Delaware Life, BlackRock Offer Bitcoin Exposure Through Fixed Indexed Annuity

In brief

• Delaware Life debuts the first fixed indexed annuity with Bitcoin exposure through BlackRock’s U.S. Equity Bitcoin Balanced Risk 12% Index.
• Policyholders get indirect Bitcoin access via the iShares Bitcoin Trust (IBIT) within a principal-protected insurance structure.
• The move signals growing institutional crypto adoption, following $530M+ in Bitcoin ETF-linked structured notes from major Wall Street firms.

Delaware Life Insurance Company has launched what it’s calling the industry’s first fixed indexed annuity tied to a Bitcoin-inclusive index. The company is making that possible by adding the BlackRock U.S. Equity Bitcoin Balanced Risk 12% Index as an option in its fixed index annuity, or FIA, portfolio. An FIA is a type of insurance contract designed to provide principal protection with the potential for limited upside growth. The principal is comprised of the payments made to an insurance company. In return, the insurer promises to protect that principal against market declines. And while the gains are linked to an index—usually something like the S&P 500—the policyholder isn’t directly invested in the market. 

So that means returns are typically capped. And if the index goes down, then the policy holder’s return for that period would typically be zero instead of negative. This means that the Bitcoin exposure for Delaware Life Insurance Company policyholders will be indirect, since it’s access through an ETF inside the index. “As the retirement-planning landscape evolves, we’re continuously and thoughtfully innovating to meet the needs of financial professionals and their clients” Colin Lake, president and CEO of Delaware Life marketing, said in a press release. The BlackRock U.S. Equity Bitcoin Balanced Risk 12% Index combines U.S. stocks and Bitcoin and targets 12% volatility. It uses cash adjustments to help offset Bitcoin’s price swings. The Bitcoin component comes in with the iShares Bitcoin Trust, or IBIT, which had amassed $74.5 billion worth of assets under management by the end of last week.

The new index option will be available to policyholders for three of Delaware Life’s products: Momentum Growth, Momentum Growth Plus, and DualTrack Income. Since Bitcoin ETFs launched in the U.S. two years ago, Wall Street has found lots of ways to incorporate them. Jefferies issued the first U.S. structured note tied to a Bitcoin ETF in July last year, and Goldman Sachs, Morgan Stanley, and JPMorgan have now sold more than $530 million in structured notes linked to IBIT. Life insurance companies have been slow to embrace Bitcoin or Bitcoin ETFs because of market volatility. Up until now, the interest has been more in using blockchain to streamline back office functions. For example, the Bank of China put 4 million insurance records on a private blockchain in 2019. But the rate of investment in crypto product from insurers took a while to catch on. By 2021, U.S. insurers had invested only $3 million in Grayscale’s Bitcoin and Ethereum trusts—before either had been converted into spot ETFs. Late last year, Morgan Stanley broadened crypto exposure for its wealth clients, including those with retirement accounts.