Dementia And Life Insurance: Who Gets The Benefits?

Life insurance policies are available for people with dementia, but they are limited. People with dementia are often deemed high-risk by insurance companies, and traditional term or whole life insurance policies are typically not an option. Instead, people with dementia can opt for a guaranteed issue life insurance policy, which offers no medical questions and guaranteed acceptance. However, these policies have a mandatory graded period, usually two years, during which the beneficiaries will only receive the premiums paid plus interest if the insured person passes away. Obtaining life insurance for seniors with dementia can be challenging, and it is essential to carefully review the terms and conditions of different policies to make an informed decision.

Can a person with Power of Attorney cash a life insurance policy and keep the money?

A person with Power of Attorney (POA) can cash a life insurance policy on behalf of the policyholder, but they cannot keep the money for themselves unless they are also a beneficiary. The POA must act in the best interests of the principal (the person who granted them the POA) and has a fiduciary duty to act in good faith. The POA controls the financial decisions, including whether to borrow from any built-up cash value or cash out the policy. However, they cannot transfer money to themselves without good reason and express authorisation. The POA must keep complete financial records, and the beneficiary of the life insurance policy has the right to access these records.

In the case of a person with dementia, they can no longer give their POA to another party as they are not deemed mentally competent to do so. If a person with dementia has already granted POA to someone, that person can manage their life insurance policy on their behalf. If the person with dementia is the beneficiary of a life insurance policy, their POA cannot cash it in unless it is in the person's best interests.

If a person with POA is suspected of fraud or not acting in the best interests of the principal, legal action can be taken against them. The beneficiary of the life insurance policy may have the right to sue the POA agent for fraud or theft if they believe the POA agent has cashed in the policy for their own benefit. However, if the POA agent can prove that the money was used for the principal's care or living expenses, they may not be found guilty of fraud.

What are the best guaranteed issue life insurance companies for dementia patients?)

If you are looking for life insurance for dementia patients, you will likely need to find an agent to pre-screen with several companies. The best choice for seniors with dementia is a guaranteed acceptance whole life policy, which is designed for people with high-risk health conditions.

AIG (Corebridge Financial)

AIG offers guaranteed acceptance life insurance, which is commonly referred to as no-questions life insurance. There are absolutely no medical questions on the application. These policies are intended for people with high-risk pre-existing conditions. The only factors that are considered when applying for guaranteed life insurance include:

• You must be a U.S. citizen
• You must be between the ages of 40-85
• You must reside in a state with product availability
• You must be able to understand what you’re purchasing and sign the application

Great Western Insurance Company

Great Western Insurance Company is another option that offers guaranteed acceptance life insurance. They offer the best combination of price, state and age availability, as well as living benefits.

Mutual of Omaha

Mutual of Omaha is our pick for offering guaranteed issue coverage for applicants between 45 and 85 years old, with coverage amounts for final expenses ranging from $2,000 to $25,000. The company also offers no-exam, simplified issue coverage options to the healthiest applicants up to age 85 across its other policy options. Mutual of Omaha also scores highly in financial strength with an A+ rating from AM Best, suggesting a strong ability to meet financial obligations and payout claims.

AAA

AAA's guaranteed issue whole life plan offers up to $25,000 in coverage to applicants between the ages of 45 and 85 to cover debts and final expenses. AAA offers more policy information online than some other providers, including qualifying ages, coverage amounts and rider options. As an alternative to guaranteed issue coverage, AAA offers a more traditional whole life policy with up to $75,000 in coverage for people between 18 and 85 years old.

Fidelity Life

Fidelity Life earned our pick as the best provider for seniors based on its offerings to applicants over 50 years old. The RAPIDecision Guaranteed Issue policy provides a death benefit of up to $25,000 that customers can use for end-of-life expenses and burial costs. Its RAPIDecision Final Expense plan might offer a better option for senior applicants considered in above-average health, with up to $40,000 in coverage. Fidelity Life also holds an A rating with AM Best, indicating “excellent” financial strength.

State Farm

State Farm earned a place on our list for its guaranteed-issue final expense plans for applicants between ages 45 and 80 years old. We named the company best for customer satisfaction thanks to holding the number one spot on J.D. Power’s annual customer satisfaction survey for four straight years. State Farm’s reputation for customer service is matched by its financial stability and market share. The provider holds an A++ rating from AM Best, supporting its ability to meet financial obligations and payouts.

How does dementia affect your ability to qualify for life insurance?

Dementia is a serious condition that affects a person's memory, judgment, and cognition, and reduces their ability to perform daily tasks. It is typically progressive, meaning the symptoms get worse over time. This degenerative nature of the disease means that life insurance companies deem it a high-risk health impairment.

Due to the severity of this disease, people with dementia will receive an automatic decline from insurance carriers when applying for traditional term and whole life policies. This is because individuals must be of sound mind when entering into a legal contract such as an insurance policy, and with dementia patients, there’s no way of proving that this is the case.

However, this does not mean that people with dementia cannot get life insurance at all. They can still get guaranteed issue life insurance, which does not require a medical exam. This type of policy accepts everyone regardless of health status, and no medical records or interviews are required to obtain coverage. The downside is that these policies tend to be more expensive and include a graded death benefit or a waiting period, typically of two or three years. After the waiting period is over, the policy will become effective and beneficiaries will be eligible for the benefits.

Other factors that may influence your ability to qualify for life insurance coverage are the age of onset, family history, how the condition is progressing, and the extent to which you require assistance in your daily activities.

What are the benefits of guaranteed life insurance for seniors with dementia?

Guaranteed life insurance is a viable option for seniors with dementia, offering several advantages over traditional life insurance policies. Here are some of the key benefits:

No Medical Questions or Exam

One of the most significant benefits of guaranteed life insurance is the absence of medical questions or exams. This means that individuals with dementia will not be subjected to rigorous medical evaluations or inquiries about their health condition. This "no-questions-asked" approach ensures that applicants are not discriminated against or denied coverage based on their dementia diagnosis.

Guaranteed Acceptance

With guaranteed life insurance, seniors with dementia are assured acceptance regardless of their health status. This is in stark contrast to traditional life insurance policies, which often decline coverage for individuals with pre-existing conditions like dementia. The guaranteed acceptance aspect provides peace of mind and ensures that individuals with dementia can obtain the necessary financial protection for their loved ones.

Fixed Monthly Premiums

Guaranteed life insurance policies offer fixed monthly premiums, providing stability and predictability for seniors with dementia. Fixed premiums allow individuals to plan their finances effectively, knowing that their insurance payments will remain consistent over time.

Guaranteed Death Benefits

The death benefits provided by guaranteed life insurance policies are guaranteed. This means that, in the unfortunate event of the insured person's death, their beneficiaries will receive the full amount specified in the policy. This assurance is especially important for families dealing with the challenges posed by dementia, as it provides financial security during a difficult time.

Accrual of Cash Value

Guaranteed life insurance policies also offer the benefit of accruing cash value over time. This means that the policy can build up a cash reserve that can be accessed if needed. This feature provides additional financial flexibility and can help cover expenses or serve as a source of funds in the future.

No Expiration Date

Unlike some traditional life insurance policies, guaranteed life insurance has no expiration date. This means that the policy remains in effect for the insured person's entire life, providing lifelong coverage. Seniors with dementia can, therefore, rest assured that their coverage will not terminate at a certain age or after a specified number of years.

In conclusion, guaranteed life insurance offers numerous benefits for seniors with dementia, including guaranteed acceptance, fixed premiums, guaranteed death benefits, and no medical questions or exams. These advantages provide financial security and peace of mind for individuals and their families facing the challenges associated with dementia.

How do prescriptions for dementia affect qualification?

Prescriptions for dementia will affect your qualification for life insurance. All underwritten insurance policies will run a prescription history check, and common dementia drugs will be flagged. If you have ever filled a prescription for a dementia drug, you will be deemed a dementia patient and will be declined instantly for an underwritten life insurance policy.

Common dementia drugs include:

• Rivastigmine Tartrate
• Cholinesterase Inhibitors: Donepezil (Aricept), Galantamine (Razadyne, Reminyl), Rivastigmine (Exelon)
• Namenda (memantine) for Alzheimer's

If you have dementia, your best option for life insurance is a guaranteed acceptance whole life policy, which is designed for people with high-risk pre-existing conditions.

Frequently asked questions