Perhaps you’re looking for smart strategies to help fund your Long Term Care Insurance premiums. A common question is, “How can I afford to pay the premiums?” Long Term Care Insurance is not for everyone. Long Term Care Insurance is a good fit if you have $100,000 and above in liquid assets, excluding your home. One important thing to keep in mind when buying Long Term Care Insurance is to find premiums that will be affordable for you during your retirement years.
If you have a pension, you may be able to pay for Long Term Care Insurance with your pension.
Interest on Savings Method
John has a portfolio of $500,000, consisting of $250,000 in stocks, $150,000 in bonds, and $100,000 in a CD earning 4%. One way to protect the entire portfolio from the potential high cost of Long Term Care is to use a portion of the interest on the $100,000 CD to pay his Long Term Care Insurance premiums.
At 4% on $100,000, John would earn $4,000 per year in interest. Simply take a portion of the interest (the remaining interest stays in the investment and continues to grow), John can fund his Long Term Care Insurance. Making that one move actually creates a pool of money, or separate LTC account, of approximately $600,000 that could be used on Long Term Care for either John or his spouse or both.
That means John still has his $500,000 portfolio PLUS an additional $600,000 in Long Term Care Insurance that will pay for both John and his spouse’s future LTC needs. In addition, if either John or his spouse needs LTC in the future, the cost will not have to come out of his IRA, but out of the insurance companies reserves.
By using a portion of the interest from just that one investment, John protects his entire portfolio that he has worked so hard to build up.