[100-Year Brain Health⑥] Dementia Can Strike Anytime, Prepare with Financial Products

Dementia Insurance from Insurers and Bank Trusts... Receive Treatment and Living Expenses upon Dementia Diagnosis
"Number of Dementia Patients Expected to Increase, Government Needs Comprehensive Measures"

[Asia Economy Reporters Changhwan Lee and Minwoo Lee] Mr. A, a man in his 50s who owns several buildings in Seoul, has recently been exploring dementia trusts at his main bank. As he ages, his memory has declined, and he occasionally forgets important appointments. He plans to entrust a certain amount of assets to the bank for management and use the funds for nursing care or hospital expenses if dementia or a serious illness occurs later. Any remaining funds will be gifted to his children.

Ms. B, a woman in her 50s who cared for her mother who passed away from dementia, is looking into dementia insurance. Because of her family history, she believes her own risk of developing dementia is high. Knowing better than anyone that her family would suffer greatly over a long period if she were to develop dementia, Ms. B plans to purchase dementia insurance while still relatively healthy to prepare for any possible onset.

South Korea is experiencing rapid aging, and the number of dementia patients is increasing significantly every year. As the number of dementia patients grows, financial products such as dementia insurance and bank trusts that can prepare for this are also expanding. There are calls for active government policy support to popularize dementia-related financial products.

By 2065, Dementia Patients Expected to Reach 3.28 Million; One to Two Out of Every Ten Elderly May Have Dementia

According to the Korea Insurance Research Institute on the 30th, the number of dementia patients in Korea is expected to increase from 750,000 in 2018 to 3.28 million in 2065, growing at an annual rate of 3.2%. This rate is 1.6 times higher than the elderly population growth rate of 1.9% during the same period. The proportion of dementia patients among those aged 65 and older is also projected to rise from 10.3% in 2020 to 16.1% in 2050.

The national management cost for dementia patients was estimated at 13.6 trillion won in 2017, accounting for about 0.8% of the country's gross domestic product (GDP). The annual total medical expenses amounted to 810 billion won, which is higher than those for the five major chronic diseases: cerebrovascular disease, cardiovascular disease, diabetes, hypertension, and arthritis.

Dementia causes enormous mental and financial damage not only to the patient but also to their family, so it is essential to prepare in advance. Improving lifestyle habits to prevent dementia and subscribing to financial products such as dementia insurance beforehand are also effective methods. If insured with dementia insurance, one can receive support for hospital and nursing care expenses if dementia occurs.

As the number of dementia patients increases significantly each year, the dementia insurance market is growing annually. According to the Korea Credit Information Services, as of 2019, there were 1,362,000 dementia insurance policies in Korea, a nearly threefold increase from the previous year.

Accordingly, insurance companies have diversified and increased the release of dementia insurance products. In the past, the insurance industry mainly sold dementia insurance as riders within other insurance products such as health insurance or whole life insurance, but recently, products that exclusively cover dementia have been launched. The share of standalone dementia insurance products increased from 8% in 2017 to 52% in 2018 and 78% in 2019.

This year, many dementia insurance products have been launched, mainly by life insurance companies. ABL Life released the '(Non-Participating) ABL Dementia Care Insurance' last month, a dementia-specialized insurance product that elderly people can also subscribe to. The subscription age for this product ranges from 30 to 75 years, which is an expanded age range compared to other dementia insurance products.

Depending on the subscription riders, it covers diagnosis fees according to dementia stages, nursing care expenses for severe dementia, support for hiring caregivers, and dementia hospitalization expenses. Notably, for moderate or higher dementia, it provides up to 500,000 won monthly for life as living expenses, and after being rated for long-term care, it offers support payments of 200,000 to 300,000 won per use for home care or facility care, which is considered an advantage.

Eun Jaekyung, Marketing Director at ABL Life, said, "Reflecting the reality that one out of ten people aged 65 or older was diagnosed with dementia as of 2020, we developed a product that elderly people can subscribe to and that focuses on diagnosis fees by dementia stage and nursing care expenses associated with dementia."

Products offering dementia prevention programs have also appeared. Heungkuk Life Insurance launched the '(Non-Participating) Heungkuk Life Dementia Love Protection Insurance' earlier this month, which focuses on the mild dementia stage, the early stage of dementia. Unlike existing dementia insurance that focuses on severe dementia coverage, this product strengthens coverage starting from mild dementia, which has the highest incidence rate. Upon diagnosis of mild dementia, it provides a dementia prevention program worth 1 million won.

The dementia prevention program is provided through the SuperBrain program by Rowan, a digital therapeutics development company. This program offers various training programs that stimulate the brain of dementia patients through multiple tasks via an app and customized training using artificial intelligence (AI), aiming to delay the progression from mild dementia to severe dementia as much as possible.

Trusts, Asset Management, and Predicting Onset Rates... Banks and Fintech Also Eyeing the Market

Banks are also eyeing the brain health and dementia-related market by launching trust products and others. They are also forming business agreements with a long-term perspective to pioneer the market.

Hana Bank, strong in the trust sector, launched the asset management product '100-Year Operation Dementia Preparedness Trust' last year in response to the increasing dementia population due to rapid aging. This product adds asset management functions to the 'Safe Happiness Trust,' a lifestyle management trust product launched in March 2020.

During healthy periods, it aims for profit through asset management, and during times when fund management is needed due to dementia or illness, it provides comprehensive life management functions such as elderly care, inheritance, living expense payments, and safe payments.

Viewing customer health management as part of asset management, Hana Bank has also partnered with healthcare companies. In May, Hana Bank signed a business agreement with medical precision diagnosis platform company Ngen Bio to provide VIP healthcare services. Through this, they plan to assess customers' complex health conditions and provide necessary health information and customized management methods.

Fintech companies like BankSalad are also focusing on 'health.' In April, BankSalad launched the 'Find My Risk Diseases' service, which provides the incidence rates of major diseases such as diabetes, dementia, and stomach cancer. Based on users' personal health information, it statistically predicts the likelihood of developing ten diseases, including dementia, stroke, heart disease, and various major cancers. The calculation combines health checkup records from the National Health Insurance Service with the user's age, gender, and family history.

Some are also conducting long-term dementia prevention activities. In April, Shinhan Bank signed a business agreement with the National Pension Service's in-house venture Digital Literacy Research Institute and Silvia Health to establish the Brain Health Talent Center. The center plans to carry out dementia prevention and awareness improvement through ▲development and operation of educational programs ▲hosting brain health seminars ▲conducting dementia prevention campaigns.

Government, Industry, and Academia Must Jointly Establish Comprehensive Dementia Measures

Although the market for dementia-related financial products is growing, the diversity of products and public awareness remain low compared to the increasing number of dementia patients, leading to calls for active government policy responses.

According to the Korea Insurance Research Institute, the Japanese government has selected dementia prevention and early response as national core tasks considering the social costs of dementia and has continuously strengthened dementia measures through cooperation and investment among industry, academia, and government.

In particular, the government, industry, and academia have jointly established comprehensive dementia measures, including early prevention and daily life support. Additionally, financial companies such as insurance firms are encouraged not only to provide financial products but also to offer various services through partnerships with other industries to support the elderly.

Researcher Inyoung Jung of the Korea Insurance Research Institute pointed out, "The number of dementia patients in Korea is expected to increase significantly in the future. Active policy responses from the government and proactive roles from the insurance industry are necessary."