Princeton Graduate starts a Bitcoin-only life insurance company to, quote, spice up the industry. As someone who set up over a billion dollars for the life insurance, I have some thoughts. This is either genius or concerning or maybe a little bit of both. Let's check this out. A little bit more about that because I think a lot of people are familiar with the idea of people borrowing against their home, home equity loans, using your house as collateral. And more and more people are hoping that in the future you'll be able to use Bitcoin as collateral. But what is the advantage to using it through this life insurance policy? Yeah, that's a great question. And I think at its core, what we are doing is allowing people to stay long Bitcoin. Bitcoiners don't want to sell Bitcoin. So we're allowing them to maintain exposure to Bitcoin. Actually, the number of Bitcoins that they own grows in the whole life insurance policy. And we can get into the mechanics if that's interesting. But in whole life insurance, and this is just the same thing that the people that call you and try to sell you, you know, Northwestern Mutual reps or New York Life reps are calling you. All of our products, it's just a whole life insurance policy. So when we talk about the benefits of our policy, it's the same benefits that they would try to pitch you on. But you can almost think of it as rather than being in dollars or if you're in Europe in euros or if you're in Mexico pesos. you're just paying for your life insurance using Bitcoin as the currency. Now, I think that's well said. And he actually, in the first five minutes, summarized life insurance quite well. But essentially, the biggest difference is this is a whole life insurance chassis. But the difference is it's in Bitcoin. And he opened up by literally saying like everything that they do is in Bitcoin and how they file is in Bitcoin and all. And so I think it's very, very interesting. I think that could also set Set up a couple potential issues. And you can say that this is just like your Northwestern Mutual policy, but the biggest difference is Northwestern Mutual has been around for 100 plus years, very, very stable, very regulated. I got questions about where this insurance company is, where it's regulated. A lot of times insurance is a contract between you and the insurance company. And so it's really built in the promise of and the track record of the insurance company. So that's something that. We'll see if he mentions, but that is a question. You can say that this is just like whole life insurance, but whole life insurance is very much built on trust and a track record. Our carrier, we have a fully licensed and regulated life insurance carrier, and its functional currency is Bitcoin. So that means its balance sheet is exclusively Bitcoin. We don't allow our company to touch dollars or stable coins or euros or anything other than Bitcoin. So it's all Bitcoin. We actually think we're the first company in the world. We state our audited financials in terms of Bitcoin. So you can imagine. how ridiculous our financials are. They're stated to the Satoshi. So there's nine decimal points for every line item in our financials. And then we do all of our regulatory filings in terms of Bitcoin. And then we do all the math that an insurance company does, like solvency calculations, reserving, is all done in terms of Bitcoin. I'm wondering for people that are into Bitcoin, like purists, does that matter to you? If you're going to work with an insurance company, do you want them to be all in, not one foot in, one foot out? I'm just curious from a standpoint, is that a red flag if someone, you know, like, like, let's say a, a life insurance with a fiat like one of the big mutual insurance carriers what if they had the ability to have a bitcoin version of their life insurance um deal would that be a red flag they're also you know in the fiat world and they're having like a bitcoin component or would you want to work with a company that's just all in bitcoin i'm just i'm more curious that's a that's a question that comes up for me the pros and cons of that yes and a lot of people think in terms of dollars so can you kind of break this down i mean i'm thinking of a life insurance policy let's say it's a million dollars. But in this case, you would put up a million. It would be worth a million dollars worth of Bitcoin or a certain amount of Bitcoin. I think one of the things I watched this video once before, Natalie doesn't really understand life insurance. And so she's doing her best in this interview. But I think, you know, Danny has to, again, go back and educate a little bit more about how life insurance works. Except remove dollars from your mind completely. We operate as a company solely on Bitcoin standard. And that is how our products operate as well. So you would buy an insurance policy essentially like X amount of Bitcoin, but you don't know what it's technically worth. And if Bitcoin drops 60%, it's a much smaller life insurance policy. Correct. Yes, that's exactly right. So similar to if, well, let's just use a real example. In the last 10 years, the purchasing power of the dollar has dropped between 20% and 25%. So I talk to people all the time who maybe tragically, their parents recently passed away. And they find us because the life insurance policy that their parents bought in the 60s or 70s that they thought would be substantial dollars now can barely buy a car. And so if you believe that Bitcoin relative to the dollar were not to appreciate over time, this would make no sense. you should just go buy a dollar-denominated life insurance policy. I appreciate him saying that. If you bought a dollar life insurance policy 10 years ago, the purchasing power today is 80% to 75% of what it would have been 10 years ago. And that's likely, with money printing into the basement of currency, going to continue. So now, if I give you the option, Natalie, you can buy life insurance, and when you die, I will pay you out a million dollars whenever you die. Could be tomorrow, hopefully not. Could be 60 years from now, hopefully. Or a million dollars, or I'll pay you out 10 Bitcoins. What would you choose? I would obviously want the Bitcoin. Right. I would take Bitcoin for the record too in that equation. 10 Bitcoin versus a million dollars. I, you know, I'm not going to predict that Bitcoin is going to a million a coin, though I've talked to people like Mark Moss that believe it's very doable. But even right now, that would be a no brainer. Just think about what has happened in the world in the last 15 years since the creation of Bitcoin. What Bitcoin, the market cap of Bitcoin is $2 trillion roughly today. You just think about the wealth creation that has occurred in the last 15 years in Bitcoin. That's $2 trillion. You can maybe subtract out some lost coins and Satoshi's coins and things like that. But that's $2 trillion of wealth creation. And until now, people really haven't had a vehicle with which they could use that wealth to plan for their family's futures. And so what we've done by creating this Bitcoin denominated life insurance carrier is provided them with really life insurance is like the world's oldest savings vehicle. So we brought the world's oldest savings vehicle to allow people to use their Bitcoin to actually plan. And they get all these tax advantages, which is why they're buying it. It's crazy how much the purchasing power of the dollar has just been destroyed. When I was young, I thought that a million dollars was so much money. And now I'm like, that can buy you a shack in Los Angeles. You think about the Home Alone house during the holiday season. They probably bought that for $200,000 and now it's $2.5 million. Like, yeah, it's really difficult. But so do you purchase it essentially by how many Bitcoin you want to receive? So it's like 10 Bitcoin or something. What if the 10 Bitcoin turned into $100 million worth and you want to draw on some of that? Yes, that's great. That'd be great for you if the 10 Bitcoin did. This is where you should start taking notes because I believe this is where the value of this strategy works. If you really believe in Bitcoin, the appreciation and you want to go long-term Bitcoin, I think that what they're doing is essentially creating a tax-free wrapper to get Bitcoin, use it throughout your life and be able to pass it on to the next generation. Maybe it makes sense just to walk quickly through an example of a policy and that way we can lay out the mechanics and how it operates. So an individual would come to us and they would fill out a life insurance application. We run their underwriting, like any other life insurance carrier does. The nice thing is we do everything online, so we don't require them to go see a doctor or do blood work done. But you basically decide how much coverage. Which sounds amazing until it's not. So I mean, it's like anytime you do that, you have to understand, I would love to know what their underwriting process is, because this whole thing could be genius until they make a huge error. And then boom, they're underwater, which goes back to who's backing them. $1 million or $2 million or $5 million of life insurance coverage, you pick. 10 bitcoins or 20 bitcoins or 50 bitcoins of life insurance coverage. We then, based on your medical underwriting, like any other life insurance carrier out there, tell you how much that costs. And so your payments are called premium payments. In Bitcoin? In Bitcoin. So an example of a policy could be that you want 20 bitcoins of coverage. And based on your underwriting, we tell you that will cost 10 bitcoins of premium payments. So you pay 10 bitcoins. And in exchange, whenever you die, no matter when that is, if it's tomorrow or 10 years from now, we will pay you at 20. That It depends on your medical underwriting that ratio can change, but. but that might be an example of a policy. Now you pay over 10 years. So you would pay those 10 Bitcoins, one Bitcoin per year for 10 years. And then after 10 years, you're just done paying. So it's called a limited pay whole life insurance policy. Limited pay meaning you're not paying every year for the rest of your life. So after 10 years, you're done paying. And then whenever you die, your beneficiaries will receive 20 Bitcoins. Now there are all these great tax advantages of whole life insurance. The first is that growth is tax-free. All right. Before we get into tax benefits and advantages. Okay. Hear me out. This is where maybe I'm... really weak when it comes to my understanding of Bitcoin. So let's say in this example, he used his example, you put 10 Bitcoin over 10 years, you're paying in, it's a 10 pay, meaning it's only a 10 pay whole life insurance, which I think is the simplest to understand. So I understand why they're doing that. And then they will pay out when you die, 20 Bitcoin. Now, the belief is Bitcoin is going to appreciate and grow over over time. So the Bitcoin itself will grow in value. The question I have is how are they actually like, again, this could sound really dumb. How are they actually taking 10 Bitcoin and making 20? Like I, how are they doing? Are they, are they selling the Bitcoin and like trading it? Are they, cause I, cause I get the whole, like a Bitcoin is worth a hundred thousand today. Maybe the belief is Bitcoin is going to be a million in the future, but like, I still don't understand how they're like, if I, for example, put one Bitcoin over the next 10 years, to then get 20 million in the future and now he's going to talk about how you can borrow against and all that stuff where you have cash cash value or bitcoin value i still don't understand how they they can get 20 20 bitcoin um and how they're doing that in a safe way so again i i i'm just that's just something that I would want to better understand hey guys I just wanted to interrupt real quick if you're watching this and have an indexed universal life policy a whole life policy have any type of insurance policy in general and you're like I want to know if I'm on the right track I want to know if this is set up properly we at better wealth want to help you we want to give you a free policy analysis and show you are you on the right track is there some things that you potentially could be doing better and so we have a link down below that you will have access to we would encourage you if you have a policy And you want to see if you're on the right track, check that out. And if you're someone that's watching this and you're like, I want to talk to someone maybe setting up a policy for myself or I have questions, we would love to serve you. You can also see a link to have a call with someone on our team. Back to the episode. So the payout of life insurance policy is income tax free. So if the 10 Bitcoin grow from being worth a million dollars to $10 million. You wouldn't have to pay taxes on those gains. Tax-free, exactly. So you're paying in 10 bitcoins. And then income tax-free. I'm not sure you can say estate tax-free, but for sure income tax-free. In whole life insurance, there's this concept of the cash value of the policy. And that's what people draw on during their lifetime for liquidity. We don't call it cash value because there's no cash in our policy. So we just call it the Bitcoin value. But you can use the Bitcoin value of your policy during your life to take out a loan against it. And in whole life insurance, it's just called a tax-free policy loan. And so let's say you were paying in Bitcoin. We promise you when you die, 20 Bitcoins in this example that we're giving. If 10 years from now, Bitcoin's worth a million dollars a coin, you could use your policy value as collateral, take out a policy loan. And by means you would borrow one Bitcoin out in this example, that Bitcoin would be worth a million dollars because that's the price of Bitcoin on the day of the loan. But most importantly, the cost basis of that Bitcoin would also be a million dollars. So you could sell it to have a million dollars of cash and not owe any capital gains tax on that sale. So if you paid your premiums today at $100,000 and 10 years from now, borrowed out of Bitcoin at a million and sold it. That's $900,000 of appreciation that you would not owe capital gains tax on. Wow. And he's using proper language and potentially improper language. He's saying borrowing against, which is true. But then he's saying sell the Bitcoin. And I think that's still an outstanding loan. And so it's not that you can just sell. I don't think it's a true withdrawal because, again, then it wouldn't be the tax-free nature, wouldn't exist. But that is really, really cool that they're building up some type of... Bitcoin value that you can borrow against, which is beautiful because in the lending component, they're hedging two risks or hedging mortality. And they're also hedging, you know, interest rate or appreciation growth of the Bitcoin, which could be really, really valuable. So I do appreciate that they're mentioning this. The collateral is the policy's value that is in Bitcoin. The loan that you're borrowing out is in Bitcoin. Now you'd choose probably to sell it because you want to go buy a house or do something. But the loan is in Bitcoin. And because the collateral. Yeah, I don't get what he means by selling it, but maybe using it. You're never at risk of getting your collateral liquidated or getting margin called. So one thing that many Bitcoiners are concerned about if they want to borrow against their Bitcoin is what happens if tonight Bitcoin drops 90 percent. Let's just be super dramatic. They would get liquidated. Whoever their lender is, they liquidate their collateral to make themselves whole in that loan because they have dollars borrowed against Bitcoin collateral. But because Bitcoin borrowed against Bitcoin collateral, your loan is just one Bitcoin against two Bitcoins of collateral. or whatever it is, no matter what the price of Bitcoin is. So it's actually better for you, Natalie, if you borrow Bitcoin out in the future at a high price, let's say a million dollars in 10 years, if Bitcoin then overnight dropped 90% to a hundred thousand dollars, you could take your million dollars of cash, buy a $100,000 Bitcoin and use that to repay your loan. Yeah. But then the opposite, I mean, if Bitcoin goes up by nine and a lot of, well, it's too, I owe you. So let's get even better. Let's make it even better. That is fine. And you don't have to repay that loan. Whatever outstanding loan balance there is, whenever it is that you pass away, just gets netted out of that 20 Bitcoin that we pay out to your. policy. So there's no term on the loan. We charge right today, we charge a 3% interest rate. How? Well, number one, I appreciate this language going across. I love the fact that this guy talking about this Bitcoin life insurance is using some of the same lingo. So awesome. So that loan, I don't think you're selling that loan. I think it's truly a loan on the balance sheet. But since the death benefit, the Bitcoin death benefit is higher, it's going to cancel out. But then he's saying a 3% loan rate. I'm just wondering, like, how the economics work on that. If you borrow dollars into Bitcoin, standard market is a 40% loan-to-value ratio and 14% interest rate. We will give a 90% loan-to-value ratio. Awesome. And we charge 3%. And you never have to repay the loan if you don't want to. So you're right. If Bitcoin continues just to churn higher and higher and higher, we anticipate most of our policyholders who take out loans will just never repay. Which, by the way, if all they did, and I'm going to give, like, a pitch to this. If all they did was say, hey, Give us your Bitcoin, put 10 Bitcoin over time into this policy. Somehow I got to figure out how they give you more Bitcoin and how that's sustainable. But the fact that they're giving you a cheap loan, that you get 90% access to your Bitcoin value, I would love to see how they might be like illiquid for years. I don't know how that's set up. That's something to note. But from a tax perspective... It's genius. From a tax perspective, you get to use your money and potentially liquidate Bitcoin and use cash in a tax advantage way. And you get income tax free when you pass it on. It's from a tax perspective, brilliant life insurance chassis. I just, again, I'm getting stuck on how they're able to do certain, they're able to give you a certain deal of 3%. But then how is the company taking your one Bitcoin and then promising more Bitcoin without taking crazy risk? They'll just let that net out against the payout that goes to their beneficiaries. Fascinating. I wanted to ask you, because of your TradFi experience, do you see a message that kind of cuts through to help people who are in the traditional finance world that do not believe in Bitcoin get over the hump and the skepticism? Well, it's an interesting question because when I was managing, you know, I took a very institutional approach to investing in my first job because we were managing money for family offices and institutional clients. And so the irony is that I graduated from Princeton in 2017. I joined this multifamily office where I was then managing money for these wealthy individuals and families. And in 2017, the Bitcoin bull run, more and more of our clients came to us and were asking us questions about Bitcoin. Yeah. I didn't know much about Bitcoin. So our house view from our investment research team was Bitcoin is not an investable asset class. A client hires a firm like my prior firm because they're already wealthy and they want for generations to remain wealthy. And so the information that I was being armed with by our research team was like Bitcoin is not investable. It does not belong in your portfolio. But I personally felt like it was my fiduciary duty to actually do the research myself. So then I think I became a hypocrite because I was telling all my clients to not invest in it And then I was like personally going down the Bitcoin rabbit hole So I personally got into Bitcoin in 2017 And then just three years ago when I got recruited by Digital Currency Group to help them build out their multifamily office It was a great way to pair those two passions together How do you reach TradFi people? I think we are entering into an environment unlike one we've ever seen So I've been around builders in the digital asset space, Bitcoin or broader digital assets Now for three years professionally All of the builders that I know have been building despite regulatory headwinds. They've been building on, I think, the optimism that regulators and lawmakers, rather than being scared of something they don't understand, will do the research themselves to learn that this is something that could benefit everyone. And we are now entering into, for the first time, a landscape where we have regulatory tailwinds. So I think that with the past regulatory uncertainty, anyone in TradFi has just kind of put their hands over their ears because they aren't willing to take on that risk. Whereas I think going forward with more clarity... in the U.S. and abroad, it will just open up access to new capital. And we've seen that, right, in just the last year with the approval of the ETFs. BlackRock is the world's largest asset manager. Fidelity, we've seen some asset managers that opposed Bitcoin kind of walking back their words. I saw a headline that Schwab was talking about Bitcoin now, even though they'd resisted. So I think that with the additional regulatory clarity, institutions and traditional finance will further embrace Bitcoin. All right. So here are my final thoughts. Number one, hats off I I I never want to be the person that's stuck in the old way and saying like anytime someone's trying to innovate to be scared by innovation and say, oh, this is not going to work or this is a scam because I don't understand it. I will say some of the things that I like, AI. I think that there's so much inefficiency in these insurance companies and the fact that they're approaching from a standpoint of like how can we go about this way more efficiently. I love the fact that that's the case. I get the whole Bitcoin being long Bitcoin, but putting some type of planning around it. I like the concept of being able to use your money or your Bitcoin while you're alive, but still be able to, you know, have some type of benefit in the future. Love that. I love that they're speaking the language. Some of the questions that I have is company stability. No idea. It sounds like some people are backing them, but... It sounds like it's a pretty clear for profit. And so would love to know like what's in it for you and then how like just I would love to know the transparency. I bet you they probably thrive off of transparency because that's kind of the Bitcoin world. So it's like how does that work? I would love to know like, you know, fully. They talk about a fully licensed carrier, where that is, how it works. Would love to know how the liquidity works early on. Do you have to do you you're locking up your Bitcoin for the. first 10 years do you get to use that money your your value immediately uh when we get into the structuring like how does that all work so that is that is a question that i have obviously i have a question around okay if you have a for-profit company how do they get paid people are putting in bitcoin with the promise of having a greater bitcoin and so how does how does that all work i get with the whole cash you're investing that cash and dollars are growing and all my understanding of a bitcoin is is the bitcoin will grow in value but again i still can't get my head around i put 10 bitcoin in and then you give me 15 how unless and then if if so like am i happy with this risk and then that's the biggest thing is this all sounds great until the underlying company says oh you know we're just going to shut our doors and i think that's where you know and even danny mentioned you know these 200 year institutions can be stuck in their ways, can be inefficient at times, but like heavily regulated, heavily regulated and have a ton of cash. Some of these insurance companies are bigger than countries and they're built on trust. And that's the aspect of like you're already hedging on something Bitcoin that could be way more volatile. Do you really want to join forces with an insurance company that might be a startup? That's the question. That's the question. I am actually a believer that long term, I believe in the Bitcoin message, especially with who's in office and some of the things going on. I think there could be some crazy volatility. I'm not sure it's going to be a million. I'm not making any predictions, but I wouldn't be shocked at this point. I would not be shocked. I personally am going to start putting a portion of my portfolio into Bitcoin as a hedge, not investment advice, but that's something that I'm going to do. but I'm not betting the farm on it like some of my friends. And so this is a very intriguing, very intriguing company. I am going to be reaching out to this company and seeing if I can do an interview where I can actually do like a deep dive. I've seen a couple other interviews that they've done as a company. And to my knowledge, nobody in the insurance space has interviewed them. And so being in this space and having some knowledge and connections, I would just love to like understand it better. Maybe we can like go through the process and maybe we can look at illustrations and that would be super fun and so please let me know in the comments if i was able to get danny or somebody else from their company to interview with me like what questions should i ask like what questions should should i ask and i may even include my friend mark moss in this journey because he's a big fan of life insurance and he's a big fan of bitcoin and he might be able to see things or ask certain questions that um i am unaware of i appreciate you watching this video would love to hear your thoughts and again subscribe if you want to follow this journey of me learning more about bitcoin life insurance is this good idea this is bad idea uh time will tell and i'll get to the bottom of it
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