What is a Morbidity Rating?

According to the 2018 Annual Disability Statistics Compendium, about 2.7 million (13.4%) Florida residents are living with disabilities. When an employee or business owner becomes disabled and unable to work, the insurance company may approach you with a settlement offer to buy out your remaining future disability benefits. Among the factors that are used by insurance providers to calculate the lump-sum disability buyout is your morbidity rate. This determines your chances of achieving partial or full recovery before reaching your maximum benefits.

If you’re considering a disability buyout and want to understand how the amount is determined, consulting with an experienced Florida disability insurance buyouts attorney is important for detailed guidance. At Victor Peña Law PLLC, I have the experience and resources to assist and represent clients in their disability claims. 

As your legal counsel, I can evaluate the terms and provisions of your long-term disability policy, review the insurance company’s settlement offer, and help you determine the best course of action. Based in Fort Lauderdale, Florida, my firm handles cases in any state throughout the country.

Disability Insurance Buyouts

A disability insurance buyout is an insurance company’s settlement offer or proposal to buy out your remaining future disability benefits. This involves offering you a lump-sum settlement payment up-front in exchange for your disability insurance policy.

Your long-term disability insurance policy buyout amount will be calculated using different factors, including the value of your monthly payment, your current age, morbidity rate, and mortality rate.

Morbidity Rate &
Disability Insurance Buyouts

Morbidity rate indicates the rate of disease appearing in a population or geographical location. This is the possibility that you may recover fully or partially from your disability before the end of the benefit period. The total sum of future benefits will be reduced by any legitimate morbidity factors based on the increased likelihood of having certain diseases or illnesses.

What is a Morbidity Rating?

The morbidity rate can be described as the rate at which chronic and acute diseases or illnesses occur in a population. It measures the number of people in a geographical location who contracted a certain illness or disease during a particular period. Some examples of common morbidities include:

  • High blood pressure (hypertension)
  • Diabetes
  • Lung disease
  • Chronic kidney disease
  • Cancer
  • Obesity
  • Heart disease
  • Stroke
  • Alzheimer’s disease
  • Anxiety, depression, and other mental health conditions

How Morbidity Ratings Are Calculated

The morbidity rate is calculated by dividing the number of cases of a disease, illness, injury, or disability by the total population during a particular period. It is shown as a percentage.

How does a Morbidity Rating
Affect A Disability Buyout Offer?

Morbidity ratings are relevant in your disability insurance company’s review of your disability buyout offer. When performing a financial review, the disability company’s actuaries use morbidity rates to predict the likelihood that you will develop certain medical conditions in the future. The assessment ends with a calculation used to discount the anticipated future value of your claim. The higher the likelihood you will contract medical conditions that can limit your lifespan, the higher the discount will be and the lower the offer will be from your insurance company.

Morbidity Rate vs. Mortality Rate

Morbidity and mortality are two terms that are commonly used by insurance companies when calculating premiums and disability payouts. While morbidity rates are used to calculate the likelihood a claimant will develop certain medical conditions, the mortality rate indicates the likelihood the claimant will die before the expiration of the policy. This is especially relevant when a claimant suffers from any life-limiting condition. If you have any terminal condition or illness that is life-limiting, your insurance company will not be willing to offer a settlement of your disability claim. They will find it a “better business decision” to roll the dice and continue paying your benefits in hopes that they will not have to pay for the maximum duration of the policy.

It is important to understand that the insurance company will review your entire file to evaluate your medical conditions including any history of smoking, your tendency to drink alcohol, any mental health conditions or mentions of suicidal ideation, history of cancer, heart conditions, diabetes, and any conditions involving the major organs.

Why You Should Get Help With
Securing or Evaluating a Buyout Offer

Insurance companies have their own procedure for determining long-term disability buyouts. No matter how appealing the lump-sum payment may seem, understanding the benefits and risks is crucial before accepting any settlement offer. A knowledgeable disability insurance buyouts attorney can help evaluate the legal terms of the settlement agreement, negotiate a fair settlement, and ultimately protect your best interests. It is very important that the insurance company perform a proper assessment of your medical conditions when calculating any buyout offer. Factoring in a medical condition that no longer exists could have a significant impact on the mortality ratings used to calculate the buyout offer. 

At Victor Peña Law PLLC, I’m dedicated to providing comprehensive legal guidance and dedicated representation to clients in all phases of their disability insurance claims. As your attorney, I can evaluate the insurance provider’s proposal, inform you about the long-term benefits and risks, and determine whether accepting the buyout settlement offer is a good choice for you. I will thoroughly review your buyout offer and medical records if necessary to help you negotiate a more favorable settlement. 

Contact my firm — Victor Peña Law PLLC — today to schedule a one-on-one consultation with an experienced disability insurance buyouts attorney. I can work to protect your rights and offer you the comprehensive representation you need. Located in Fort Lauderdale, Florida, my firm handles cases nationwide — including clients located in Los Angeles, Seattle, New York City, Chicago, and anywhere else in between.


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