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Getting Life Insurance When You Have Dementia or Alzheimer’s

Finding the right life insurance for dementia patients can help protect your finances and might prove helpful in paying for regular supervision, especially when diagnosed with Alzheimer’s, the most common form of Dementia.

Russell Cain

Fact Checked

Updated: 20 May 2024

If you or a loved one has been diagnosed with Dementia, finding life insurance can be a frustrating task.

Life insurance companies in Australia understand your concerns and recognise Dementia as a serious illness, which is why select insurers offer life insurance policies. However, each instance of Dementia will be reviewed on a case-by-case basis.

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Can you get life insurance if you have Dementia?

Yes, generally, most individuals with Dementia will be able to qualify for life insurance. However, the insurer will generally require a medical exam and details concerning your initial diagnosis, recent dementia-related episodes, medications and visits to the GP/neurologist.  Every life insurance company follows different underwriting guidelines. So, even if you’ve been turned down in the past, you might still find coverage from another insurer.

Your best chance is to apply to a retail life insurance company accustomed to impaired risk cases. They will offer you the services of a specialist to help you find the best option suited to your circumstances.

Take note. You will have to serve a waiting period because Dementia is classified as a pre-existing medical condition. Waiting periods will vary from insurer to insurer. It’s best to read the company’s product disclosure statement (PDS), for precise guidance.

How much will life insurance coverage for Dementia cost?

The premium you’ll pay for Dementia life insurance will depend on a variety of factors, including the type and amount of coverage you want, the life insurance company you’re applying to and of course the kind of Dementia you’ve been diagnosed with.

If the underwriter determines you to be in excellent health, you might be able to obtain a fully underwritten life insurance policy. However, you will likely pay a higher premium than someone without Dementia, all other things being in equal.

The life insurance company will usually want to know about your:

And you can expect some more in-depth questions, including:

If you do not have Dementia but have a family history of the disease, you might want to think about getting insurance against Dementia.

Trauma insurance for Dementia and Alzheimer’s

Trauma insurance, also referred to as critical illness cover, usually pays a lump sum benefit when you are diagnosed with one of the illnesses listed in the insurer’s PDS, and Dementia and Alzheimer’s are typically listed. Alzheimer’s disease or Dementia results in significant cognitive impairment. A life insurance company will typically explain significant cognitive impairment as deterioration in the life insured’s mental state.

The condition is significantly debilitating, leaving severe sufferers unable to care for themselves.

According to Dementia Australia (2018), there are over 400,000 Australians living with Dementia, of which 45% are male and 55% female. Without a medical breakthrough, the number is expected to rise by another 100,000 by 2025.

Which life insurance companies provide trauma insurance for Dementia?

Most life insurance companies in Australia provide trauma cover for Alzheimer’s disease in their trauma insurance policies. Dementia or Alzheimer’s must be diagnosed by an appropriate medical specialist and will usually be categorised as a deterioration of your Mini-Mental State Examination score to 24 or less, depending on the life insurance company you apply to.

Please note: It’s important that you fully disclose if symptoms of Dementia existed that would cause a reasonable person to seek diagnosis, care or treatment from a medical professional when applying for a policy.

Generally, a 90-day qualification period exists. During this period, you would not be able to claim benefits when diagnosed with Dementia. However, some insurers might reduce this period. Carefully read through their PDS before deciding.

Trauma insurance for Alzheimer’s patients in Australia

Source: lifeinsurancedirect.com.au (March 2018)

What is Dementia?

The brain is a complex signalling system much like a computer. Information comes in, gets processed and turned into memories. All of this is done by billions of nerve cells, each branching out and connecting with other nerve cells.

Dementia is a general term used to describe a group of conditions categorised by a decline in a person’s mental ability, severe enough to interfere with daily life. Symptoms include memory loss, impairment in communication, and limited social skills and thinking abilities. There are many different types of Dementia, with Alzheimer’s being the most common.

What is the difference
between Dementia
and Alzheimer’s?

Dementia describes a collection of neurological disorders that affect the functioning of your brain. Alzheimer’s disease is the most common type of dementia. About two-thirds of the total number of Dementia cases are considered Alzheimer’s. Memory loss, disorientation, lapses of judgement and anxiety are all underlying symptoms of Alzheimer’s and most other types of dementia.

Alzheimer’s disease occurs where there is a permanent, irreversible failure of brain function leading to significant cognitive impairment for which no other recognisable cause has been identified. This may result in a need for continual supervision to protect the sufferer. Eventually, it may be necessary for those with Alzheimer’s disease to have full-time care.

The different types of Dementia

What are the signs of Dementia?

Early signs of Dementia vary a great deal. The most common tell-tale symptom seems to be memory loss, especially the loss of short-term memory. Catching possible dementia in the early stages is of utmost importance. Symptoms include:

Fortunately, a diagnosis of Dementia does not mean that your life is over. People with dementia are still able to live happy lives, although they are likely to need constant care.

Is Dementia classified as a disability?

Dementia is not seen as a normal part of ageing and thus should be classified as a disability, meaning people with Dementia must be afforded the same disability support as any other person with acquired disabilities. Some people living with Dementia do receive support from the National Disability Insurance Scheme (NDIS). However, many people with younger onset dementia face barriers to entry.

Although Dementia is more common in people over the age of 65, Dementia Australia, previously known as Alzheimer’s Australia, revealed that Dementia had been diagnosed in approximately 25,938 Australians between the ages of 30 and 50 years old.

Dementia Australia remains an advocate for the NDIS to assist younger people with progressive neurodegenerative diseases.

Cost of long-term care for people with Dementia

Dementia in Australia is on the increase. According to the latest report from the Economic Cost of Dementia in Australia (January 2018), it costs about $88,000 per annum to care for a person who has dementia.

93% of these costs are generally used for residential care. Essentially, residential costs are higher for people with dementia than for those without. 52% is generally attributed to pharmaceuticals, 17% for hospitalisation and 24% to pay for attendances.

As Dementia is incurable, this ongoing expense may eventually add up to a crippling amount, placing considerable strain on the funding of the Federal Government. Australia is being forced to look at more sustainable ways of dealing with dementia. Keeping dementia patients at home for as long as possible is one of these options. Which is why you might want to invest in a life insurance policy to help support your loved ones taking care of you or paying outstanding bills when you pass away.

Where to get quotes for Dementia insurance coverage

When shopping for life insurance or Trauma cover, it is important that you work with a specialist or at least start comparing policies from Australia’s top 10 life insurance companies.

We know finding cover is challenging, especially if you’ve been turned down before. But, when working with a specialist, you have a higher chance of finding the cover that suits your requirements.

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Specialist

Russell is the founder and CEO of Life Insurance Direct and has been quoted in The Sydney Morning Herald, The Age, Independent Financial Adviser, Risk Adviser, Adviservoice, and Insurancenews. Russell has over 15 years’ experience in the Australian life insurance & financial services sector and is instrumental in driving the latest innovations in our insuretech platform.

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