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By Peter Eberle
The cryptocurrency market brought along with it several "Bitcoin billionaires" who rode the crypto wave into wealth, but it has also presented the opportunity for several other ways for investors to make money. The unique properties of digital assets make it an intriguing investment opportunity for life insurance policies, allowing the value of a life insurance policy to grow throughout the insured's lifetime.
A Digital Asset Index Fund is primarily advantageous as an alternative investment for life insurance for high-net-worth individuals. “For these wealthy individuals, a standard whole life or universal life insurance plan will not allow them to leave the legacy they desire. They instead choose to invest in a variable life insurance policy,” explains Peter Eberle, President and CIO of Castle Funds. “However, economic conditions are making it to where variable life insurance policies based on traditional equities and securities do not yield satisfactory returns.”
Castle Digital Index Fund available inside life insurance products
PPVUL and PPVA, when combined with a nontraditional investment option like the Castle Digital Index Fund, represent a unique solution for high-net-worth clients who expect institutional pricing and seek alternative investment options on a tax-favored basis,” explains Eberle.
Another reason Bitcoin and other digital assets are becoming an exciting alternative investment for life insurance is that the outlook for equity and fixed-income returns is low. The near-unprecedented rate of inflation that recent trends have shown has pointed toward a looming economic recession that could wreak havoc on the stock market. When investments are tied to something as essential as life insurance, market conditions mustn't have a significant effect on the worth of a portfolio.
Digital assets inherently have very little correlation to market benchmarks. Commonly, the benchmark used to measure the value of an investment is the S&P 500. However, the S&P 500 does not indicate the health of the cryptocurrency markets. That isn't to say that Bitcoin is not susceptible to any outside influences — for example, the price of Bitcoin dropped significantly after Russia invaded Ukraine — but it is generally less dependent on economic conditions than traditional securities.
Bitcoin also has unique advantages in terms of not being considered a security by the SEC. Because of the decentralized nature of Bitcoin, there was no public offering that would lead to it being considered a “security.” There’s no centralized organization in charge of Bitcoin, which means that the regulatory framework for this asset is very different from the regulations that affect stocks and bonds. As a result, organizations like Castle Funds are able to implement their own stringent standards. “We maintain our digital assets in secure custody so that there is no vulnerability or risk,” Eberle asserts.
Investing in digital assets for life insurance also comes with unique tax benefits. When a nontraditional investment such as Bitcoin is integrated into an insurance product, it offers tax-deferred growth, tax-free withdrawals, and income-tax-free death benefits. This eliminates much of the hassle for both the insured and the beneficiary, ensuring that as much value as possible is received from the product after the insured's passing.
The advantages of having digital assets as a life insurance investment
Indeed, like any other investment portfolio, it is crucial to diversify the assets in the investments made for your life insurance, and digital assets are a wonderful asset class for that diversification. Even if the stock market is down, the crypto market can be up. A portfolio consisting of a mix of traditional securities and fixed-income investments alongside digital asset investments can ensure that, when the time comes and you pass away, you can leave the legacy you intended to leave behind for your loved ones.
Some critics have expressed concern over whether the "crypto winter" will cause Bitcoin and other digital assets to become an unreliable investment for life insurance, but cryptocurrency is not unlike any other form of speculative investment — it can be volatile. "There are times when the asset's value will go up and other times when its value will go down," explains Eberle. "This so-called crypto winter is simply a prolonged bear market, and bear markets eventually end."
Indeed, the crypto market will eventually recover. It could take several years before the market again reaches the peak it had reached, but for long-term investments such as life insurance, it's a waiting game. The long-term value of your portfolio can be served by making investments that will pay off in the future, as that will maximize the returns for your beneficiary.
Now is the time to consider investing in insurance products backed by Bitcoin and cryptocurrency. "Even though the market has been criticized as being volatile and unpredictable, any investment you make can come with a significant amount of risk," Eberle asserts. "In the financial world, there are very few absolutes, so don't let fear and uncertainty dictate the decisions you make for your and your loved ones' futures."
Author Bio
— Peter Eberle is the President and Chief Investment Officer of Castle Funds, which manages private funds for the insurance, institutional investment, family office, and individual markets. Peter has extensive experience in portfolio management, derivatives trading, and risk management.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.