1. Client is single and age 50e. She wants to fund long-term care insurance costs in the future.

Her family history assumes the following:

She will need long-term care coverage when she turns age 78;

She will need coverage for 6 years;

Long-term care costs in her area are $72,000 per year;

Long-term care costs are increasing by 5% every year;

She can earn 7% on her savings and assets;

She currently earns $98,000 per year; and

She has saved $75,000 that she is willing to use for long-term care costs.

Use the above data to answer the following questions:

a. What is the future value cost of long-term care coverage when the client enters a nursing facility?

b. What is the total cost of coverage for 6 years when the client enters a nursing facility (present value of cost determined at age 78?

c. How long will the client's long-term care savings last when she enters a nursing facility?

d. Assume that the client has another asset worth $250,000. If she is willing to use this asset to help pay for long-term care costs, does she need long-term care insurance at this time?