According to data from the U.S Census Bureau, over 19 million American adults of working age have disabilities that limit or prevent them from working. In the event that an employee or business owner becomes unable to work due to an accident, injury, or illness, disability insurance provides financial assistance to replace some of their lost income. At some point during your claim, however, your insurance provider may approach you with a lump-sum buyout offer.
An insurance company’s primary reason for a lump-sum offer is always to save money. At Victor Peña Law PLLC, I’m committed to offering knowledgeable and comprehensive guidance in matters related to disability claims. As an experienced disability insurance buyouts attorney, I can evaluate the insurance company’s offer, review the legal terms and conditions, and help you understand the benefits and risks of accepting or rejecting the lump-sum buyout. I will fight diligently to protect your rights and help negotiate a fair settlement amount. Located in Fort Lauderdale, Florida, my firm handles cases in any city throughout the country.
What is a Disability Buyout?
Depending on the terms or provisions of your long-term disability insurance policy, your insurance company can offer you a lump-sum buyout or payment. A lump-sum buyout can be described as a settlement offer by your insurance company to buy out your remaining future disability benefits. In a disability buyout, your company may attempt to buy out your claims or policy by offering you a huge amount of money (lump-sum settlement payment) upfront in exchange for your insurance policy.
Reasons to Accept a Buyout
Assuming the lump-sum payment you’re being offered is fair, here are some reasons to accept the buyout:
- It Avoids Potential Termination of Claims: You can avoid the prospects of the insurance company reviewing your health condition or disability and eventually canceling your disability benefits.
- It Becomes Part of Your Estate: A lump-sum payment can be a part of your estate. You can also put it in a trust. In the event of an untimely death, it can be passed down to your chosen beneficiaries.
- It Can Be Invested: In addition, the lump-sum payment received from the disability buyout can be an investment for a higher rate of return that will benefit you and your loved ones.
- It Avoids Medical Record Validation: Every now and then, the insurance company will be requesting access to your medical records and examinations to ascertain your condition. Accepting a buyout offer can help sidestep such a request.
- It Avoids Sneaky Surveillance Tactics: You won’t need to keep worrying about sneaky surveillance tactics or investigators used by insurance companies to monitor policyholders and deny claims.
The Drawbacks of Taking a Buyout
Here are some drawbacks of accepting a lump-sum buyout:
- It is Lower than Full Value: As mentioned earlier, insurance companies offer lump-sum settlements to policyholders in order to save money. Hence, the value you will receive will be lower than the full value of your disability insurance policy.
- You Will Lose the Monthly Payment: Once you accept the lump-sum payment, you will no longer receive monthly payments.
- It Has Tax Implications: Accepting a lump-sum payment may have negative tax consequences.
- You May Outlive the Money: If your policy offers lifetime payouts and your family has a history of longevity, you may wish to continue under your disability insurance policy.
- The Possibility of Wastage: Not everyone can manage a huge amount of money. You may end up wasting the money through poor financial decisions, bad investment, or poor judgment.
- The Loss of Future Benefits: You may end up accepting an offer that considerably undervalues the future benefits of your policy.
Determining whether a lump sum buyout is fair and in your best interests requires critical thinking, detailed planning, and extensive calculations. An experienced attorney can review the settlement offer and help you make key decisions.
Call Victor Peña Law PLLC for Help
Each insurance provider has its own protocol for long-term disability buyouts. Receiving a lump-sum payment may seem appealing, especially when facing financial instability. However, the settlement offer may be either beneficial or risky for you. If you receive an offer from your insurer to buy out your disability insurance policy for a lump-sum payment, consulting with an experienced disability insurance buyouts attorney is crucial to help review the offer and its legal terms and ultimately protect your best interests.
At Victor Peña Law PLLC, I have devoted my career to providing outstanding legal services and representing claimants in all phases of disability insurance claims. As your legal counsel, I can review the insurance company’s proposal and help you understand its long-term ramifications. Using my experience, I will fight to protect your rights, benefits, and future. I will also help you negotiate a fair settlement offer that contains the right legal terms and conditions.
Contact my firm — Victor Peña Law PLLC — today to schedule a one-on-one case assessment with a knowledgeable disability insurance buyouts attorney. I can offer you the comprehensive legal guidance, assistance, and 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.