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Family finances and retirement hopes can be shattered by dementia

Blog Article

Publication date:

09 September 2019

Last updated:

09 September 2019


Johnny Timpson, Scottish Widows

Critical-illness cover and financial planning conversations.

It’s unlikely that there are many reading this who haven’t been affected by dementia in some way. According to the Alzheimer’s Society, it is estimated 1 in 14 people over the age of 65 are affected by dementia, and the likelihood of developing the illness increases with age. A diagnosis is obviously devastating for a family emotionally, but the financial impact shouldn’t be underestimated either.

Consider your client approaching their retirement. Having saved their whole working life, they’re looking forward to paying off their mortgage and taking advantage of pension freedoms. Their golden years are just around the corner, but what follows is a life changing diagnosis.  

Unlike illnesses such as cancer or heart disease, the biggest support to people with dementia comes from help with basic daily needs such as washing, dressing and eating, rather than medical treatment available under the NHS. They become progressively dependent on what can be expensive personal and social care, with the cost being calculated by the Alzheimer’s Society at £100,000.

You might be surprised to know that as social care is means tested, anyone with assets (including a home) of more than £23,250* is often responsible for meeting these costs themselves. As a result, care needs and costs are spiralling, stretching the resources and finances of families and local authorities alike.

So sadly, instead of your client spending their hard-saved pension and any other investments on the retirement they’d hoped for, as well as any plans to provide financially for their family, they’re left with little choice but to utilise these assets, along with (in many cases) any built-up equity in their home, to pay for this care.

This is where the role of appropriate financial protection can come into its own.

Critical illness cover can provide a significant financial boost to families at a time of emotional and financial stress. And additional support benefits, such as ‘Care’ provided by Red Arc, also provide much needed emotional and practical support, and not just to the person suffering from the illness. The family or partner, who may be feeling pressure from performing a care role, can also access support.

It’s also worth speaking to clients about the need for, and benefits of, Lasting Power of Attorney should the nature of their health mean that they lack contractual capability and the ability to manage their financial affairs.

Remember too that while dementia is obviously more prevalent in the older generation, it’s not just a disease which affects the elderly. It’s estimated that over 42,000* people are suffering from early-onset dementia, which starts before the age of 65. This is not even state retirement age for many of us working today, so consider the impact this would have on people who are working, contributing to a pension and who have dependent children reliant on their income.   

While a financial protection conversation most commonly takes place around mortgages or other life events such as the birth of a child or marriage, it’s important not to forget the role it plays in your clients’ wider financial planning, including their retirement. If this conversation isn’t one you’re having already with your clients, you’ll find some valuable information and tips on our website and in this handy guide to help you take the first steps. 

Visit the Alzheimer’s Society for more information about dementia and alzheimer’s disease.


Source: * Alzheimer’s Society


To hear more from Johnny, read his previous blogs on the Scottish Widows Protect centre.


You can also read the CII’s Dementia-friendly guide for insurers HERE.

This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.


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