As a seasoned analyst with over two decades of experience in the finance industry, I’ve witnessed the evolution of traditional financial products and their digital counterparts. The emergence of Bitcoin-denominated life insurance from Meanwhile is an intriguing development that merges two worlds – digital assets and legacy financial instruments.
Over time, the popularity of cryptocurrencies has significantly increased, leading to a vast array of uses for them. Even the original cryptocurrency, Bitcoin, isn’t exempt from this trend. This is evident with the surge of interest in exchange-traded funds, Bitcoin decentralized finance, and ordinals seen in 2024.
An innovative application for Bitcoin (BTC) lies in its integration within the life insurance sector, spearheaded by Meanwhile, who identifies themselves as “the first and only life insurance firm that operates using Bitcoin.
In Episode 14 of the “The Agenda” podcast, Jonathan DeYoung and Ray Salmond sat down with Danny Baer, the Director of Wealth and Asset Management at Meanwhile, to delve into the workings of Bitcoin-based life insurance and explore the tax advantages it provides for BTC holders.
What is Bitcoin life insurance?
According to Baer, Meanwhile provides a whole-life insurance policy which guarantees lifelong coverage for customers, unlike traditional policies with limited terms. What sets Meanwhile apart from other mainstream companies is their unique approach – they express their insurance policies and conduct all operations using Bitcoin as the currency.
Instead of using traditional dollars for premium payments, policy growth, loans, or payouts, everything related to your life insurance in this context is based on Bitcoin.
In simple terms, having a 10 BTC insurance coverage currently equates to approximately $720,000. However, the actual worth in U.S. dollars might significantly increase if Bitcoin’s price trend continues to rise.
“What we’ve tried to do is take an asset that we view as a very low time preference asset in Bitcoin, meaning that people should own it for a long time, and marry that with one of the lowest time preference savings or investment or planning vehicles, which is whole life insurance.”
Tax benefits of Bitcoin life insurance
Baer stated that a life insurance policy based on Bitcoin offers numerous tax benefits for long-term investors. “The main reason people are purchasing our Bitcoin-based whole life insurance policy isn’t primarily due to the insurance aspect of transferring Bitcoin upon death,” he explained, “it’s because of the crucial living benefit, which is the tax-exempt policy loan.” In simpler terms, you can obtain a loan using your policy’s value without incurring any taxes.
In my exploration as a researcher, I’ve observed an intriguing trend: as the value of Bitcoin surges, users accumulate a more substantial Bitcoin-denominated pool. This, in essence, expands the potential for Bitcoin collateralization. To put it simply, you can essentially borrow Bitcoin using your existing holdings, which then functions like receiving a new Bitcoin but with an updated cost basis.
“Let’s just say you paid your premiums in at $63,000 today, and it’s 10 or 20 or 30 years from now, and Bitcoin has gone to $1 million a coin. You could borrow against the value of your policy, Bitcoin out, [and] its cost basis would be $1 million. So, you could sell it immediately and have no capital gains on that transaction because you’re selling it at cost.”
To get further insights from Baer’s talk with The Agenda – such as details about Meanwhile handling customers’ Bitcoin, payout procedures, and the company’s regulation – tune into the complete episode on CryptoMoon’s Podcasts page, Apple Podcasts, or Spotify. Don’t forget to explore the rest of CryptoMoon’s array of shows as well!
As a researcher, I’d like to clarify that this content is primarily for educational purposes and should not be construed as legal or investment advice. The perspectives, insights, and personal opinions shared here are my own and may not align with those held by CryptoMoon. Always consult with a professional before making important decisions related to law or investments.
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2024-10-30 15:13