Things to consider when preparing clients for the likelihood of Alzheimer's disease

Besides the mental and physical impact of Alzheimer’s, the disease affects a client’s financial capacity and situation — and that of their loved ones.

The Alzheimer’s Disease Facts and Figures report showed that:

• The estimated total annual cost for people with Alzheimer’s and other forms of dementia is $226 billion, with roughly $44 billion in out-of-pocket costs.
• 48 percent of caregivers reported that the expense of caring for a friend or family member with dementia led to spending cutbacks over the previous 12 months.
• 23 percent reported taking money from their own retirement savings to help pay for dementia-related expenses.
• Caregivers were 28 percent more likely than non-care contributors to report they ate less or went hungry because they didn’t have enough money to afford proper meals.
• Within the last five years of life, people with dementia spend an average of 32 percent of their household wealth.
• Twenty-five percent of care contributors spent more than 10 percent of their annual household income on dementia-related expenses. One in 30 spent more than 90 percent.

5: Use This Checklist to Help Your Clients and Their Families Prepare

“People with mild cognitive impairment or mild Alzheimer’s disease may retain the capacity to designate a trusted person as their financial agent,” said Pokorski. As a financial professional, it is important to have conversations with your clients and obtain their permission to speak with their families if you have concerns about the client’s cognitive abilities.

You can also talk to your clients about creating a document listing the following:

• Family members
• Financial professionals
• Accountant
• Attorney
• Physicians
• Assets
• Income
• Bank and investment accounts
• IRAs
• Insurance policies
• Wills
• Trusts
• Credit cards
• Safety deposit boxes
• Retirement benefits
• Recurring bills
• User names and passwords for online accounts

Furthermore, realize that people with diminished mental and financial capacities can be easily taken advantage of financially. Look out for such red flags as claims of missing funds, new people coming in to “help” with finances, or beneficiary changes.

6: Consider how the living benefits of life insurance can help your clients prepare for the possibility of an Alzheimer’s diagnosis

In addition to providing a death benefit, some life insurance products offer riders that can ease future financial burdens for clients who later develop Alzheimer’s, as well as aiding family members.

“It is clear to most people that life insurance offers, first and foremost, a death benefit,” said Michele Frey, Vice President of Product and Solutions Marketing for Prudential’s Individual Life Insurance business. “But what some may not know is that life insurance can also play a tremendous role while the insured is still living. It’s the living benefits that can help your clients be better prepared to deal with life’s challenges that may occur later in life, some of them entirely unexpected.” These can include financial hardships that can come along with a chronic illness like Alzheimer’s.

“Adding a chronic illness rider to a life insurance policy provides clients with an added layer of protection,” said Frey. “The rider provides your clients additional choice and flexibility, particularly at a time when they may not feel as though they have complete control.”

This is where the conversation about life insurance riders comes into play. These can allow your clients to accelerate their policy’s death benefit should they become chronically or terminally ill and meet the terms and conditions of the rider.

This strategy is compelling because the death benefit is there for the client’s beneficiaries. The chronic illness rider also offers the peace of mind that comes with knowing that, should they need financial help due to a chronic illness such as Alzheimer’s, they can accelerate the payout.

Alzheimer’s is a particularly devastating chronic illness that affects not only the patient — your client — but their loved ones, as well. Working closely with your clients and their families can help you determine if life insurance with a chronic illness rider is suitable for them, spot the initial signs of dementia, and prepare clients for possible future financial challenges.