CIGNA LONG TERM DISABILITY (LTD) LUMP SUM SETTLEMENT OFFERS
CIGNA Disability Buyout Lawyers: Negotiate the Best Buyout with CIGNA Settlement Attorney.
Life Insurance Company of North America (LINA) does business under the name CIGNA and frequently offers buyouts. However, more recently, they have been employing the company Lucens Group to handle many of their settlement offers to their claimants. CIGNA’s tactics are predictable and we have seen consistent low ball offers from CIGNA when it comes to settling claims. While other insurance companies will not make offers until a claimant has been receiving benefits for several years, CIGNA has been known to make offers to claimants within the first year of the claim.
Such offers are rarely to your benefit and CIGNA may attempt to entice you with a promise to waive any potential overpayment that could result from a future award of SSDI benefits. The CIGNA representative may even attempt to convince you that no benefits will be payable beyond 24-months and that for this reason you should take the offer. While it can sometimes be true that your benefits will be limited to 24-months it is important to carefully consider any settlement offer by CIGNA and have an experienced Cigna Buyout Lawyer review the offer before making any life-changing decisions.
I Received a Buyout Offer From CIGNA, What Now?
CIGNA likes to extend offers to settle over the phone. You should avoid accepting any verbal offers without first speaking with an attorney and without having fully considered your options. CIGNA will ask you to agree to a certain amount and then send you a detailed “LUMP SUM SETTLEMENT AGREEMENT AND RELEASE” containing many more details than given to you over the phone. The release will state your monthly benefit amount and your date of disability. The release will discharge CIGNA from any responsibility in any way related to any tax implications that may result from accepting the lump sum settlement. Cigna will also not give you any tax advice. Most importantly, by signing the release CIGNA will expect you to release them and any of their affiliates from any and all liability relating to the claim.
To Cigna’s credit they also usually encourage you to consult with an attorney and/or financial advisor and have the release reviewed before CIGNA will remit payment. However, CIGNA may not do this in every case so if you have received a CIGNA buyout offer you should request that CIGNA pay at least a portion of the fees to your attorneys and/or financial advisor. CIGNA offers a small amount of money knowing that many claimants will have a tough time finding lawyers or financial advisors who will do the work for $250. Despite this, it is a good idea to consult with a lawyer before signing anything or accepting any verbal offers. Victor Peña Law PLLC will review any offer.
CIGNA Insists That I Take a Lump Sum Payout and That My Policy Will Not Pay Beyond 24-Months, What Now?
CIGNA, unlike most other disability insurance companies, has been known to extend settlement offers very early in a claim. A buyout offer is early if it is offered before 24 months of benefits have been paid. The reason for this is that many long-term disability claims are denied at the 24-month mark. If CIGNA extends an offer within the first two or three years of being on claim it is likely they have determined that your benefits will be subject to a limitation in your policy and that benefits will be payable only for the term allowable under the policy limitation. There are various limitations that could apply but the most common are:
- A change in the definition of disability and/or
- A mental nervous limitation.
The most common limitation invoked as a reason to deny a claim if you are already on claim with CIGNA is the change in definition of disability. This change usually occurs after 24-months of benefits have been paid although some CIGNA group insurance policies will do this at the 36-month mark or even after 60 months of benefits.
The initial test of disability typically considers whether a claimant is disabled from his/her own or regular occupation. CIGNA will look at whether the medical records and other evidence of disability meet the own occupation standard. If the definition changes—and it typically does—then CIGNA will start looking for evidence to support a finding of disability under the any occupation standard, meaning that the medical evidence must support a finding that you are unable to perform the material and substantial duties of any occupation.
CIGNA will start it’s any occupation review months before the definition actually changes and you may get letters from CIGNA advising you of their review or they may just reach out to your doctor for additional information and you won’t know about it until you get a denial letter. It is not uncommon to receive a letter from CIGNA only 12-18 months into the claim stating that your benefits will be denied at the 24-month mark and that you have the option to appeal.
Often however, CIGNA will call you and tell you they have determined your benefits will end after 24-months and that they will agree to pay you an up front lump sum of the benefits remaining in the 24-month period in exchange for you signing a release. Sometimes they even sweeten the deal by offering an additional two months of benefits with an assurance that you will not receive benefits beyond 24-months.
These early offers can sometimes be in your benefit, especially if you are recovering from your disability and plan to return to work soon. Also, if you expect to receive SSDI benefits in the near future then taking an early buyout can sometimes be worked out in your favor. In many cases, however, these offers are not to your benefit and once you sign a release you could waive all your future rights to benefits beyond 24 months.
How Does CIGNA Calculate a Buyout Offer?
CIGNA will consider various factors in calculating a buyout offer including:
- A review of the present value of your claim,
- The statistical likelihood of benefits ceasing due to death, and
- Anticipated future interest rates.
CIGNA’s settlement department will determine a range that they consider to be reasonable and extend an offer to you via phone. As soon as you receive a call or letter from CIGNA offering you a buyout you should immediately contact an attorney.
Why is CIGNA’S Buyout Offer So Low?
A CIGNA settlement offer will always be a fraction of the total value of the claim. They will take into account various uncertainties on top of those listed in their offer letter. If the offer is a small fraction of what you consider to be the total value of the claim it could be that they have determined a limitation applies to your claim, in which case, they would not anticipate paying you beyond the limitation period.
If there is no applicable limitation, then the discount rate they used to calculate the offer could be very high. The higher the discount rate percentage the lower the present value will be. (see present value). The younger you are, the more uncertainties there will be about the future and the lower the offer will be.
Reasons to Accept A Settlement Offer From CIGNA
Everyone’s financial situation is unique and whether or not to ask for or accept a buyout offer from CIGNA should be carefully considered along with your unique financial situation. CIGNA will tell you that a buyout can offer you:
- The opportunity to make a decision to leverage current finances against future need
- More flexibility in exploring options that will put the benefits to maximum use
- The opportunity to resolve outstanding debts (especially those with high interest rates)
- The opportunity to finance other income-generating investments
- The opportunity to finance re-training, re-education or self-employment
While these are all possibilities for you it is important to weigh the risks of accepting a settlement against staying on claim. Often, tax implications that arise from the acceleration of the future benefits in one lump sum payment outweigh the benefits of taking a lump sum.
There are other options that could limit the tax liability you accept by agreeing to take a settlement, but these options must be discussed with the appropriate specialists before any releases are signed and before you agree to take a buyout. Victor Peña Law PLLC has a network of professionals that can help guide you in determining your best options.
How and When To Approach CIGNA For A Buyout
If you have not received a settlement offer from CIGNA but you would like to approach them for a buyout there are many things you should consider carefully before approaching CIGNA. Among other considerations, you should ask yourself:
- When was the last time CIGNA did a medical review?
- Is my doctor available and willing to fill out medical paperwork if CIGNA requests an update now?
- How long will my primary doctor be able to complete future claim forms?
- How long have I been on claim?
- Are there any policy limitations that apply to my claim?
- How much longer do I have left before I reach the maximum benefit period?
- What is the likelihood I will reach my maximum benefit period?
- Am I willing to give up a portion of my future benefits just to receive a lump sum?
- Am I willing to undergo an independent medical evaluation?
- Do I have any employer sponsored benefits that require me to stay on claim with CIGNA in order to continue receiving them?
- Will my health insurance end if I settle my claim with CIGNA?
- Do I fully understand my disability policy?
Why Should I Retain An Attorney To Secure A Buyout With CIGNA?
It is always a good idea to consider your legal options before signing any legal documents, especially a settlement release. This is especially important when you are dealing with your livelihood and your disability benefits may be your only or primary source of income and should therefore be handled carefully. You should contact a disability buyout lawyer as soon as you consider approaching CIGNA or as soon as you receive an offer from them whether over the phone or in writing. An experienced buyout attorney can help you understand if it’s a good option for you. The DI Lawyer has a network of professionals that can help you make the best decision and help you minimize your legal and financial risk if you decide to take a buyout. We will consider looking at any open offer from CIGNA or Lucens Group.