Why Should Bitcoin Be Integrated with Life Insurance?

3 Mins read

The volatility of the crypto field has led to some investors questioning whether there is a more familiar strategy for long-term investment in the rapidly changing space. Bearing this in mind, recently, an index of the largest digital assets has been introduced as a potential investment for life insurance products, and eligible individuals might want to look at this as an option for their portfolios.

Private Placement Variable Annuities (PPVAs) and Private Placement Life Insurance (PPLI) are insurance solutions designed for high-net-worth individuals to participate in nontraditional investment options on a tax-deferred basis. If you are looking to put your money aside and allow it to appreciate for the future, especially outside of the restrictions of traditional securities products, PPVAs and PPLIs are the exact vehicles you need.

Why use PPVAs and PPLI policies

For many wealthy individuals, the primary benefit of PPVAs and PPLI products is the ability to defer tax on gains. This allows your investment to grow without paying tax on gains until sold, meaning that your beneficiaries could receive tens (or even hundreds) of thousands more than they would have with a traditional taxable investment account, depending on how the policy is set up.

Perhaps more important, however, is the fact that PPVA and PPLI policies allow the holder to maintain control over their funds until they pass away. Investments can be reallocated tax-free in either PPVA or PPLI policies, and withdrawals behave very differently regarding taxes. For example, with a PPLI policy, withdrawals are generally tax-free unless it is a modified endowment contract, and loans can often be taken against the policy’s cash value as well. For PPVAs, withdrawals are subject to a 10% penalty up to age 59½, after which point they are taxed as regular income.

These policies also offer greater flexibility because they are not subject to the same requirements placed on registered products. Essentially, this means that these policies can be more personalized to fit the needs of high-net-worth investors as long as they meet the definitions of being an accredited investor and a qualified purchaser. While there is a list of qualifications that can be used to meet these definitions, one that is particularly of note for nontraditional investors is that having $5 million or more in qualified investments establishes you as a qualified purchaser.

PPVAs and PPLI policies meet the crypto market

Castle Funds now offers a diversified crypto index fund eligible for inclusion in PPVA and PPLI products. As a result, self-made “Bitcoin billionaires” will have the opportunity to participate in PPVAs and PPLI to plan for their future and ensure they can leave a legacy for and support future generations. Flexibility has been a critical tenet in these individuals’ rise to success,  with the adoption of new ideas and technologies serving as crucial parts of their advancement.

The wealthy’s use of PPVAs and PPLIs has revealed the limitations traditional investments have historically placed on life insurance products. With alternative investments having become an increasingly popular source of diversification in investment portfolios, high-net-worth individuals would want to diversify their life insurance portfolios as well with these alternative investments. Seeing the potentially-lucrative gains that alternative investments such as a Digital asset index can offer — and given the fact that these gains are tax-deferred in PPVAs and PPLI policies — means more money for your beneficiaries, making this an appealing opportunity.

Access to liquid alternative investment strategies with greater liquidity than private equity, venture capital, or real estate strategies offers the potential for portfolio risk reduction through diversification, with relatively small allocations of 5% or less. Using alternatives as diversifiers in this way can thus conserve more capital for longer-term, less-liquid investment options.

The integration of Bitcoin and other digital assets into PPVAs and PPLI policies is a natural step forward due to the freedom allowed by these two life insurance offerings. High-net-worth individuals will find that this is a way to grow their investments and ensure that future generations are well-set to carry on their legacy with less burden from the taxes that can impact non-insurance financial products.


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