Life Insurance

Michelle and I are taking some great classes at church (FPU) and, armed with this knowledge are looking to get some new life insurance as we currently have none. Zero. Nada.

Turns out when she went part time the school district dropped her coverage, and didn’t bother to mention that detail to us. So, like good grownups we’re now looking to get ourselves covered in the event of the unthinkable.

Dave Ramsey makes a great case for a term policy over whole life. It’s cheaper and if you wisely invest the difference you’ll end up way ahead in the end. We called an insurance broker and he has found some rates for both 20 and 30 year term for us and also mentioned something called “Return of Premium” where you get all the money you paid in back (if you don’t kick the bucket first). At face value this seems like a great idea… I pay $65 per month for, say 30 years for a $500,000 policy, then I get a big fat check back at the end of that if I’m still around. Return of Premium policies are more expensive, though (40-100% more from what I can tell). So, a similar regular term policy would run me around $45/month for the same amount of coverage and years.

So is it worth it? Here’s the recent quotes. I’m just going to list mine (and not Michelle’s) to keep things simple:

A. 30 year term (with Return of Premium): $767 per year

B. 30 year term (Normal): $545 per year

Difference: $222 per year

OK, I’m no financial guru by any means, but it seems that if I go with plan A and give an insurance company $767/year for 30 years, that equates to a total of $23,010. So in 30 years, I’ll be 61 and get a check (tax free) for $23,010.

If I go with Plan B and pay $545/year for 30 year (a total of $16,350) and invest that extra $222 somewhere I might be able to do better. At least I’ll be in control of my money and it won’t be tied up with an insurance contract. Not to mention that if I die before the 30 years is up, all that extra cash paid in Plan A disappears in to the insurance company’s pocket rather than going to Michelle and Davis.

So, if I invest $222 each year into a Roth IRA mutual fund earning an average of 9% over the 30 years, I end up with around $30,260 (assuming it earns no more or less than 9% every year). After taxes are taken out on those earnings I have $24,345. Since its in a Roth IRA, as that money is growing over those 30 years I have access to what I put in (after 5 years)… so that I could tap it if needed (rather than it being tied up with an insurance company).

Our insurance broker argues that while more money is made going the Plan B route, those investments are not protected from market fluctuation, lawsuits, bankruptcy, etc. while the return of premium “guarantees” I get all the money I put in back. But my issue is that the $23,010 I get back won’t really be $23,010 after inflation (using this inflation calulator at 3% inflation per year it’ll would be worth more like $9,227!). So, I will have just given an insurance company extra money to invest and I don’t get to share in any of those extra profits. Return of Premium seems more like burying that money in a mason jar in the back yard than any sort of sound investment strategy.

Am I missing anything here or are return of premiums just another way for insurance companies to make money?

Floyd Farm and B & B

Last week was Harley Week here at the beach. Since we live so close to the action, and we aren’t motorcyclists, we decided to get out of town for the weekend. We didn’t want to go far away and we are in the process of saving money to get out of debt. Therefore, we decided that a vacation to Loris would be a peaceful getaway. Tracy’s dad and Patty were going to Uwharrie, so their house was available.

We arrived on Friday evening. Patty is the best hostess. When she plans for you to stay, the house takes on this bed and breakfast ambiance. There was popcorn and movies on the coffee table and notes with instructions for the remote controls and various electronic devices. In our room, there were mints on the pillows and more movie-watching instructions. After going to eat seafood at Adams, we came home, fed Davis and went right to sleep. It’s amazing how dark it is when you are in the country. The best we can hope for at night in our condo is a dusky kind of light. We slept soundly with Davis in the middle of the bed with us. The next morning we went to breakfast a Granny’s kitchen. Tracy had grits, eggs, tomotoes and bacon. I had pancakes and bacon. The food was served on mix-matched china that looked like at some time or another it had really belonged in a “Granny’s kitchen.” When I went to pay for our food, the lady at the register said, “Ya’ll aren’t from around here, are you?” Either we looked very out of place, or only regulars frequent this establishment. After breakfast we drove down country roads while Davis napped in the back.

Even though we have visited with Tracy’s dad and Patty numerous times since Davis’s birth, Davis had not officially been introduced to the farm animals. Once we returned to our “home away from home,” Davis met the dogs. We held him and pointed at the dogs and said, “Puppy.” He stared at the dogs, squealed and whispered, “Pu, Pu, Pu.” Finally, Mattie came and bravely offered to let Davis pet her. He obliged, then returned his “puppied” hand to his mouth. Later that evening, during farm animal feeding time, Davis met the horses. He squealed in delight at them all. When they all were put in their stalls, we visited Little Man. He looked at us and we looked at him. I blew in his nostril and he lifted his head, rolled back his lips and gave us a very gummy grin. Davis and I smiled and continued to stare. As we stood entertained by the smiling horsey, without warning, Little Man decided to sneeze. Davis and I were directly in his path. We got snotted. Snot flew everywhere: on my arm, all across the side of Davis’s face and down his arm. We learned not to stand to close to horses.

The rest of our time on the “Floyd Farm and B&B” was spent relaxing and enjoying the peace and quiet. I don’t know that we have ever thought of going to Loris as a vacation, but with all the hustle and bustle here at the beach, it’s nice to go to Loris and listen to the birds and drive down country roads and smell dirt and freshly cut grass and look out your backyard and see trees and be reminded that yes, there are stars in the sky at night.

I Am 6 Months Old – Look What I Can Do!

Below is a list of all the things that Davis can do now that he is 6 months old:

  1. Sit up momentarily – he then falls to one side if someone doesn’t catch him
  2. Successfully reach for and retrieve anything that is within his grasp – this includes paper (he loves paper), hair, earrings, paci, and his favorite toys (the silicone measuring cups, stuffed blue puppy, and my stuffed goat which I got for Christmas from David and Patty)
  3. Get mad when one of the things he successfully retrieved is removed from his sticky fingers
  4. Sing ba-ba-ba-ba and ma-ma-ma-ma
  5. Laugh and giggle out loud when he is tickled or when you munch on his toes
  6. Eat like a maniac
  7. Land swim – this is his attempt at crawling – he lays on his belly, lifts his arms and legs and paddles like there’s no tomorrow – he then looks up to see if he has gotten any closer to his destination and smiles like he’s so proud
  8. Stick his tongue out
  9. Peek through the top rails of his crib to see if anyone is coming to rescue him
  10. Play peek a boo with himself – he likes to put things over his face and wait for someone to remove them – once the things are removed, he puts them right back – we have to keep our eye on him b/c this can be somewhat dangerous if he is left to his own devices