Note

Fair Value Measurements

The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. The Company uses a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

●

Level

inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement rate.

●

Level

inputs are inputs other than quoted prices included within Level

that are observable for the asset or liability, either directly or indirectly.

●

Level

inputs are unobservable for the asset or liability and reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

Investments

, available for sale

: Fair values of available for sale fixed maturity securities are provided by a

third

-party pricing service. The pricing service uses a variety of sources to determine fair value of securities. The Company’s fixed maturity securities are highly liquid, which allows for a high percentage of the portfolio to be priced through pricing sources. Fair values for equity securities are also provided by a

third

-party pricing service and are derived from active trading on national market exchanges. The Company's investment in FHLB stock is carried at redemption value which approximates fair value.

The table below presents the amounts of assets measured at fair value on a recurring basis as of

December 31, 2019

and

2018:

	December 31, 2019
	Total		Level 1		Level 2		Level 3
Available for sale:
Fixed maturities:
US Treasury securities	$	632,639	$	632,639	$	-	$	-
Corporate bonds		20,084,397		-		19,892,797		191,600
Municipal bonds		7,055,059		-		7,055,059		-
Redeemable preferred stock		2,133,893		-		2,133,893		-
Mortgage backed and asset backed securities		3,246,904		-		3,246,904		-
Total fixed maturities		33,152,892		632,639		32,328,653		191,600
Equities:
Common stock		9,214,694		9,169,694		45,000		-
Preferred stock		926,809		-		926,809		-
Total equities		10,141,503		9,169,694		971,809		-
Total	$	43,294,395	$	9,802,333	$	33,300,462	$	191,600

	December 31, 2018
	Total		Level 1		Level 2		Level 3
Available for sale:
Fixed maturities:
US Treasury securities	$	569,940	$	569,940	$	-	$	-
Corporate bonds		15,842,361		-		15,642,361		200,000
Municipal bonds		6,598,113		-		6,598,113		-
Redeemable preferred stock		192,404		-		192,404		-
Mortgage backed and asset backed securities		3,780,985		-		3,780,985		-
Total fixed maturities		26,983,803		569,940		26,213,863		200,000
Equities:
Common stock		10,735,935		10,735,935		-
Preferred stock		150,040		-		150,040
Total equities		10,885,975		10,735,935		150,040		-
Total	$	37,869,778	$	11,305,875	$	26,363,903	$	200,000

The Company discloses the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are

not

measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. The methodologies for other financial assets and financial liabilities are discussed below:

Cash

and

cash equivalents

: The carrying amounts approximate fair value because of the short maturity of these instruments.

Investment income due and accrued:

The carrying amounts approximate fair value because of the short maturity of these instruments.

Policy loans

Policy loans are stated at unpaid principal balances. As these loans are fully collateralized by the cash surrender value of the underlying insurance policies, the carrying value of the policy loans approximates their fair value.

Federal Home Loan Bank advance

: FHLB advances are stated at the outstanding principal balance and the carrying value approximates their fair value.

Policyholder deposits in

deposit-

type contracts

: The fair value for policyholder deposits deposit-type insurance contracts (accumulation annuities) is calculated using a discounted cash flow approach. Cash flows are projected using actuarial assumptions and discounted to the valuation date using risk-free rates adjusted for credit risk and the nonperformance risk of the liabilities.

The estimated fair values of the Company’s financial assets and liabilities at

December 31

are as follows:

	December 31, 2019
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	6,678,805	$	6,678,805	$	6,678,805	$	-	$	-
Investment income due and accrued		321,362		321,362		-		-		321,362
Policy loans		118,930		118,930		-		-		118,930
Total Financial Assets (excluding available for sale investments)	$	7,119,097	$	7,119,097	$	6,678,805	$	-	$	440,292

Financial Liabilities:
Policyholder deposits in deposit-type contracts	$	19,396,614	$	19,186,265	$	-		-	$	19,186,265
Federal Home Loan Bank advance		1,000,000		1,000,000		-		-		1,000,000
Total Financial Liabilities	$	20,396,614	$	20,186,265	$	-		-	$	20,186,265

	December 31, 2018
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	2,077,646	$	2,077,646	$	2,077,646	$	-	$	-
Investment income due and accrued		286,890		286,890		-				286,980
Policy loans		56,539		56,539		-		-		56,539
Total Financial Assets (excluding available for sale investments)	$	2,241,075	$	2,241,075	$	2,077,646	$	-	$	343,519

Financial Liabilities:
Policyholder deposits in deposit-type contracts	$	16,626,218	$	15,361,164	$	-	$	-	$	15,361,164
Total Financial Liabilities	$	16,626,218	$	15,361,164	$	-	$	-	$	15,361,164