Are Disability Companies Required to Offer You a Buyout?

Almost every person faces challenges and hardships at one time or another. However, for individuals with disabilities, their physical or mental impairment can limit them from performing major life activities. The U.S Census Bureau indicates that more than 19 million American adults of working age have disabilities that prevent or restrict their ability to work. The process of maintaining a disability claim is a stressful process in and of itself. Often, claimants will look for a way out, sometimes simply dropping the claim altogether to avoid dealing with the insurance company.

At Victor Peña Law PLLC, I have devoted my career to helping disabled claimants with their LTD claims. This includes securing disability buyouts with insurance carriers. I’m available to evaluate your unique situation and explain the reasons why the insurance company will or wouldn’t offer you a buyout. As an experienced Florida disability insurance buyouts attorney, I will fight compassionately to protect your legal rights and help negotiate a fair settlement offer. Located in Fort Lauderdale, Florida, my firm handles cases in any city throughout the country.

Are Disability Companies Required to Offer You a Buyout?

A disability insurance buyout can be described as a proposal or settlement offer from the insurance company to buy out the remaining potential future benefits on your disability insurance policy. Although insurance companies are not required to offer you a disability buyout, if you are given the option of a lump-sum settlement, it is important that you review the legal terms and understand the potential ramifications.

Reasons a Company Might Offer a Buyout

Here are some reasons why an insurance company will offer you a disability buyout:

Save Money

Insurance companies are in business to make more money and save costs. The disability carrier may approach you with a settlement offer lower than the full value in order to save money. This automatically stops all monthly payments.

Long Life Expectancy

The morbidity rating is the rate of acute and chronic disease appearing in a population. If there is a lower possibility that you will contract a medical condition, you are likely to have a longer life expectancy. Hence, the insurance company may approach you with a settlement offer.

Your Claim Is Mature

Upon review of your mortality and morbidity rating, if the disability carrier concludes that your benefits are expected to be paid for the maximum duration of the policy, they may approach you with a lump sum buyout offer.

Reasons a Disability Company Might Not Offer a Buyout

Common reasons why an insurance carrier wouldn’t offer you a disability buyout include:

Insufficient Reserve Funds

According to the National Association of Insurance Commissioners (NAIC), insurance companies are required to hold a minimum reserve for claims reported or incurred. In the event that there is not enough money in reserve, the disability carrier will not offer you a buyout.

Ongoing Cancer Treatment

If you’re suffering from a condition that is related to cancer, receiving treatment means there is a possibility of recovery. Also, if you recover, then you won’t be disabled any longer. Due to the reasonable likelihood of recovery, the insurer will be reluctant to offer you a buyout.

Short Life Expectancy

One of the conditions used by the insurance carrier to calculate buyouts is the span of the policyholder’s life expectancy. If you’re suffering from a disability or terminal condition and you have little time left, the insurance company will be unwilling to consider doing a buyout.

The Terms of Your Disability Policy

Most policies contain specific limiting provisions and changes that occur after a certain period of time. The most common is the change in the definition of disability. Additionally, there are some medical conditions that frequently limit your claims to a maximum of 18 or 24 months of benefits. If your disability insurance policy contains such terms or conditions and there are upcoming changes expected, the insurance company won’t offer you a buyout.

Potential SSDI Benefits

If there is a possibility that you may be awarded SSDI benefits in the future, your disability carrier will not agree to a lump-sum buyout offer.

Work With an Experienced Attorney You Can Trust

Insurance companies usually have their own protocol for offering disability buyouts to policyholders. Depending on the surrounding circumstances of your unique situation, you may or may not be offered a lump-sum buyout. However, if you have received a settlement offer from the disability carrier, you need to consult with an experienced long-term disability insurance buyout attorney as soon as possible to review the offer, its legal terms, long-term ramifications, and help determine the best course of action.

At Victor Peña Law PLLC, I’m dedicated to offering comprehensive legal guidance and reliable advocacy to clients in long-term disability buyout matters. As your attorney, I will review the insurance company’s buyout offer and help you weigh your options including whether you should negotiate an improved settlement offer. Using my extensive experience and legal understanding, I will fight to protect your legal rights and your best interests and help you negotiate a fair settlement amount with the appropriate legal terms and conditions.

Contact my firm — Victor Peña Law PLLC — today to schedule a consultation with an experienced disability insurance buyout attorney. I can offer you the detailed legal counsel, assistance, and reliable advocacy you need. Located in Fort Lauderdale, Florida, my firm handles cases nationwide, including clients located in and around the areas of Los Angeles, Seattle, New York City, and Chicago.


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