It targets 12% volatility, aiming to balance Bitcoin-linked upside with principal protection for conservative investors.
Delaware Life Insurance Company, a subsidiary of Group 1001, has added BlackRock’s U.S. Equity Bitcoin Balanced Risk 12% Index to its fixed indexed annuity (FIA) offerings.
This makes Delaware Life the first U.S. insurer to add cryptocurrency exposure to its annuity structure.
How will the Bitcoin-linked index work for policyholders?
Delaware Life’s announcement that it is incorporating the BlackRock U.S. Equity Bitcoin Balanced Risk 12% Index into its FIA lineup may look like a deviation from that conservative norm. However, that is not the case because it still offers downside protection for conservative policyholders.
The new index will be available across three of Delaware Life’s FIA products, which are the Momentum Growth, Momentum Growth Plus, and DualTrack Income.
BlackRock’s Global Head of Digital Assets, Robert Mitchnick, stated, “The BlackRock U.S. Equity Bitcoin Balanced Risk 12% Index offers a measured approach, allowing policyholders to participate in digital assets while maintaining the downside protection they expect from annuity products.”
Delaware Life’s index will use BlackRock’s SEC-approved iShares Bitcoin Trust ETF (IBIT) for exposure to Bitcoin’s price performance.
BlackRock and Delaware Life are bullish
The launch coincides with Bitcoin’s 17th anniversary as well as the second anniversary of the IBIT ETF, and it speaks to how far the cryptocurrency space has come as it begins to make entries into mainstream financial infrastructure.
“We’re proud to partner with BlackRock as the first insurance carrier to offer cryptocurrency exposure through a fixed index annuity,” said Colin Lake, President and CEO of Delaware Life Marketing, in a statement accompanying the launch.
He also stated, “As the retirement-planning landscape evolves, we’re continuously and thoughtfully innovating to meet the needs of financial professionals and their clients. Our fixed index annuities deliver what today’s investors want and need: opportunity for growth with protection.”
One of the appeals of a Bitcoin-linked index to FIA is that it has the potential to deliver outsized returns should Bitcoin perform strongly in the long term. To deliver on that potential shouldn’t be too hard, as predictions have the cryptocurrency set for another major bull run. Although there’s the longstanding concern that Bitcoin may perform otherwise.
By targeting a 12% volatility band, the BlackRock index aims to manage some of the extreme price swings that have historically characterized Bitcoin, smoothing the path for conservative investors.
Regulators in the insurance space will be paying attention to this new offering, how policyholders respond to it, and the performance of the investment, given that it is a novel blend of insurance and digital asset exposure.
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