Are My Crypto Assets Covered Under Income Protection Insurance?

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Since crypto is new to most people, it can be difficult to understand exactly how to handle your assets. Putting a static value on a volatile form of currency is almost impossible, and it’s essential for anyone who holds cryptocurrency to have a plan for what to do if they lose their employment or investment income.

An insurance policy to protect your pre-tax income may seem appealing, but whether or not it meets your needs depends heavily on what your primary source of income is and what the cause of your inability to work is. If you’re considering insuring yourself with an income protection policy, read on to learn about whether or not your crypto assets will be covered.

What are crypto assets?

First, it’s important that you understand what cryptocurrency and crypto assets are. Cryptocurrency is a form of digital currency, as opposed to fiat currency, that utilizes a secure ledger called the Blockchain to create a cryptographic record of all transactions. While crypto can be exchanged for goods and services, many people use them as an investment opportunity due to the volatility of the worth of bitcoin and other crypto-assets.

Crypto assets can include more than just the amount of currency you own. The NFT market is a great example of a crypto-based asset. NFT stands for a non-fungible token, and most NFTs are audio, video, or image files that give the buyer ownership of the respective artwork. These works can be treated as an investment and that may appreciate in value, just like any other work of art.

If you’re looking to purchase crypto, the easiest way to do so is to use one of many crypto exchanges. There are a number of platforms and they all have different pros and cons, so take your time and explore your options before you make a decision. It only takes a couple of clicks to learn how to buy BitCoin on CashApp, and exchanges like Robinhood and Coinbase are also great for beginners. Most exchanges allow you to transfer money directly from your debit card or bank account, making it easy to get started and make your first bitcoin purchase.

Are crypto assets covered by income protection policies?

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Income protection insurance is designed to help you pay your bills for a set period of time if you should suffer a partial or total disability that prevents you from working by providing you with up to 75% of your pre-tax income. One of the main advantages of income protection is the peace of mind that it provides should a disability cause you to be unable to work. Your monthly benefits can help make up for the loss of your paycheck and give you a measure of financial security that you can rely on, even if you’re unable to work.

Unfortunately, most cryptocurrencies and other assets are considered investment income or a part of your net worth, rather than a portion of your pre-tax income. Thus, most income protection policies do not cover any loss of income connected to cryptocurrency. Cryptocurrency is also not a stable asset, meaning its value is volatile and fluctuates minute by minute. This means it can be difficult to ascertain the worth of cryptocurrencies like Bitcoin for the purposes of determining the value of your investment as an income stream.

It’s important that you fully understand what crypto is, how it works, and the risks associated with investing before you start accumulating significant crypto assets. If you aren’t sure where to get started, it might be worth talking to a financial advisor so you can learn the ropes before you begin to accumulate cryptocurrency.

The value of your crypto and other assets like NFTs will fluctuate depending on market conditions, so make sure you monitor your account carefully to ensure you buy and sell at the right time. While income protection can be incredibly valuable, especially for those who value financial security, your investment income won’t typically be covered or considered a part of your pre-tax income for the purposes of receiving your monthly benefit.


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