The Link Between Cryptocurrency Trends and Insurance Investment Plans

What are Cryptocurrency Investments?

Cryptocurrency is a type of digital currency. It is built on the advanced system of blockchain networks, that is, a large number of computer networks are involved in its creation. The word ‘crypto’ means encrypted algorithms and cryptographic techniques. Using cryptocurrency, one can make quick online payments without the need for a third party.

BTC or Bitcoin was the first popular cryptocurrency. You may invest in cryptocurrencies using a crypto exchange platform. Create your account and open your crypto wallet that stores your purchased cryptocurrencies. You can buy or sell crypto using your wallet keys and password.

Did you know, Bitcoin has a limited supply of 21 million coins?

What are Insurance-based Investments?

As you may be aware, insurance broadly falls into two types: general insurance and life insurance. The purpose of insurance is to provide financial protection against unforeseen situations like death, loss of the insured, or damage to the insured property or health.

Certain insurance also lets you invest, along with offering insurance coverage. One such example is ULIP. It stands for a unit-linked insurance policy. ULIPs let you invest in market-linked funds while assuring you life coverage. Although these investment plans are market-linked, they are usually more stable than cryptocurrencies.

Note: ULIPs offer both life insurance and an investment opportunity under a single policy!

Cryptocurrency Investment & Insurance-based Investments

People often consider cryptocurrencies and insurance investments as poles apart. While both offer investment options, they are quite different.

However, you must know that crypto and insurance investments share several commonalities as well. This is why these two are linked together, especially by investors. Have a look at some of the common features of the two:

Cryptocurrency Investments

• These are often high-risk investments that have high possibilities of both profit and loss
• Cryptocurrencies are highly volatile. The situation may also change overnight
• In crypto investments, security is of high concern as it depends on secure blockchain networks and the safety of digital wallets
• Cryptocurrency may also be well-regulated in India in the near future. The government has already laid down taxation norms of 30%

Insurance-based Investments

• Insurance-based investments are also associated with market risks. However, compared to crypto, these are less risky
• These are also volatile, but usually, not as much as cryptocurrencies. So, you can expect comparatively better stability
• Insurance-based investments also maintain security with their secure and safe claim systems, trustworthy companies, and reliable agreements
• The insurance industry is one of the highly regulated ones under the IRDAI (Insurance Regulatory and Development Authority of India) and the government of India

Is Cryptocurrency Affecting Insurance-based Investments?

The table above explains how cryptocurrency and insurance-linked investments are interconnected at certain junctures. It may prompt you to consider whether cryptocurrency can affect the insurance industry. The answer can be in the affirmative to quite an extent.

The rise of cryptocurrencies may affect insurance-based investments. Here are some of the reasons:

Many are Now Risk Takers

With the popularity of cryptocurrencies, many investors have now become risk takers. It simply means the risk appetite of various investors has increased. This is because cryptocurrencies are usually highly volatile and involve knowingly taking risks.

So, when it comes to insurance-based investments like ULIPs, investors are more likely to take the risk. The concerns that people had earlier regarding the volatility of ULIPs may drop.

Insurance: Comparatively Stable

Owing to the volatility of cryptocurrencies, it is likely that people will try to balance their investments with certain stable choices. Insurance-based investments could be one of these. As we read in the case of Krushna, he experienced a sudden loss of more than half his crypto investment. So, to balance the risks of crypto, insurance-based investments could be a good choice. Creating a stable investment portfolio is often a smart move.

Rising Awareness

As discussed above, an increase in crypto investments has convinced many investors to invest in a portfolio. So, eventually, it has also led to an increasing awareness regarding insurance-based investments like ULIPs.

Did you know, the first crypto ATM was installed in Vancouver, Canada, in 2013?

Over To You

Cryptocurrency took over the market headlines in a very short span of time. Bitcoin also became popular quite soon. In today's times, where crypto investment is common among high-risk investors, comparatively stable options like insurance-based investments are typically found in balanced investment portfolios. They are less volatile and often give good returns over time. If you are also planning to create an investment portfolio, consider including funds with different risk appetites.

For more details on insurance-based investments and how cryptocurrency is influencing insurance investments, connect with us at Jio Insurance Broking. At Jio Insurance Broking, you can easily compare policies for an informed decision and choose the best investment plans!