How to Protect your Bitcoin from Uncle Sam

As Bitcoin becomes ever more popular, and the value of it soars to new dizzying heights, many Hodlers wonder how they tap into the value of their newfound fortunes without triggering a taxable event.

Enter, Bitcoin Life Insurance.

Bitcoin Life Insurance is a Whole Life Insurance Policy. Which simply means that the customer is covered for their entire life, instead of just a portion of it. Furthermore, it builds “cash value” as well. More on that part later.

But what makes Bitcoin life insurance Bitcoin life insurance? You pay in Bitcoin; the cash value builds in Bitcoin and the death benefit pays in Bitcoin. This simply means, the currency being used is Bitcoin, not fiat. Forget everything you know about using fiat, because now its Bitcoin.

But that’s not all. There are Tax advantages as well!

If you are one of the few that are holding multiple Bitcoin and want to tap into the value without triggering a taxable event, now you can. Your new policy will hold inside it your Bitcoin, which you can use as collateral for a tax-free, low interest loan (as of this writing averaging about 3%). At which point, you will receive new Bitcoin on a stepped-up basis which you could immediately sell or spend and owe no capital gains tax.

As Bitcoin continues its inevitable climb higher and higher, the value of your policy will increase as well. This means your pool of funds available to you will increase too. For example:

Say you bought Bitcoin when it was trading at $100,000 and 21 years from now its worth $21,000,000. You will be able to borrow against the value of your policy when the Bitcoin is worth $21,000,000, but best of all the coast basis will be $21,000,000 not $100,000. So, you could sell or spend it immediately and have no capital gains taxes for that transaction since you’re selling it at cost.

But what if the value of Bitcoin drops while you have a loan out? Will you get a margin call? Nope.

Since the value of the life insurance contract is completely in Bitcoin, the insurance company only cares about Bitcoin. In fact, if the value drops, that would only benefit you. If Bitcoin is worth $1,000,000 and the value drops to $100,000 you can pay off the Bitcoin loan with only $100,000. The point is, its still only 1 BTC.

Finally, you will be leaving a truly lasting legacy to your loved ones. The problem many people find with life insurance, is that they buy a death benefit of $100,000 for example, but they live for another 20 years, and they find that inflation has eaten away at their gift to their heirs. $100,000 20 years ago is only worth about 75% of that today. Inflation.

With Bitcoin life insurance, the value of Bitcoin will inevitably go up. 10 years ago, Bitcoin was only worth a few hundred dollars, today its worth over $100,000. 10 years from now it will likely be worth $1,000,000. What a nice gift that would be to leave someone!