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Federal Life Plans to Offer Crypto Contracts: Annuity Moves

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What You Need to Know

  • Federal Life will offer the annuity only to accredited investors who can tolerate big account value ups and downs,
  • RetireOne added a fee-based investment wrapper from Midland National.
  • Halo and Simon also have news.

Federal Life Insurance Co. wants to help wealthy, sophisticated investors tie variable annuity returns to the performance of cryptocurrencies.

The Riverwoods, Illinois-based insurer is preparing to introduce a private placement variable annuity that will let owners link some of the account value to Bitcoin assets, Ether assets and other cryptocurrency assets..

Federal Life said it will offer the annuity only to accredited investors who can tolerate big account value ups and downs, and the risk of loss of principal.

The company announced the contract launch in a press release that included the following disclaimer:

This press release is directed to independent investment advisors and not to any potential purchasers of the private placement variable annuity. No offer for the sale of securities is made hereby.

The Machinery

Federal Life reported it has already set up an insurance-dedicated fund that will support the new annuity.

It plans to use Gemini and Onramp to hold and trade cryptocurrency coins, WisdomTree to design the contract asset allocations and FED Mutual Financial Services to distribute the contracts.

Bain Capital helped Federal Life demutualize. Bain will now help support the company’s cryptocurrency annuity effort, Federal Life said.

The History

Federal Life was founded in 1899. It was a policyholder-owned mutual. It formed a mutual holding company structure in 2016, and it completely demutualized in 2018.

The company has been using cash from the demutualization to strengthen and expand its operations.

(Image: Shutterstock)

Other companies also have annuity news …

RetireOne and Midland National Launch No-Commission, Flat-Fee Wrap Contract

RetireOne — Aria Retirement Solutions’ fee-based annuity and insurance distribution program — has joined with Midland National to introduce the Constance contract.

The Constance contract is a flat-fee, commission-free contingent deferred annuity.

A consumer can buy the annuity, wrap it around investments, and use the annuity to have ordinary investment arrangements produce guaranteed streams of income that can last a lifetime, RetireOne says.

The RIAs who help clients buy the Constance contract can wrap the contract around client brokerage accounts, IRAs and Roth IRAs.

RetireOne has described the contract as a “stand-alone living benefit” that, in effect, separates the income guarantee features of an annuity from the investment management features.

RIAs and clients who want to use a built-in investment menu with the Constance contract can choose from a menu that includes ETFs and mutual funds.

David Stone, RetireOne’s CEO, said the product is portable, meaning that a consumer can move the guarantee from one custodian to another.

Midland National is part of Sammons Financial Group. Its annuity division is based in West Des Moines, Iowa.

Menus

In annuity distribution program news:

Halo Investing has added annuities from Great American Life Insurance Co., which is now part of Massachusetts Mutual Life Insurance Co.

Simon Annuities and Insurance Services has added a menu of annuities from AIG Life & Retirement.