insurance policy from the lender.

This is not to say that the financial product proposed in LLOYD is not worthwhile. Rather, LLOYD provides an excellent example of the difficulty in linking a mortgage and an insurance product under the present laws of the United States on a commercially feasible basis.

In sum, then, United States laws (which define a US mortgage) and other obstacles have seemingly prevented a mortgage/insurance type product from being sold. Despite great success of the endowment type mortgage in the United Kingdom, despite billions of dollars lost in bad real estate loans and many collapsed lenders in the United States, despite the creative prowess of the US financial industry which has tried and failed to successfully develop and sell anything resembling a UK endowment type program in the US, the problem remained unsolved: "for some renters longing to enter the housing market, the likelihood of coming up with a down payment may seem like a pie-in-the-sky notion." (Chicago Tribune, Jan. 24, 1992.) It remained for the present inventors to find a solution.

II. OBJECTS OF THE PRESENT INVENTION

Therefore it is an object of the present invention to provide a computerized investment and mortgage payment calculation system which overcomes the previously mentioned disadvantages and limitations of the prior art.

A further object of this invention is to provide a computerized investment and mortgage illustration system, and a method of operating that system, in which a standardized illustration request form is filled out electronically for the purposes of providing a mortgage quote and an investment quote, and a means for computing mortgage and investment payments in conformity with those quotes.

An additional object of this invention is to provide a computerized investment and mortgage illustration system which uses a central computer to provide information concerning a mortgage using an investment as collateral and as a means for repaying the mortgage.

Another object of this invention is to provide a computer system for producing a printed illustration document which will permit comparison of the innovative financial product with other loan products.

Yet another object of this invention is to provide a computer system incorporating a central database into which data representing different lenders' mortgage rates is written and from which data is read in order to provide an illustration of a mortgage collateralized by an investment which is most suitable to the borrower's needs.

Still another object of this invention is to provide a computer system incorporating a central database into which data regarding different carriers' life insurance policies is written and verified by each such carrier authorized for retrieval thereof and from which is read data making up an illustration proposal of a mortgage backed by a life insurance policy which is most suitable to the borrower's needs given underwriting and policy requirements.

Still another object of the invention is to provide a computer system incorporating a central database accessible via modem capable of storing and transmitting locally applicable mortgage and insurance quotes on a national basis.

Still another object of this invention is to provide a computerized insurance and mortgage illustration system capable of showing the projected annual accumulation of life insurance cash values that (under current interest and mortality charge assumptions under a given life insurance carrier's life contract and authorized projections thereof) will provide collateral for a mortgage and which will eventually pay off that mortgage with the after-tax proceeds from surrendering the insurance policy after a stipulated period.

Still another object of this invention is to provide a computerized insurance and mortgage illustration system capable of showing the projected annual accumulation of life insurance cash values that (under current interest and mortality charge assumptions under a given life insurance carrier's life contract and authorized projections thereof) will provide collateral for a mortgage and which will eventually pay off that mortgage with the proceeds from a life insurance policy loan after a stipulated period.

Still another object of this invention is to provide a computerized insurance and mortgage illustration system capable of showing the projected annual accumulation of life insurance cash values that (under current interest and mortality charge assumptions under a given life insurance carrier's life contract and authorized projections thereof) will provide collateral for a mortgage and which will eventually pay off that mortgage with the proceeds from life insurance policy death benefits.

Still another object of this invention is to provide a computerized insurance and mortgage illustration system capable of showing the projected annual accumulation of life insurance cash values that (under current interest and mortality charge assumptions under a given life insurance carrier's life contract and authorized projections thereof) will provide collateral for a mortgage and which will eventually pay the interest on that mortgage with the proceeds from life insurance policy loans after a stipulated period.

Still another object of this invention is to provide a computerized insurance and mortgage illustration system capable of showing the annual death benefit amount which will provide for the payment of the remaining principal owed in each year over the stipulated term of the mortgage.

Still another object of this invention is to provide a computerized insurance system capable of identifying potentially higher risk individuals and providing specialized insurance values for those individuals in an illustration of a mortgage using life insurance cash values as collateral.

Still another object of this invention is to provide a computerized insurance and mortgage illustration system incorporating a central database into which data is written and from which such data is read, to provide the prospective applicant with finally printed, individualized, loan and insurance application forms prepared from standardized textual material in combination with the aforementioned information.

Other objects and advantages of the present invention will become apparent from the following summary of the invention, drawings, and detailed description of the invention and its preferred embodiment.

III. SUMMARY OF THE INVENTION

In accordance with the broad, general objects of this invention, a computerized investment and mortgage illustration system is provided for use in illustrating and supporting an innovative financial product. The innovation involves a financial product using an investment other than a down payment (such as cash value life insurance) as collateral and a repayment means for a mortgage, preferably wherein the financial product is devoid of a cost containment clause. This can be accomplished, for example, by having the borrower own an insurance policy and use the policy to secure the loan. In one embodiment (to which the present invention is not limited), a party other than the lender or insurer can illustrate a combination of life insurance and a mortgage preferably selected from those of numerous lenders and insurers.

Accordingly, the present invention involves processing information in a standardized manner, preferably to package an individually selected mortgage product with an individually selected investment product, the products each being selected from respective groups of such products made available by different suppliers. The packaging process tailors the financial product to the prospective applicant's particular needs.

The system can, for example, be owned and operated by a suitably licensed national intermediary, for example, a broker or data processing company. The intermediary would work in conjunction with lenders, securities firms and life insurance companies (and their agents and representatives) and with mortgage brokers to design, develop, and distribute investment and mortgage products. The investment and mortgage products, when used in combination with one another, will provide mortgages using an investment as supplemental collateral acceptable to lenders, mortgage insurers and endorsers, and investors in the secondary market for mortgages. The intermediary, operating nationally in cooperation with lenders and utilizing the system provided by this invention, can facilitate the sale of the combined investment/mortgage products by providing authorized lawyers, real estate agents, accountants, financial consultants, relocation specialists, corporate benefits advisors, or mortgage and/or life insurance agents and securities brokers with access to the system of this invention via remote terminals. As compensation for its work in designing the products, maintaining the system, and administering new kinds of supplemental collateral made possible by the system, the intermediary and user of the system would receive commissions for the sale of investments or, when appropriate, would receive fees for services provided.

Having a data processor or broker working in conjunction with lenders differs from past intermediaries both in the United States and the United Kingdom in that the system of this invention creates for the first time the capability of offering a number of different investment and mortgage products which may be used in conjunction with one another. By bringing these disparate products together in a combined format that is understandable to the end customer, the system permits the customer to have the benefit of access to a new composite mortgage instrument with supplemental security which would otherwise not be available, without encountering the aforementioned problems of the prior art.

A user of the system can be an employee of the aforementioned intermediary providing illustrations requested by individuals outside of that firm. Alternatively, a user of the system can be an individual who has received special approval from the intermediary to use the system.

A central processing unit in a digital computer is at the heart of the system. The central processing unit can access a database into which data is written and from which data is read. That data includes information regarding life insurance, mortgage information, actuarial information, insurance premium information, and predetermined text data for incorporation into the combined mortgage and insurance illustrations. The computer system further includes information corresponding to requirements of laws and regulations governing insurance and information on personal tax rates.

Plural terminals are provided for communicating with the central processing unit, each terminal having input means, such as a keyboard, and a display, such as a cathode ray tube (CRT) or a video display terminal (VDT). Each terminal is operable by a user to produce requests and to enter information and/or retrieve information for writing into and/or reading from the database via the central processing unit. The central processing unit provides a means for enabling access to the database in response to predetermined information entered at the terminal by the user and is suitably programmed to recognize particular authorizations.

In accordance with one desirable aspect of the invention, information regarding a life to be insured and other data needed to provide illustrations of a mortgage using life insurance as collateral for that individual is keyed into the central processing unit by a system user using a keyboard at a video display terminal. To assist the user in entering the appropriate data, a series of data comprising a "form" is displayed on the user's terminal by the central processing unit, and the user will normally proceed to enter pertinent information in the blanks provided. This information constitutes such things as the potential borrower's name and address, the amount of the mortgage requested, the amount of life insurance coverage required, the individual's personal tax rate, the number of points required by the lending institution, the individual's age, sex, and health status, and any other information necessary in providing an illustration of a mortgage using life insurance as collateral. This information is correlated via the central processing unit, resulting in the generation of premium quotation and mortgage illustration information. This information is then displayed at the user's terminal and can be printed out on the user's printer. Thus, in a matter of minutes, a prospective applicant is apprised of information pertinent to the mortgage such as (but not limited to) what the up-front payment and monthly payments would be for the mortgage if life insurance is used as collateral.

Once data called for by the "form" is entered into the computer system at the user's keyboard, a client information file or database record (hereinafter "client file") is established which will be variously updated as the user conducts sensitivity analyses of the impact of different insurance and loan related assumptions on the ultimate amount of the up-front payment and the mortgage. Once the prospective applicant decides to apply for a life insurance policy and loan, a final version of the illustration is saved by the user in a master database file for later retrieval and processing.

After input data has been compiled in a client fie, errors or omissions in that data (e.g., the amount of requested insurance may be too high or omitted altogether, etc.) are detected. If these errors cannot be corrected immediately (for example, by supplying information from another file or record), further processing of the illustration request is suspended and the need for additional information is reported.

In the event that the prospective applicant wishes to proceed immediately to obtain the respective applications for the insurance and mortgage products, the system is capable of taking the information stored in a final illustration database file, requesting a minimum of information otherwise not required in the illustration process (such as the prospective applicant's personal balance sheet information, which typically is required in the loan application form) and merging it with prepared textual information about the insurance and loan products to generate printed application documents in a form acceptable to, and previously approved by, the lender and the insurance company. The system also permits the user to separately enter these forms and fill the forms out electronically. The application forms still require signature by the prospective applicant, however. When signed, these forms are sent, for example, by mail or courier, to the lending institution and the system owner/operator for further processing. Should the prospective applicant wish to have this process expedited, the user may send the information on the signed forms electronically to a computer at the lending institution and/or system owner/operator, facilitating processing in advance of the receipt of the signed paper copies.

An alternative method for entering client data into the system, rather than by entering this data directly at a user's terminal, is to have the prospective applicant manually complete insurance and loan illustration request forms which may or may not have been generated at the user's terminal. The request form can be sent by mail or courier to the system operator and entered by the user into the computer system.

By means of the aforementioned computer system, this invention makes it possible for the first time to offer the American consumer a US mortgage arrangement which will perform like the endowment mortgage available in the United Kingdom. This mortgage/insurance financial product (referenced herein as the "Ryan Mortgage") has innovative characteristics uniquely suited to the US legal environment, but without the drawbacks of LLOYD. Unlike LLOYD, the Ryan Mortgage is typically not a single financial product necessarily offered by a single seller (e.g., a lender). In a preferred embodiment, it is a combination of two or more different financial products offered by different suppliers (i.e., multiple lenders and multiple insurance carriers). Because the consumer, not the lender, is the owner of the life insurance policy, there is no cost containment clause in the Ryan Mortgage.

Also, the borrower owns the means for repaying the mortgage; the borrower may completely repay the mortgage without having to purchase the means for repaying the mortgage from the lender. Like the UK product, the key components to the transaction may include: a balloon repayment mortgage, life insurance coverage equal to the amount of the mortgage, and a separate vehicle for accumulating principal. Vehicles for accumulating principal might include a universal life insurance contract, an Individual Retirement Account, Keough Account, or zero coupon bond.

This description will focus on a preferred embodiment of the invention using as an investment a universal life insurance policy, but it is to be explicitly understood that other equivalent investments can be used as a means for repaying the mortgage, e.g., term life insurance with a zero coupon bond, IRA, Keough Account, or tax-deferred annuity, or some other (preferably tax-favored) means for producing secured revenue in conjunction with life insurance. Indeed, in another embodiment of the present invention, an investment for repaying the mortgage can be selected from any two or three of a group consisting of a life insurance policy, a security, and an annuity. Further, the mortgage repayment vehicle can comprise a plurality of these investments selected from the group.

As in the UK, a purchaser of a Ryan Mortgage will enjoy fully deductible mortgage interest payments over the life of the mortgage. Premium payments provide life insurance coverage, and tax-free growth of principal for the repayment of the mortgage.

Unlike the UK product or a conventional US mortgage, the Ryan Mortgage completely or partially replaces the traditional mortgage down payment with an insurance purchase. For example, to purchase a $262,000 home rather than pay $52,400 (20% of the home purchase price) as a down payment and borrow the remaining $209,600, the Ryan Mortgage home buyer pays $31,586 (12% of the home purchase price) to purchase a life insurance contract and borrows $262,000, the full purchase price of the home. The $31,586 life insurance investment provides paid up coverage for the remainder of the borrower's life. The policy also accumulates sufficient cash value to repay the $262,000 balloon payment mortgage loan when it comes due, for example, in thirty years. The borrower pays only monthly interest charges on the mortgage. Monthly mortgage payments do not include principal repayment. Monthly mortgage payments are one hundred percent tax deductible over the life of the mortgage. (See Specimen 2.)

Normally lenders are reluctant to provide financing for one hundred percent of the purchase price of a home and are unwilling to wait until the end of the mortgage for the repayment of principal. However, under the Ryan Mortgage, the lender has additional security: the real estate plus the insurance.

The Ryan Mortgage offers the borrower at least two premium payment methods. The first is a lump-sum prepayment. With a lump-sum prepayment, the home buyer deposits an amount sufficient to pay the first scheduled premium. He or she also deposits enough money to purchase an annuity contract that will pay three annual premium payments (for example) for the second through fourth years of the life insurance contract. For example, of the $31,586 payment described above, $8,916.16 would go to pay the first scheduled premium payment and $22,669.84 would go to purchase an annuity at the date of the mortgage closing. Over the next three years, the annuity will make the premium payment of $8,916.16 on the anniversary of the mortgage transaction. After making his or her lump-sum payment, the home buyer normally makes no further premium payments. While interest rates remain at or above the rate projected, these premium payments will be sufficient to ensure that the life insurance contract remains in force over the life of the mortgage. The premium is also large enough to assure that the policy will accumulate sufficient cash value to repay the mortgage by the end of the mortgage term. Normally, the lump-sum prepayment needed will be less than twenty percent of the purchase price of the home. (The standard down payment amount of a conventional home purchase is twenty percent of the purchase price.) Also, the after-tax monthly cost of the all-interest monthly mortgage payments will typically be less than or equal to the cost of a conventional mortgage with a similar down payment amount.

The second premium payment method involves the participation of a guarantor. A guarantor could be an employer wishing to provide a benefit for its employees to relocate for business purposes. Also, a guarantor could be a lender providing an irrevocable letter of credit in exchange for a fee. The guarantor provides financial assurances to the lender that the home buyer will make the annual insurance payments. In a guaranteed transaction, the homeowner's premium payment would usually be less than five percent of the purchase price of the home. For example, ten annual premium payments of $4,700.70 could provide adequate cash value to pay off the $262,000 mortgage obligation in the last year of the mortgage. A guarantor arrangement allows the home buyer to make a drastically reduced up-front payment. In this example, the first of ten annual premium payments, $4,700.70, amounts to 1.79% of