Dementia And Life Insurance: What Are Your Options?

Being diagnosed with dementia can be a frightening and upsetting time, but it's important to know that you are not alone. In the UK alone, there are about 850,000 people living with dementia, and this number is expected to reach close to 1 million by 2030. If you're concerned about how your diagnosis will impact your ability to get life insurance, rest assured that you still have options. While traditional life insurance policies may be out of reach, there are alternative types of life insurance designed specifically for individuals with health conditions such as dementia.

What is dementia?

Dementia is an umbrella term for a range of neurological conditions that affect the brain and worsen over time. It is not a natural part of ageing, though it is more common in older people, with one-third of all people aged 85 or older having some form of dementia. It is caused by changes in certain brain regions that cause neurons (nerve cells) and their connections to malfunction. These changes can be caused by different diseases that affect the brain in different ways, resulting in different types of dementia.

The symptoms of dementia include memory loss, poor judgement, confusion, changes in the ability to speak, understand, and express thoughts and words, getting lost in familiar neighbourhoods, taking longer to complete daily tasks, loss of interest in daily activities, hallucinations, paranoia, and problems with balance and movement. These symptoms can vary depending on the type of dementia and the areas of the brain affected.

There are several types of dementia, including:

• Alzheimer's disease, which is the most common form and is associated with abnormal buildups of proteins in the brain, known as amyloid plaques and tau tangles, along with a loss of connection among nerve cells.
• Frontotemporal dementia (FTD), a rare form that occurs in people younger than 60, affecting the frontal and temporal lobes of the brain, leading to behavioural symptoms and problems with language and emotions.
• Lewy body dementia (LBD), characterised by problems with thinking, movement, behaviour, and mood. People with LBD have abnormal deposits of a protein called alpha-synuclein in the brain.
• Vascular dementia, which is diagnosed in people with vascular changes in the brain, such as a stroke or injury to small vessels supplying blood to the brain.
• Mixed dementia, which is thought to be connected to a combination of changes in the brain, such as those associated with Alzheimer's and vascular dementia.

While there is currently no cure for dementia, treatments can help manage symptoms and slow down the progression of the disease.

What types of life insurance are available to people with dementia?

People with dementia can still get life insurance, but their options are limited. The most likely option is guaranteed acceptance life insurance, which guarantees coverage but has some limitations.

Guaranteed Acceptance Life Insurance

Guaranteed acceptance or guaranteed issue life insurance is available to people with dementia because it does not require a medical checkup or ask any health-related questions. However, it is the most expensive form of life insurance, and coverage amounts are lower than traditional life insurance. It also has a two-year waiting period, during which the full coverage amount is not available. After the waiting period, the insured is eligible for the full sum.

Simplified Issue Life Insurance

Simplified issue life insurance is a type of no-medical life insurance that is more flexible and accepts people with health issues. However, people with dementia may not qualify for it, and even if they do, the coverage amount and duration may be lower than traditional life insurance.

Traditional Life Insurance

Traditional fully underwritten term or permanent life insurance policies are typically out of reach for people with Alzheimer's or dementia. These policies ask a lot of health-related questions and may require a medical exam.

How can life insurance help people with dementia?

Life insurance can help people with dementia in several ways, providing financial security and peace of mind for both the individual diagnosed and their loved ones. Here's how life insurance can be beneficial in the context of dementia:

• Financial Protection: Life insurance can ensure that the person with dementia and their family are financially secure. Long-term health care and nursing expenses for dementia patients can quickly deplete savings, and life insurance can help cover these costs. It can also assist with end-of-life expenses, funeral costs, and any outstanding debts, providing financial stability for the family during a challenging time.
• Planning for the Future: A dementia diagnosis often prompts individuals to get their affairs in order. Life insurance can be a crucial part of this planning process, helping individuals secure their wealth for their heirs and ensuring their wishes are carried out.
• Peace of Mind: Knowing that their loved ones will be taken care of financially can provide immense peace of mind for individuals with dementia and their families. This can reduce stress and allow them to focus on spending quality time together and seeking appropriate care.
• Guaranteed Acceptance: While traditional life insurance policies may be out of reach for people with dementia due to their strict health requirements, guaranteed issue life insurance policies are specifically designed to accept individuals with health conditions. These policies do not require medical check-ups or health-related questions, ensuring that people with dementia can obtain coverage.
• Simplified Process: Guaranteed issue life insurance policies often have simplified application processes, with no extensive paperwork or medical exams. This makes it easier for individuals with dementia to navigate the process of obtaining coverage without the stress of extensive underwriting requirements.
• Coverage Options: Guaranteed issue life insurance policies typically offer permanent coverage, lasting for the rest of the insured person's life. This provides long-term financial security and removes the worry of policy termination dates.
• End-of-Life Care: Life insurance can help individuals with dementia and their families plan for end-of-life care. It can provide funds to cover the costs of palliative care, ensuring the individual receives the necessary support and comfort during their final days.

How does dementia affect life insurance rates and approval?

Dementia is a catch-all term for health conditions that affect the brain and cause symptoms like memory loss. Alzheimer's disease is the most common type of dementia. Being diagnosed with some form of dementia does not disqualify you from getting life insurance, but it does affect the rates and approval process.

Factors Affecting Insurance Rates and Approval

When considering a policy for someone with a pre-existing condition such as dementia, insurer underwriters take into account various factors, including family history, age of onset, duration of the condition, progression, and other health issues that may be relevant.

The extent of a person's dementia will also determine their ability to sign a contract, as one must be of sound mind to enter into a financial agreement. This can be a challenge for individuals with dementia, impacting their eligibility for certain types of insurance policies.

Types of Insurance Policies for People with Dementia

Traditional term or whole life insurance policies are typically challenging to obtain with dementia. However, alternative options are available, such as:

• Guaranteed issue life insurance: This type of insurance guarantees coverage but has some limitations. It does not require a medical check-up or health-related questions, making it accessible to people with dementia and other serious illnesses. These policies tend to be permanent and have higher rates with lower coverage amounts compared to other life insurance types. They also usually have a graded period, during which the full coverage amount is not yet available, and a two-year waiting period before the full benefits kick in.
• Final expense insurance: Also known as burial insurance, this provides a cash benefit to cover funeral costs and other expenses. It can be a guaranteed issue or simplified issue policy, where some medical questions are asked. While it offers lower benefits and coverage amounts than traditional life insurance, it can be a more affordable option.
• Second-to-die life insurance: This type of policy insures two people but only pays out after the second insured dies, making it easier to qualify for as long as one of the insured individuals is healthy.

While a dementia diagnosis can impact life insurance rates and options, it does not disqualify individuals from obtaining coverage. Guaranteed issue life insurance is often the most accessible choice, but it is important to carefully review the terms, including coverage amounts, waiting periods, and premiums. Consulting with a qualified insurance professional can help individuals navigate the available choices and select the most suitable policy for their needs.

What are the best life insurance options for people with dementia?

Being diagnosed with dementia can be upsetting and scary, and planning for the future with life insurance can be difficult. However, it is still possible to get life insurance if you have dementia. The best option is guaranteed acceptance life insurance, which guarantees coverage but has some limitations.

Guaranteed Acceptance Life Insurance

Guaranteed acceptance life insurance is the most likely option for people with dementia. This type of insurance guarantees coverage regardless of health conditions or age, but it tends to be more expensive and have lower coverage amounts than traditional life insurance. It also has a two-year waiting period before the full coverage amount is available, and there may be a limit to the type of policy available, with some insurers only offering permanent life insurance.

Simplified Issue Life Insurance

Simplified issue life insurance is another option for people with pre-existing conditions. These policies do not require a medical exam and have fewer health questions than traditional life insurance. However, people with dementia may not qualify for this type of insurance, and coverage amounts may be lower.

Traditional Life Insurance

Traditional term or whole life insurance is typically out of reach for people with dementia due to the extensive health questions and medical exams required. However, if your dementia is not progressive and an insurer approves a policy, a whole life policy is recommended as it does not have a termination date.

Final Expense Insurance

Final expense insurance, also known as burial insurance, can provide a cash benefit to cover funeral costs and other expenses. It is typically offered as a guaranteed issue or simplified issue policy and is best suited for those who cannot get a term or whole life policy.

Second-to-Die Life Insurance

Second-to-die life insurance insures two people but only pays out after the second insured dies. This type of policy may be easier to qualify for as long as one of the insured individuals is healthy.

When considering life insurance options, it is important to work with a qualified professional and read the fine print of any potential policy.

Frequently asked questions