Not all disability carriers will offer buyouts. If you happen to receive an offer to buy out your policy in writing or by phone you should carefully consider your options before agreeing to settle. There are many reasons why your insurance company may want to settle your claim, but you can be certain that your insurance company would not be offering you a buyout if it was not found to be in the best interest of the company.
The insurance company’s actuaries and medical specialists will carefully assess the risks of your claim before deciding on a range of what might be offered to you to buyout your policy. A buyout is feasible only after the insurance company concludes it will likely have to pay your benefits to the expiration of the policy. Normally, this is to age 65 or your normal retirement age but if your policy pays lifetime benefits then you may not want to accept the insurer’s first offer. In deciding whether a buyout is practical, your insurance company will consider your age, the period of time remaining on the claim and the amount of money it has set aside in reserve for your claim.
Before you consider agreeing to a lump sum buyout, you should arm yourself with as much knowledge as possible surrounding how these settlements are calculated and make sure you fully understand the fine print—and everything in between—including the often confusing terms and conditions in the settlement agreement.
When you accept a buyout, your monthly disability benefits will end along with your coverage under the insurance policy.
Victor Peña Law PLLC will review any offer and help you understand the pros and cons of accepting or rejecting a lump sum buyout.