In the United States, life insurance is a time-tested, conservative, and dependable financial product. But those very virtues make the industry slow to incorporate innovations.
Permanent life insurance policies can be very opaque to the typical customer, and even though they have in-built borrowing features, the terms may not be ideal, while the customer feedback may be slow, depending on the carrier. The average customer doesn't understand how the product of permanent life insurance can work for them, or even recognize it as an asset.
We've invited Dr. Robert P. Murphy, the Chief Economist at infineo, to tell us about how the blockchain is the key to unlocking more options for the policy holder.
So, policy holders are sitting on a stable asset that many don't even realize they can leverage. What is infineo, and how are you addressing this?
infineo is a fintech company that is putting life insurance on the blockchain, thus marrying a time-tested, conservative financial product with the speed and transparency of decentralized finance. Our goal is to offer an AI-powered "operating system" for life insurance, creating friction-free access to one of the world's most stable assets for both individuals and institutions at scale.
Our AI engines are being trained with deep knowledge of the economics and actuarial principles underlying life insurance, so that users can upload their policy details and receive expert guidance and diagnostics. Although our "marketplace" is not yet launched, eventually, policyholders who so desire will be able to tokenize their property and use the power of the blockchain to leverage it from potential lenders across the globe.
Our current focus is on the credit union space, as our team has particular expertise working with executive insurance policies designed for non-profit organizations. As of this writing, we have $622 million of life insurance already tokenized. However, our model brings benefits to any owner of life insurance, and in 2026 we will broaden our clientele.
How can embedding life insurance policies on the blockchain can transform coverage for a policy holder?
There are several advantages to "tokenizing" a traditional life insurance policy. In the first place, it provides a transparent and verifiable record of a policy, which can be useful in the case of an individual mortality—the details of Uncle Fred's life insurance can be sent to his heirs so they're not searching his drawers while planning the funeral—but also in the event of a natural disaster, when even the carriers themselves might have delays in retrieving records and verifying payments owed.
But the true benefits of tokenization manifest themselves when many life insurance policies are securitized, allowing for the creation of "life-backed securities," which can give individuals and institutions exposure to life insurance as an asset class while minimizing some of the traditional frictions. In this setting, it is essential that potential investors understand the constituents of a bundled financial vehicle, and this is where the transparency of blockchain technology—which is essentially a public ledger—provides a firm foundation that was lacking in the 2008 crisis in the context of mortgage-backed securities.
My research at infineo has shown that curated Whole Life insurance policies have a higher Sharpe ratio—a measure of risk-adjusted returns—than any other asset class, including the stock market and Treasuries but also real estate. So we believe life-backed securities, so long as they are offered with the transparency of the blockchain, will provide a very conservative and predictable yield for investors.
What's the bottom line here, why should life insurance be tokenized?
In addition to facilitating securitization (which I've explained above) and providing backup proof of coverage, tokenization benefits the owner of a life policy by allowing for much easier borrowing, pledging, or even selling the policy. These features aren't here yet, but they are coming, and infineo will lead the way in building the infrastructure to provide them.
So then, what is the future of life insurance in 2026?
In 2026, owners of traditional life insurance policies—through tokenization—will be able to pledge their cash surrender value as collateral for others to use (for a fee) in facilitating certain transactions, thereby opening up a source of income previously unavailable. With the introduction of stablecoins backed (ultimately, perhaps via Treasuries) by life insurance cash value, the owner of a policy will be able to effectively borrow against it at much lower financing rates than carriers charge on a standard policy loan. In the long run, we see a future in which people around the world can be issued digitally-native life insurance policies without blood or urine samples, and denominated in whatever currency (including gold) that they desire, with the traditional carrier being replaced by decentralized groups of investors through the use of AI-designed smart contracts.
Insurance is the quintessential financial product that provides a cash infusion precisely when the recipient needs it. Economists have known since the 1950s that in a world with complete markets—where individuals can buy assets that pay out at any future date under any particular uncertain outcome—humans can organize their affairs with greater efficiency and a higher standard of living by allocating risk to those parties most capable of bearing it. But various practical and regulatory constraints limited this sci-fi vision. Yet with the rise of AI, blockchain-based peer-to-peer transactions, and smart contracts, individuals and institutions will be able to arrange their portfolios to capture their desired risk/return profile on a much richer menu than was ever available before.
Where do you see infineo in the next five years?
infineo is going to pioneer the introduction of all of the financial products and services related to life insurance that I have outlined above. This includes the launch of cash-value-backed stablecoins; an online marketplace where owners of life policies can pledge, borrow against, and even transfer ownership claims on their property to others; and the introduction of a digitally-native life insurance policy—which lives solely on the blockchain—that handles incoming premium payments and outgoing death benefit payments purely through decentralized smart contracts connecting investors and policyholders.
