Ignore These Myths About Life Insurance

Photo: BalanceFormCreative (Shutterstock)

Many young, single people assume they don’t need life insurance. Unfortunately, this misconception is difficult to reconcile before it’s too late. After all, life insurance is one of those investments that you can’t exactly buy after you need it, and if you wait too long, it’s going to cost a lot more to get it.

The purpose of life insurance is to provide a safety net so your family or loved ones won’t struggle to pay bills or handle other financial responsibilities after you’re gone—but that doesn’t mean you don’t have to think about it until after you have a family. Here’s what you need to know about that and other myths about life insurance that are best ignored, and what facts to consider instead.

Life insurance only matters after you die

In fact, life insurance is for the living. It’s in the name, and sure, the central reason to get life insurance is to financially protect your loved ones in the event of your death. But many life insurance policies also have living benefits, which allow you to tap into your plan in the event you are diagnosed with a terminal or chronic illness.

Another way you can benefit from your life insurance your plan while you’re still alive is through its cash value. Depending on your plan type, you may be able to build tax-deferred wealth through your policy, with the ability to make withdrawals from or take out loans against the value during your lifetime.

All life insurance is too expensive

Life insurance costs will vary depending on your age, gender, health, and specific policy. Predictably, the younger and healthier you are, the less expensive life insurance will be. For example, a healthy 35-year-old can pay under $28 per month for a term life insurance policy with a $500,000 death benefit payout and a duration of 20 years, according to Policy Genius.

If you’re concerned about costs, Business Insider advises you to start small. Get as much life insurance as you can afford for now, and then reassess when you are able to increase your coverage down the line. For your first plan, term life insurance is one of the most popular and affordable options. It’s a straightforward policy that provides a large assured sum assured for a low premium over an extended term, typically 10 to 30 years.

If you have health issues, consider looking into policies that don’t require medical exams.

You don’t need life insurance if you’re single with no dependents

This might be the most prevalent myth about life insurance: If no one is depending on you, why create a financial security blanket? The reality is that if you have transferable debt, like student loans, you could render your parents or other family members responsible after you’re dead. Life insurance is not just for married couples.

And while many think of life insurance as replacing lost income, even a stay-at-home parent who doesn’t receive a salary should take out life insurance. Although they may not be the traditional “breadwinner,” the cost of replacing childcare or other household duties is worth considering, and preparing for.

You should just stick with your employer’s life insurance

While many company life insurance policies are a low-cost (or even free) perk, they likely aren’t sufficient to meet your financial needs, typically offering around a year of your usual salary. Investopedia explains: “If you have dependents who rely on your income, then you probably need coverage worth at least six times your annual salary…Some experts even recommend getting coverage worth 10 to 12 times your salary.” It’s wise to supplement employer-provided insurance benefits with policies that are tailored to your needs.

The bottom line: Life insurance is not one size fits all

Take advantage of the fact that life insurance is highly customizable. And compared to other forms of insurance, your life insurance needs will change drastically over time. Think about it: Children, marriage, divorce, remarriage, caring for elderly family members, and retirement…and that’s just your thirties. (Kidding.)

Even if you don’t think you need it now, you should start with what you can afford and build coverage as your circumstances change. Nerd Wallet provides a handy table that will help you compare quotes now, and companies like Policy Genius make it easy to shop around for a good rate. But rather than rely solely on online platforms, it’s also worth consulting a real life professional.

By: Meredith Dietz

Source: Ignore These Myths About Life Insurance

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Sanctioning Russia On The Blockchain: Following The Money To A Network Of OTC Providers

Sanctions can only work if those who are supposed to enforce them understand exactly what to do so that they cannot be circumvented easily. Russia’s extensive network of Over-The-Counter (OTC) providers requires an extensive review by sanction committees, as they might be adopted to circumvent sanctions.

As described in the previous release, due to the limited liquidity of cryptocurrencies and Decentralized Finance space in general, it remains close to impossible for Russia to circumvent SWIFT-based systems by using crypto. However, Russians might still hold up to $200 Billion USD in crypto assets, besides running the third-largest crypto mining industry in the world. These funds can potentially be cashed out with Russian OTC providers.

The fifth EU sanction package on Russia limits the crypto asset holdings of Russian nationals, individuals, and legal entities established in Russia to €10,000 (with the same account, wallet or custody provider). The use of Russian OTC providers, which represents a network of physical providers offering cash payouts from crypto, could be adopted to circumvent these sanctions.

In oversimplified terms, OTC refers to a process in which individuals theoretically could agree on a price and meet to complete a transaction. An example of such a process could be a personal meeting in which one side brings bags with cash or any other pre-agreed means of value, and the other side could conduct a transaction on the blockchain on the spot. Transactions primarily with larger sums of money could be risky, to say the least.

Contrarily to peer-to-peer exchanges (P2P) which involve independent parties, OTC exchanges act comparable to physical pawn shops. At dedicated physical locations with announced opening hours, individuals can visit and exchange their cryptocurrencies in Russia for cash or bank transfers.

Depending on the business models of virtual assets service providers (VASPs), both OTC and P2P providers have existed in various jurisdictions since the beginning of financial interactions between individuals.

An example of such a platform in the EU is LocalBitcoin, registered with the Finnish Financial Supervisory Authority. Unlike Russian OTC providers which are subject to the 6th Anti Money Laundering Directive of the EU and connected to its so-called Counter-Terrorism Financing (CTF) legislation, LocalBitcoin is a unique case.

Existence of such a platform in the EU is only possible in Finland, as the rest of the EU has followed the recommendation of the Financial Action Task Force (FATF) to define and include Digital Assets in the national legislation and created an oversight program as a regulator.

It can be argued that the current regulatory frameworks remain far from perfect, but there is increased interest in incorporating DeFi into traditional financial compliance programs.

Such requirements to register a P2P or OTC exchange are way different within the Russian Federation. On the one hand, Russia approved use of cryptocurrency as an investment tool or a payment method as of Q1 2021 but on the other its national bank proposed a long list of bans that should outlaw the circulation of cryptocurrencies within the country.

Due to such unclear legal circumstances, licensing and supervisory programs are close to non-existent. In the absence of platforms that have chosen ‘compliance excellence’ as their differentiating business strategy, for example, Coinbase or some Scandinavian VASPs, many Russian providers have to operate in the gray space to say the least.

What is surprising is the fact that even though Russians store up to one fifth of the national bank’s reserves in digital assets, the public side has decided to not provide much clarity for the VASPs or any other players in Decentralized Finance (DeFi).

By not providing clarity for players in the Digital Assets space, the governments in Moscow and Minsk continue to lose on potential tax revenues and regulatory oversight of over 623 crypto platforms identified so far, associated with Russia and Belarus. The logic to continue to lose out on easily taxable capital gain from crypto investments remains questionable.

“Is it not paradoxical that despite the Russian Prime Minister stating that Russians hold $200 Billion USD in crypto, Russia has not yet formulated a comprehensive legislation to legalize crypto or set a taxation process for it?” — Dominika Kuberska, PhD, Faculty of Economic Sciences, University of Warmia and Mazury in Olsztyn.

With the absence of regulated players in Russia, there is a well-developed gray market of OTC exchanges that facilitate the trade of Digital Assets in exchange for rubles using both cash and bank transfers.

Sources, who desire to remain anonymous, underline that bank transfers to individuals or entities from OTC brokers are labeled as payments for IT or consultancy services. The Russian government will officially tax profits from such transfers with personal or corporate income tax (PIT, CIT).

Moreover, for customers that desire to purchase or exchange a significant amount of digital assets, there are at least ten physical brokers in Moscow or even price comparison websites like BestChange.ru that display the current rates of OTC providers in various regions.

Due to the nature of the business model, customers can often exchange cash for digital assets at the physical offices of these exchanges which can be visited by both individuals and the members of the Russian financial supervisory authorities, in case they would acknowledge their existence.

The majority of OTC providers operate without identifying their customers. Multiple sources report on direct cooperation between dedicated Ponzi schemes or sanctioned brokers with OTC providers. Even if hard evidence such as an agreement or email exchange between confirmed parties is continuously being collected, blockchain based analytics continues to provide indications for illicit transactions.

Russia has been connected with an elevated amount of illicit activities for a country that has a population of 144 million, which is 1.5 times bigger than that of Germany.

“Russia has surprisingly large amounts of confirmed illicit “Unicorns” like BTC-e/WEX exchange, Hydra dark web marketplace, dozens of pyramid schemes like PRIZM, the largest ransomware attacks and other cybercrimes which experts consider to be possibly parts of state-sponsored-activities” – Oleksii Fisun, Co-founder of Global Ledger Protocol.

With so many confirmed illicit activities coming out of one jurisdiction, it remains worth investigating how profits from illegal activities could be potentially cashed out. As described extensively in the previous article, the advantage of a public blockchain is that it remains visible and traceable.

An example of such confirmed illicit activity that could be cashed out with a Russian OTC provider, would be funds allocated in a cryptocurrency wallet provider called Konvert.im. It includes more than 100 transactions and has more than 69% exposure to funds originating from newly sanctioned Hydra Darknet Marketplace.

As Konvert.im represents an exchange, most certainly, their compliance must be aware of the origination of those funds from sanctioned Hydra. It is within such schemes the funds might be mixed with other funds that could potentially be forwarded to OTC providers for cash out.

Regardless of the choice of the provider used for Blockchain based analytics, due to the nature of Blockchain based investigations that accumulate all of the funds and its traces on the Blockchain between different brokers, there will always be a certain exposure to illicit traffic, which most likely will be at a single digit percentage wise.

Similar to accepting a physical banknote at the local farmer’s market, there could be a possibility that this banknote was used to conduct illicit activity in the past. This connection to illicit activity remains invisible on the banknote itself, but such a transaction is perfectly visible on the Blockchain.

Having said that, it remains impossible to state that an exposure of 69% to Hydra has been a technical mistake. It should rather be perceived as a dedicated action and tracing the money from Konvert.im to a Russian OTC provider might serve as a symbol that this strategy can and might be adopted to circumvent SWIFT-based sanctions and easily bypass a limitation specified in the fifth EU sanction package.

I’ve specialised in the topics on the intersection between Information Systems, Fintech, Insurtech, Cryptocurrency, Blockchain – Distributed Ledger Technologies

Source: Sanctioning Russia On The Blockchain: Following The Money To A Network Of OTC Providers

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Visa And BlockFi Launch 2% Bitcoin Rewards Credit Card

In this photo illustration a Visa logo is seen on a mobile...

Cryptocurrency services company BlockFi launched its first-ever crypto rewards credit card, in conjunction with Visa, to approved clients in the United States on Tuesday. BlockFi’s plans for a credit card were initially disclosed in December 2020 when the exchange released a waiting list for US-based clients, which is now over 400,000 people. BlockFi CEO Zac Prince expects everyone on the waitlist to receive their card around the end of July.

The new offering provides clients with a simple way to acquire bitcoin without having to pay fees or navigate the sometimes complicated onboarding processes at exchanges. BlockFi stands to benefit from utilizing the card as a customer acquisition tool as well as from the fees it will receive from money spent on the card.

“The crypto industry has come a long way since the first Bitcoin payment transaction 11 years ago,” Flori Marquez, Co-Founder and SVP of Operations at BlockFi said. “Today, nearly everyone knows about the important role crypto plays in reshaping the financial space, and our new credit card is set to be another game-changer. This card will make it easier than ever for people to earn Bitcoin back while making day-to-day purchases.”

Holders of BlockFi’s Rewards Visa Card will be able to earn 1.5% back in bitcoin on every purchase, with the payout increasing to 2% on every dollar spent over $50,000 annually. As an incentive to new users, they will receive a 3.5% bitcoin rewards rate for the first 90 days or until they receive $100 worth of bitcoin. The card also offers other benefits such as rebates on trading fees and comes with no annual fee or foreign transaction fees.

These rewards are competitive when compared to other traditional cards. For example, Bank of America’s Customized Cash Rewards credit card offers 3% cash back in one spending category of the customer’s choosing, 2% back automatically on grocery purchases and 1% back on all other purchases.

However, depending on an individual’s spending habits they could be outshone by Gemini, the crypto exchange headed up by the Winklevoss twins, when it launches its crypto rewards credit card this summer in partnership with Mastercard. While BlockFi only offers rewards in bitcoin for now, Gemini will give clients 3% back on dining purchases in any cryptocurrency offered on the exchange on purchases without annual fees or exchange fees. However, the rewards drop to 2% on groceries and 1% for all other purchases.

The launch of the BlockFi crypto rewards credit card also marks a new offering in Visa’s expanding crypto business. The electronic payments company has partnered with several crypto firms to offer Visa debit cards and supported over $1 billion worth of volume through crypto-linked cards in the first half of 2020, but the partnership with BlockFi will bring its first crypto rewards credit card. In 2021, Visa appeared on Forbes’ Blockchain 50 list after applying for over 150 blockchain-related patents and announcing an integration with US-dollar pegged stablecoin USDC.

Card users will receive a 1.5% cashback on an accrual basis for every transaction made through the card, which will then be converted to bitcoin and placed into a BlockFi account in a regular monthly cycle.

“Crypto rewards programs are a compelling way to engage consumers in the crypto economy,” Terry Angelos, SVP and Global Head of Fintech at Visa said. “We’re excited to see programs like the BlockFi Rewards Visa Card, which offer rewards that are relevant to the growing community of digital currency adopters.”

The move by BlockFi comes after PayPal Holdings Inc in October said it would allow customers to hold bitcoin and other virtual coins in its online wallet and shop using cryptocurrencies, a move which could help bitcoin and rival cryptocurrencies gain wider adoption as viable payment methods.

Bitcoin has surged about 160% this year, fueled by demand for riskier assets amid unprecedented fiscal and monetary stimulus, interest in assets perceived as resistant to inflation and expectations that cryptocurrencies will win mainstream acceptance.

Follow me on Twitter or LinkedIn. Check out my website.

 

Source: Visa And BlockFi Launch 2% Bitcoin Rewards Credit Card

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Critics:

BlockFi is a New York City-based start-up cryptocurrency financial institution. It lends U.S. dollars against bitcoin and other cryptocurrency collateral, as well as accepting deposits of cryptocurrencies which pay interest to the depositor. BlockFi Co-Founder and CEO Zac Prince has a background both in consumer lending and start-ups.

In February 2018, BlockFi received a $1.55 million funding in a seed round from ConsenSys Ventures, SoFi and Kenetic Capital, among others. In July it secured another $50 million in funding from Michael Novogratz‘s Galaxy Digital Ventures

References

Visa Pushes Into Payroll With ADP Partnership To Kill Paper Paychecks

Visa and ADP aim to reduce payment friction for off-cycle paydays

Visa is taking direct aim at physical paychecks in its latest partnership with human capital management software provider ADP.

While 94% of workers receive their pay electronically by direct deposit, checks capture off-cycle payments, such as real-time payouts, termination pay, and wage disbursements for contractors and 1099 workers. Though circulation is declining annually, the Federal Reserve collected 940 million paper checks worth $2.14 trillion in Q3’20.

Employee edge cases for off-cycle payments are becoming more complicated to process as the definition of “business hours” does not apply in a pandemic. ADP and Visa’s latest solution to enable faster disbursements therefore is well positioned to help employers navigate developing workforce dynamics.

Benefits To Employers

The initial use cases for Visa and ADP’s partnership will target off-cycle payments including one-off bonuses and reimbursements. Visa Direct will provide the rails to push real-time payments and leverage ADP’s Wisely Now Debit program to distribute and access the funds.

Notably out of scope are instant payouts and earned wage access (EWA) benefits which, have been among the most demanded off-cycle payment by employees. However, Visa Direct integrates with fintech providers such as ImmediateDailyPayPayActivZayZoonFlexWage, and Instant, while ADP’s Marketplace has overlapping integrations. Employers can also offer EWA benefits through Wisely.

The broader opportunity for faster business disbursements represents a $9 trillion market, according to estimates by Visa. Further both have a track record for scaling.

Visa Direct enabled faster payouts to approximately 2.35 million US small businesses and sellers in fiscal year 2020. Globally, Visa Direct has facilitated 3.5 billion transactions across 65 domestic ACH schemes, 16 card-based networks, 7 real-time payment schemes, and 5 payment gateways as of Q4’20.

Whereas ADP’s payroll coverage includes 460,000 customers that employ 26 million workers, per its last 10-K. Benchmarked to the Bureau of Labor Statistics’s (BLS) February report, ADP covers approximately 15% – 17% of the workforce, depending on unemployment levels.

What’s In It For Visa?

Visa will benefit by routing payment volume to Visa Direct and expanding its “network of networks” to payroll, a multi-trillion dollar global market. It will also head off network competition from the automated clearing house (ACH) which, holds a near monopoly of direct deposit processing.

In 2020, direct deposit accounted for 12% of ACH volume, representing 8 billion payments for salaries, wages, benefits, and assistance from employers to individuals, according to NACHA. Direct deposits grew 12% year-over-year while ACH payments initiated by a paper check declined 21% YOY, suggesting more volume will shift to digital payments for either network to capture.

What’s In It For ADP?

ADP’s customers will benefit by saving on processing fees, streamlining disbursements in line with payroll regulations, and boosting adoption and usage of ADP’s Wisely product.

For employers, processing fees can cost $1 – $6 per check versus $0.15 – $1.50 to use ACH, depending on the payment type and size. Visa Direct charges a premium to ACH for real-time disbursements but the terms of the deal were not disclosed.

For employees, checks delay getting paid and can carry similar processing fees. The experience is also archaic compared to the instant gratification of peer-to-peer disbursements that consumers expect from fintech apps such as Square and Venmo.

The Demise Of The Paper Paycheck

In the short-term, checks remain essential for roughly 4% of workers that still receive their pay by paper, according to the 2020 “Getting Paid In America” survey. In 2021 they are a financial lifeline for the 40 million Americans that received their second stimulus check from the IRS by mail, albeit months after the relief package was approved by Congress.

Though the technology for real-time funds disbursement exists and is leveraged outside the US, breaking into payroll is complex. Barriers holding back full dematerialization include labor laws that vary by state, strict regulations such as the Electronic Fund Transfer Act (EFTA), and perceived switching costs.

By partnering directly, Visa and ADP are testing the market for faster payroll, capturing low-hanging demand for paperless business disbursements, and providing a better experience for workers.

Follow me on Twitter or LinkedIn. Check out my website.

I lead strategy and business development as Head of Markets at Atomic Financial, the payroll APIs connecting accounts to direct deposits, income verification, and employment data. I also advise founders and C-suite executives on the competitive landscape, go-to-market strategies, company growth, and product roadmap prioritization. Over the course of my career, I’ve built and scaled market research on emerging technology trends in the financial services and fintech ecosystem. I’ve worked with venture capital firms, financial institutions, regulators, and strategic investors on due diligence for investments, M&A, among other intelligence initiatives. In my spare time, I angel invest and run marathons.

Source: Visa Pushes Into Payroll With ADP Partnership To Kill Paper Paychecks

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