Last month, we reviewed the costs of long-term care here in Florida. Since almost 70 percent of today's 65-year-olds are going to need some form of long-term care , it is important to have a plan to pay for the costs. For most people, it makes the most sense to insure against it. There are three main ways to gain long-term care coverage, and it is important to understand them in order to choose the best fit for your particular situation.

1. Traditional Long-Term Care Insurance

With traditional long-term care insurance, you pay a premium in exchange for the ability to receive benefits, if they are needed. A long-term care insurance policy provides you with money to pay for qualified long-term care costs, if they are incurred. If you never need long-term care, then you receive no benefits; it is a use-it-or-lose-it policy.

When you purchase your policy, you choose the level of insurance you want. You select the daily benefit amount for care in a nursing home and whether or not you need home care coverage as well. It is important to know the costs of long-term care services in order to elect suitable coverage amounts for your area.

You also must choose the length of time you want the benefits to be paid. Common options are one, two, three, or five years, or for your lifetime. Logically, the longer the benefit period, the higher the premiums you will need to pay. Your policy will also indicate benefit triggers, or conditions which must exist in order to receive benefits from the insurance company. Benefits usually begin once you are unable to perform two of six activities of daily living without substantial assistance for at least 90 days, or have a cognitive impairment like Alzheimer's. Non-tax-qualified plans may have less restrictive benefit triggers.

2. Life Insurance with a Long-Term Care Rider

With a traditional long-term care policy, people sometimes feel that if they buy it and don't use it, they have wasted their money. Because of this, several hybrid products have emerged. One very popular solution is a life insurance policy with a long-term care rider. This way, if long-term care is needed, there are available funds, and if not, it isn't wasted because it is passed on to the heirs as a life insurance benefit.

In this case, you invest in a typical cash value life insurance policy and select your long-term care coverage terms in the rider. If you end up needing long-term care coverage, it comes out of your policy's death benefit. If you don't spend the total benefit available, your beneficiaries will receive the balance upon your death.

If you need life insurance, getting your long-term care coverage as a rider may be a good option. This way, someone will be benefiting from the premiums you are paying, whether it is you or your heirs. If you don't need life insurance, there is another hybrid option that may be of interest to you.

3. Annuity with a Long-Term Care Rider

If you purchase a variable annuity, you may have the option of adding a long-term care rider onto the contract. Since 2010, the IRS allows for the long-term care benefit to be used tax-free.

First, you would purchase your annuity, then you would select the amount of long-term care coverage you want, often two to three times the face value of the annuity, as well as the length of time you want coverage. Finally, you have to decide if you want inflation protection.

This way, you have money available to you if you need long-term care. Otherwise, you can cash out the annuity when it matures (in which case you would lose your long-term care coverage), or let it accumulate and ultimately pass on the assets to your heirs.

Getting long-term care coverage through an annuity can be appealing because it is generally less expensive than stand-alone insurance, and you can obtain coverage without health underwriting. They tend to be less common than the other options, though, because of the current low interest rates and the large upfront investment.

SHOULD I BUY LONG-TERM CARE INSURANCE?

When deciding if you need long-term care insurance, you need to know how much wealth you have and how much you would be willing to spend on care, look at the statistics and address your family health history. For example, if you have family members who have suffered from Alzheimer's or dementia, you may be at a higher risk which would most likely involve spending several years in an assisted living facility or nursing home.

As with any insurance, long-term care insurance protects you against an unsure future. None of us knows what the future holds; once we know for certain it will be too late. It is important to have a long-term care strategy and a plan in place before you need it.

Tom Breiter is president of Breiter Capital Management, Inc., an Anna Maria based investment advisor. He can be reached at 778-1900. Some of the investment concepts highlighted in this column may carry the risk of loss of principal, and investors should determine appropriateness for their personal situation before investing. Visit www.breitercapital.com.