I think what the original poster meant...
was not that the insurance was expensive because it's a 305 and would go up with a 350 but that is costs him 2200$ a year to drive it besides fuel and repair bill...
I think the '86 is still a carb motor. I just did a desmog on my '84, not sure if you can do that or not but boy my 350 runs so much better! it actually has some cahones and feels like a V8 now, before it ran like a missing straight 6!
I snipped the AIR pump, plugged up a bunch of unused crap vacuum lines, put an open element air filter on, pulled the cat converter and replaced with 2.5 inch pipe. Runs so much better! Pulling the cat made the biggest difference. I'm putting new plugs, wires, cap, rotor and playing with the timing this week cause it has just a little bit of stumble when it shifts down to go. Even after I swapped 4.10s in it, it still felt way restricted like it was always trying to play catch up. Shifts much better through the gears since I desmogged it though.
I'm guessing your 305 has plenty of miles on it and is out of tune, if this is the case, you may benefit from the same thing. I basically did everything to my truck with stuff I had laying around, minus a few exhaust clamps. I'll probably end up putting $75 into it with the cap, rotor, plugs and wires though(which will swap to a 350 if you do ever swap em...).
Other then that, I'd put a dual plane 4 barrel aluminum aftermarktet intake and a 600 cfm holley or Ebrock, Exhaust stuff is always good too.