My experiences buying phone and life insurance; Amazon and Netflix blasts from the past; Pressuring my daughters to give me grandchildren

1) Empire Partner Michael C. recently sent in this e-mail:

Besides investment advice and education, what with your book on playing defense to be successful in life and your newsletters, you are like a money matter coach and even a life coach.

I don't believe you have ever touched on this topic. Curious to hear your views on insurance. What types to get? Relatively how much vs income or assets? What to get for kids? Endowment plans from insurers? Investment plans from insurers? Hybrid insurance and investment plans? Appreciate if you could share what you also did for your family.

This is an immensely broad and complex topic, and the right answers depend on a range of factors about both the buyer and the type of insurance – so today I'd like to discuss phone and life insurance, both of which I've bought recently.

Before doing so, however, I want to step back and underscore that, broadly speaking, insurance is a losing bet...

Obviously, insurers are charging you more than they expect to pay out because they need to cover their overhead costs and (hopefully) earn a profit. So if you pay $1,000 to, say, insure your car, the insurer might, on average, expect to pay claims of $800, have expenses of $150, and book a $50 profit (plus insurers earn money by investing the "float" – the cash they receive from customers before paying out claims).

So why would anyone "invest" $1,000 to get a future payout of $800?

There are many good reasons...

An obvious one is if you know you're higher risk than the insurance company thinks. For example, I never buy the scam insurance policies that retailers like Best Buy (BBY) try to foist on your when you buy something like a TV (if it breaks soon after I buy it, it's likely covered by the warranty or return policy, and if it breaks after a few years, it's probably time to buy a newer, better one anyway). Ditto for the various types of key fob insurance, maintenance plans, etc. that car dealers try to sell you when you buy a new or used car.

But I use my phone constantly... and after dropping and ruining it more times than I can count, I eventually decided insurance was worth it (especially since I have the most expensive phone you can buy, an $1,800 Samsung Fold 4, which I described in my January 9 e-mail).

Rather than buying Verizon's insurance, provided by Asurion, I did some research online and bought a year of coverage from a company called AKKO for $168 – $14 per month (if you use my referral code, Whitney4909387, you'll get one month free).

It was a good decision.

When I was in Rome in May, my phone fell out of my pocket – breaking the double-size inside screen (thankfully the small outside screen was fine, so I was able to use my phone almost normally for the rest of my trip). When I got home, I contacted AKKO, they sent me to a local repair shop, which charged $600 to replace the screen – but a day later AKKO Venmo'd me $500 (there was a $100 deductible), so my insurance paid off in a big way!

Another reason to buy insurance is to protect against losses you can't afford – for example, your house burning down in a wildfire, getting swept away in a flood, or being flattened by a hurricane (all of which are becoming more and more common, unfortunately).

Another example of something worth insuring if your life – if you have dependents. My wife and youngest daughter (who is halfway through college) rely on my income (my older two daughters – ages 27 and 24 – are nearly fully financially independent, I'm very happy to say!), so I need life insurance to take care of them if I can't...

If I bite the big one – most likely on one of my risky adventures – the very least I can do is make sure my wife is financially secure the rest of her life, so I bought a large $10 million, 20-year term life policy 14 years ago that costs around $8,000 per year. That's incredibly cheap because I was only 42, was in excellent health, and wasn't mountain/rock climbing.

Because this policy expires in six years, I decided to buy another 20-year policy recently – but this time it only pays out $2.5 million. Why a smaller amount?

First, there's less need. My wife's life expectancy is 14 years less today (duh) and we no longer have three small children at home to care for.

Also, the price was a gut-punch: the price per million is 7 times higher – nearly double the annual premium for only one-fourth the coverage – because I'm older, have a couple small health issues that bumped me into the second-best health category, and there's a 50% surcharge for my mountain/rock climbing (if I stop climbing, this surcharge goes away).

In addition to plain old term life insurance, there are four other common types:

• Whole life insurance
• Universal life insurance
• Variable life insurance
• Burial insurance

I once shorted the stock of a company that was in the funeral home/cemetery/burial insurance businesses, which later went bankrupt. My research led me to conclude that the industry is filled with scams and scam artists (60 Minutes exposed it all the way back in 1998: The High Cost of Dying – The Funeral Business).

As for whole, universal, and variable life, they are all different types of investment products bundled with life insurance. I've never looked at them closely because I've always felt that I can do better investing on my own. (If you disagree and want to make the case that whole, universal, or variable life insurance is worth buying, please drop me a note.)

2) I love Jon Erlichman's posts about the early days of some of the all-time greatest companies and stocks. Here's one about Jeff Bozos' first job posting at Amazon (AMZN):

And here's a screenshot of what Netflix's (NFLX) original website looked like:

3) My 24-year-old daughter sent me this picture of us from exactly 18 years ago:

I'm nostalgic for my daughters at that age, so I regularly pressure them to give me grandchildren – much to my amusement (though probably not theirs)...

On July 7, when I was at the Value Investing Seminar in Italy, I held my friend Paco's little baby, Paloma:

This inspired me to write this text to my youngest daughter Katharine, cc'ing her sisters (Hector, Dash, and John are three of her college friends – just friends, she says!):

I was delighted to get a reply within a few minutes!

I know, it's tough being my daughter!

Best regards,

Whitney

P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.