GUARDIAN
Guardian Lump Sum Settlements
In 2001 Berkshire Life Insurance Company was acquired by Guardian Life Insurance Company of America. Guardian/Berkshire policies can provide some of the best disability income protection on the market. The majority of Guardian policies are provided as group policies, typically through employers, but also through certain associations. Berkshire policies, on the other hand, are usually individual policies sold through insurance agents and are regularly marketed and provided to professionals such as doctors, dentists and lawyers.
As one of the largest mutual insurers, Guardian has been on the market since 1860 and has approximately 5,000 employees in the United States handling policies covering more than six million employees and their families. With Guardian’s vast resources they are thorough in their claim reviews as well as their underwriting when evaluating applications for new policies. It can be difficult to get coverage with Guardian if you have any pre-existing medical conditions unless you become covered under a group, employer sponsored, policy.
If you are lucky enough to obtain coverage and unlucky enough to have to use the coverage then you will be like all other disability claimants, stuck dealing with ongoing claim reviews as long as you are disabled and on claim. Once on claim for several years you may desire to settle the claim.
Does Guardian Offer Lump Sum Buyouts?
Guardian offers settlements but they are usually on Berkshire Life policies and they do not extend offers frequently. Guardian will, however, engage in settlement discussions following a claim denial. On individual policies, Guardian may negotiate a settlement to avoid incurring the costs of litigation and eating up additional resources. In exchange for a lump sum settlement, Guardian will require you to sign a CLAIM RELEASE AND POLICY SURRENDER AGREEMENT. The agreement will require you to surrender your complete policy and you will no longer have disability coverage with them. These settlement offers typically occur only when a lawyer is involved. Although it is highly unlikely Guardian will extend a settlement offer to you directly following a claim denial, you should never sign any release without first speaking with an experienced attorney.
Reasons to Accept an Offer from Guardian
Once on claim with Guardian, Guardian tends to perform frequent claim reviews asking for updated claim forms and attending physician statements. With the thousands of employees they have working for them, they have the resources to do reviews every month. A disability buyout with Guardian can eliminate this annoying requirement and provide security for you and your family without the risk of losing your benefits. Guardian is one of the more reasonable companies when reviewing individual disability claims. However, with group ERISA governed claims, their reviews can be a little riskier for claimants.
Most Guardian policies will be ERISA governed policies. When dealing with ERISA, the law favors Guardian in the event of a claim denial. For this reason, reviews on claims involving a group employer sponsored policy can be risky for claimants. Settling a claim, if the circumstances are favorable, can eliminate the risk of receiving a denial from Guardian and provide financial security for your family.
A lump sum of money can also be used to leverage investments that your regular monthly benefits cannot provide.
A Buyout vs. A Settlement Offer
It is important to distinguish a buyout offer from a settlement offer. A buyout offer occurs on an uncontested claim where you are receiving disability benefits and there is no immediate question about the insurance company’s liability on the claim. A settlement offer typically occurs after a claim denial where there is a dispute as to whether the insurance company has to pay benefits and whether you meet the terms of the policy making you eligible for those benefits.
Often, the parties to a dispute (i.e. the insurance company and the insurance claimant), disagree as to the amount owed or as to eligibility for benefits. In this case it is often mutually beneficial to work out a settlement for an amount that both sides are equally happy about—or rather, equally unhappy about.
Settlements can occur any time after a denial of benefits—sometimes before a lawsuit is filed and sometimes after. Buyouts only occur while a claim is being paid and the offer is based on the future benefits expected to be paid. Settlements factor in the costs of continuing to fight the dispute and risk or likelihood that the insurance company will lose the fight and have to pay not only benefits owed, but in some cases, additional damages for denying the claim. Most damages do not come into play when dealing with an ERISA governed claim where, the best-case scenario for a claimant, is often limited to recovering back benefits owed on the claim.
Reasons to Decline a Settlement Offer from Guardian
Depending on when an offer is made, it could work against you to accept an offer. If the claim has been denied and a settlement is being negotiated, it is sometimes best to file a lawsuit if the offer is too low. If a lawsuit has already been filed, then often it can be worth the risk to take the case to trial rather than taking a settlement. These decisions should be made only with competent legal counsel from attorneys with experience handling claims with Guardian.
In the case of a buyout offer while a claim is being paid, sometimes the offer is simply too low and it is not worth the money lost by accepting an early buyout offer. Whether an offer is low will depend on a number of factors which should be discussed with experienced professionals.
Are Guardian Disability Benefits Taxable?
Generally, the answer to this question depends on how the premiums were paid. If premiums were paid with pre-tax dollars then the benefits are usually taxable. If the premiums were paid with post-tax dollars then the benefits are non-taxable. How a settlement will be taxed will not necessarily follow these general rules. If a settlement is a buyout on an uncontested disability claim, then the lump sum payout is considered an acceleration of those future benefits. The taxability of the lump sum will tend to mirror the taxability of your monthly benefits.
If, however, you are dealing with a settlement on a denied disability claim, the taxability will not follow these rules and only an experienced tax professional can answer these questions. Victor Peña Law PLLC has a network of experienced tax professionals, financial advisors, and lawyers who can help in this area.
Should I Hire an Attorney for A Buyout with Guardian?
You should always seek legal advice before attempting to settle your case and before signing any release paperwork. If your claim has been denied and you are interested in settling your claim to avoid having to go through the long process of litigating, then settling could be an option but only an experienced attorney can go over your options with you. Some insurance companies will attempt to coax you into signing a release agreement in exchange for a small settlement. By doing so you will likely be waiving all rights you have to pursue any claim on your insurance policy. While Guardian has not been known to do this, you should be mindful of how insurance companies handle things.
If you are on claim and wish to approach Guardian for a request for a buyout, it is best to prepare yourself and your claim before engaging in any discussion with Guardian regarding a possible buyout.