When most people think about Life Insurance, they usually think about the financial support their loved ones receive when they pass away.
However, what is not usually fully understood is the “living benefits” of a permanent life insurance policy.
The living benefits can fund college, used during retirement planning, fund a start-up business, save on taxes and more. Permanent life insurance is far more beneficial than just passing assets onto heirs, and when its powered with Bitcoin, the living benefits are then supercharged.
If these ideas sound new to you, then you are not alone. Industry surveys, repeatedly shows that 3 out of 4 Americans don’t understand the full potential of Whole Life Insurance. Much less, when embracing the power of Bitcoin.
It is important, if you want to bring your wealth to the next level, that you begin viewing life insurance as an asset that supports long-term financial goals.
What are “living benefits”?
Living benefits are features built into Whole Life policies that allow you to access funds while you are still alive. Think of it as a “savings account” built inside your policy.
Let's take a closer look at how living benefits work:
· Cash-value accumulation. Permanent policies such as Bitcoin Whole Life Insurance gradually build cash value, which can be borrowed against or withdrawn, often functioning like a low-interest loan without the hassle of going to a bank. You cannot be denied this loan. The only question you will be asked is “How much would you like?”
· Tax advantages. The cash value grows on a tax-deferred basis. Typically, if you withdraw Bitcoin only what you've paid in premiums, those funds can be generally accessed at a normal tax basis. However, when you borrow, the Bitcoin receives a new cost basis at that day's value—allowing you to access your Bitcoin's value without triggering a taxable event.
· Wealth transfer. Life insurance can also be used to pass assets on quickly from one generation to another. With proper planning, it can help reduce tax burdens and avoid probate for your beneficiaries. The best part is, you don’t have to leave a treasure map with hidden clues for your loved ones to help them figure out your password to access the Bitcoin wallet you left behind.
Two paths with Bitcoin
Being smart about taxes is essential to preserving wealth.
“Not your keys, not your Bitcoin” is a nice bumper sticker slogan, but it also ignores the very real fact that the IRS exists. You could keep all of you Bitcoin in a hard wallet, locked inside your safe, hidden in your closet. This is nice in theory, but unless you want to go to jail for tax evasion, you will have to pay 20, 30, even 40% tax rates on your Bitcoin gains if you ever want to enjoy the wealth you have accumulated.
That’s simply not an acceptable option.
Bitcoin Whole Life Insurance policies provide coverage for your whole life, as long as the premiums are paid. Over time, the policy builds cash value (in Bitcoin) that you can use for anything you want; such as retirement, starting a business, vacations, medical expenses etc. And it all happens transparently on the blockchain.
Yes, some of your Bitcoin will not be in your hard wallet, but you will gain so much more, such as tax advantaged liquidity.
Key considerations with Bitcoin Life Insurance
If you are considering a Bitcoin denominated life insurance policy, take the time to make sure the policy is aligned with your financial goals and needs.
Here are a few points to consider:
· How much a of a death benefit do you need?
· Are you looking for lifelong coverage, or just a specific stage of life?
· How soon do you anticipate to need to access the funds inside the cash value of the policy?
The more clear your goals and expectations are, the easier it is to plan accordingly.
A financial adviser can serve as both a guide and educator, helping to demystify these complexities and inform your decisions. Consider asking:
How does the cash value work, and when can it be accessed? Understanding the mechanics and timing of cash value access is critical to long-term planning.
Will using living benefits reduce the death benefit? In some cases, accessing funds now could reduce the amount available to beneficiaries later. In others, it might not.
How does this policy integrate with your broader financial strategy? Life insurance should be an active component of your financial plan, supporting your goals such as preparing for retirement and passing on wealth from one generation to another.
Life insurance is not just about protecting your family after you are gone. When designed and used effectively, life insurance can be an essential part of your financial strategy.
You need to be proactive and make your policy work just as hard for you as you do for your loved ones.