In recent weeks, there has been a growing interest in dementia-related insurance plans. Many are questioning the value and importance of obtaining such coverage. In this article, I will explore what dementia is, how it affects our daily lives, its potential financial impact, alternative options for addressing our concerns, and whether investing in a dementia-specific insurance plan is worthwhile.

What Is Dementia?

Dementia is a form of disorder of the brain that causes us to have progressive worsening of memory and intellect (cognitive abilities), orientation, and personality. Dementia affects a person’s ability to think, reason, remember, learn new information and skills, solve problems, and make judgments or decisions. This will result in affecting a person’s ability to work, or daily activities and ability to interact with others.

The risk of Dementia increases with age, and it can affect any adults, but it is more common in those aged 60 and above. In Singapore, about one in 10 (age 60 and above) suffer from dementia. It is found that there were approximately 82,000 people with dementia in Year 2018 and is projected to increase to 152,000 by the Year 2030 which is a whopping 85% increase in dementia patients in 12 years.

There are different types of Dementia:

Source: Agency For Integrated Care

Based on research by the Alzheimer’s Society in the UK, the average life span of patients suffering from Alzheimer’s disease is about eight to 10 years. However, life expectancy is less for patients who are diagnosed in their 80s or 90s. There are also cases where patients who suffer from Alzheimer’s live over 15 to even 20 more years.

How Does It Affect Dementia Patients and Their Family Members?

In the beginning of dementia, most patients may be still able to be functional independently (still able to drive, work, take part in social activities, etc.). At this point, family members play an important role in providing support and companionship and helping to plan out the future for the patient. Although there is no cure for dementia illness, if dementia is still in the early stages, the patient can seek treatment which may help to slow down the progression or temporarily improve the symptoms.

As dementia progresses, the patient might fall into the deterioration of abilities, including the capability to perform activities of daily living, or ADL for short. ADL such as eating, dressing, showering, toileting, walking or moving around, and transferring (in and out of a bed or a chair). Thus, caregiving for a dementia patient can be challenging, demanding, and time-consuming.

Family members can become emotionally, mentally, and physically stressed while taking care of dementia patients. This is especially so when the family members are still working and may need to take time off to care for the patient, which affects their daily lives. Hence, one way is to engage external professional caregivers or trained domestic helpers to take care of the patient whenever the family members are working or not around.

How Is It Going to Impact Your Finances?

In the early stages of dementia, patients must cover several expenses, including screening and monitoring, medication, and management of behavioural and psychological symptoms of dementia (BPSD). Since there is no cure for dementia, these costs are ongoing.

If dementia progresses to a severe stage, rendering the patient unable to perform daily activities, family members may need to hire caregivers or trained domestic helpers. This entails ongoing monthly expenses, along with various other daily costs, which can extend over the long term.

For instance, Singlife (formerly Aviva Ltd.) conducted a long-term care study in 2018, revealing an average monthly requirement of $2,324 for such care. This encompasses various expenses such as caregiver fees, home modifications, medication, dietary supplements, rehabilitation, and aids for daily living like wheelchairs and therapy. With a patient’s life expectancy often spanning around 10 years, the total expenses could surpass $278,880.

Given the rise in medical inflation over the years, the projected amount could escalate substantially, potentially imposing a significant financial strain on families.

Is It Worth Getting a Dementia-Specific Insurance Plan?

If we look at the angle of the long-term expense perspective one is suffering from dementia, it does seem that it is relatively important to get a dementia-specific insurance plan. There are a few different types of dementia-specific insurance plans in the market and each product has its unique selling proposition. Usually, such a specific type of insurance plan has a lower premium compared to the usual life or health plan.

Before diving deep into a dementia-specific plan, we must first understand what is the most important benefit that we are looking for in a plan. Some plans provide coverage for dementia up to age 80, while others offer lifetime coverage, which essentially gives you a higher assurance. Additionally, some plans offer a lump-sum payout upon suffering from dementia, while other plans offer a monthly payout for over 10 years. Therefore, it’s crucial to explore the available options thoroughly before making a purchase decision.

Are There Any Other Options? (Havend’s Framework)

Apart from getting the dementia-specific insurance plan to hedge against the risk of financial impact on the family in the event of suffering from dementia, there are other available options in which Havend has a framework for long-term care planning.

In 2020, the Singapore Government launched Careshield Life and made it mandatory for all Singapore Citizens and Permanent Residents to be insured under the government administration. CareShield Life is a long-term care insurance scheme that provides basic financial support should an insured develop severe disability, especially during old age, and need personal and medical care for a prolonged duration (long-term care).

CareShield Life serves to payout at least $600 per month for a lifetime if one is found to be unable to perform 3 out of 6 ADLs. Hence, this provides Singapore Citizens and Permanent residents higher assurance as the coverage is wider and is not limited to just severe dementia-related conditions but any illness or accident that may cause one to be unable to perform 3 out of 6 ADLs to start receiving a monthly payout.

Building on the government initiative, Havend has a framework that helps an individual to consider how they can start planning for their long-term care.

Based on Havend’s framework, engaging a trained domestic helper to take care of the severely disabled patient including purchasing medication and therapy treatment would cost about $1,500 per month. However, if the family member can afford a private nursing home, the cost could go up to $4,500 per month (non-subsidised rate) and some nursing homes could even cost up to $7,500 per month.

At Havend, we use Singlife’s study in 2018 as a baseline to start our planning for long-term care, as the average cost per month for a severely disabled patient would be estimated to be $2,324. Factoring in a 3% inflation rate, the projected average monthly cost for 2024 would be approximately $2,781. Considering CareShield Life as a fundamental protection, we frequently advise our clients to bolster their long-term care coverage to mitigate against the financial risks associated with severe disability.

Source: Havend’s Long-Term Care Framework

Conclusion

While dementia may be a significant concern, it is just one among several illnesses like stroke, paralysis, and Parkinson’s disease that can result in severe disabilities affecting daily activities. Rather than approaching dementia insurance in isolation, a more comprehensive strategy involves establishing a robust safety net of long-term care insurance, such as the CareShield Life scheme, which isn’t illness-specific, and then supplementing with Dementia insurance (illness-specific) for greater assurance.

In planning for retirement, all too often the focus is on retirement income, wealth preservation or even legacy gifting, however, neglecting the role of insurance protection can be detrimental, especially the financial impact due to medical and caregiving needs which are more pronounced for retirees.

Hence, it is always advisable to approach your trusted advisor to seek guidance in your insurance planning journey.

Do reach out to us for a complimentary InsureWell Assessment to find out if you are adequately covered with your existing insurance or overpaying for inadequate coverage. We promise to tell you if you have enough insurance and if that is the case, you need not purchase any insurance from us.

This is an original article written by Mike Zhang, Lead, Insurance Specialist at Havend.

At Havend, if we are found to have oversold you, we have put in place a Money Back Guarantee (MBG) scheme, so you can trust that we will always prioritise your interests first. Unprecedented in Singapore, learn more about our Money Back Guarantee scheme here.