Your client has counted down the years to retirement, paid off their mortgage and taken advantage of pension freedoms, having saved for this their whole working life. Their golden years are just around the corner. But then there’s the devastating diagnosis that they’re developing Alzheimer’s, the most common form of dementia – a complex, unpredictable and degenerative health condition caused by disease in the brain.
Yet, unlike cancer or heart disease, Alzheimer’s cannot be cured or effectively treated. The biggest support to people with the disease comes from help with basic daily needs such as washing, dressing and eating rather than medical treatment available under the NHS, and they become progressively dependent on expensive personal and social care.
Sadly, instead of 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 now left with little choice but to utilise these assets, along with (in many cases) any built-up equity in their home to pay the required £850-£1000+ per week for care or a place in a residential home.
As our society ages, the number of people being diagnosed with dementia in the UK is rising sharply and, as a result, care needs and costs are spiralling. This is stretching the resources and finances of families and local authorities alike. According to the Alzheimer’s Society, there are 850,000 people with dementia in the UK, with numbers set to rise to over one million by 2025. This will soar to two million by 2051. One in six people over the age of 80 in the UK have the condition.
Meeting the costs and challenges of our social care crisis (which is really also a dementia and palliative care crisis) will be the subject of a Government consultation later this year. Figures from the Alzheimer’s Society reveal that the total cost of dementia to the UK is estimated to be around £26.3bn a year, with two-thirds of this paid for by individuals suffering from the disease and their families. Around 70% of people in care homes have dementia or severe memory problems.
At the same time, unpaid carers who support people with dementia, many of them juggling this with their usual jobs, are saving the economy £11 billion a year. Yet without them, our care system simply could not function.
It’s important to note, however, that dementia is not just a disease which affects the elderly. An estimated 43,000 people are suffering from early-onset dementia, which means it starts before the age of 65 – not even state retirement age for many of us of working age today. And the number of people diagnosed with early-onset dementia has increased sharply in the last 10 years, due to our ageing population and improved diagnosis.
While it lacks the profile and attention of other life changing and limiting critical illnesses, dementia is the UK’s biggest killer and it costs our economy more than cancer or heart disease. Around 225,000 people in the UK will develop the condition this year, which is one every three minutes. And many of these individuals have to face it alone.
It’s no surprise, therefore, that the FCA has an increasing focus on improving support and outcomes for vulnerable consumers. We, as an industry, however, still need to find better ways to show the critical role that appropriate financial protection advice, solutions and support services play in safeguarding the financial welfare of our families.
It’s very clear, for example, that people in the UK are seriously underestimating the potential cost of care. According to research from Scottish Widows’ think tank, the Centre for the Modern Family, people, on average, estimate that residential care would cost £549 a week – when in reality it costs on average £866 for a place in a nursing home – leaving a shortfall of £317 every week. But the deficit could be significantly higher in reality, since one in four people admit they’ve no idea how they would cover these costs for themselves or a relative and half say they’d have to rely on a relative to help them cover the financial impact.
This is where the role of financial protection can come into its own. Critical illness cover, for instance, can provide a significant financial boost to families at a time of emotional and financial stress, yet only one in ten of us have taken out a policy. 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.
World Alzheimer’s Day is on 21st September 2017
Johnny Timpson is a protection specialist at Scottish Widows