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Feb 7 2011 12:00AM


I’m interested in getting long-term care insurance through my financial adviser. How will my investments pay for this? It will be about $6,000 a year.


According to FPA member Mark K. Baker, CFP®, of Farmers Financial Solutions, one way to fund the premiums of your long-term care insurance policy is to designate a particular investment to cover the costs of that policy. “A single investment with funds of $150,000 earning a conservative four percent return would provide $6,000 per year of gain that would be used to pay the premiums,” Baker said. “This would keep your principal intact. You also could slowly liquidate an investment to pay for the coverage. $150,000 divided by $6,000 would last for 25 years, if it had no investment gain. Or even use a combination of both, part gain and part principal. There are also some long-term care insurance policies that feature a paid up rider. You pay for a set amount of time and no premiums are payable after that period. Your current age, of course, would help to determine a more specific plan of action.”

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