Do not argue with your loved one about what is real and what is a fantasy. Say something like, “I can see you are scared, but everything is fine.”
During the day, redirect them to another activity.
At night time, ask them if it would help if you sat with them for a few minutes. You may want to try leaving a night light on or having soothing music playing as a way to calm them. Sometimes it is the inability to see in the dark that causes these fears.
You may want to seek guidance from their doctor. Rule out vision issues that could be contributing to this problem and talk to the doctor about whether medication might help reduce the hallucinations if they begin to cause your loved one greater distress.