Hi
@Sarah.chambers1230 and Welcome to Dementia Talking Point. This is a very friendly and supportive place and you'll get lots of help and support here.
People with dementia can have hallucinations, but it could be caused by something else. It might be an idea to email or write to your grandad's GP with a list of your concerns and ask him/her to invite him in for a check up, that's if you think he would go. When I became concerned about my mum I piggybacked an appointment she already had.
Does your grandad live with you or another family member or does he live on his own? It might be worth starting to set things up ahead of him maybe needing more help in the future. If you haven't already done so getting
Power of Attorney set up is important as it will make helping him so much easier in the future. You can also ask social services to do an assessment of his needs, even if he would have money to pay for help. In some areas Age Concern have a service where people will do light housework or take an elderly person out to the shops etc.
I'm sure others will be along shortly with their suggestions and experiences.