The SSDI system is entirely separate from your private disability insurance claim with your insurance company. The Federal Government operates the system through the Social Social Security Administration (SSA).
If you are seeking SSDI benefits, you have to apply for them by filing a claim with the SSA and proving that you are “disabled” as defined by the federal law under the SSDI system. This analysis focuses mostly on whether you can perform what the government calls “substantial gainful activity.”
Your eligibility for benefits under each program–SSDI or private disability insurance– depends on the terms and conditions that specific program or policy.
That being said, your decision to accept a lump sum payout will not affect your SSDI benefits. Instead, you will continue to receive your monthly SSDI benefits as long as you are deemed disabled under the SSA’s standards. You should consult with an SSDI attorney for specific questions relating to SSDI benefits.
Before accepting a buyout, however, you should consult an experienced disability insurance buyout attorney. In some situations, a disability carrier may want some, if not all, of your SSDI retroactive payout. Whether they can do this will depend on a number of factors including your policy, any reimbursement agreement signed, and if your insurance company is willing to offer a buyout. An experienced buyout lawyer can review the terms of the policy and any buyout offer to determine if being approved for SSDI after taking the settlement may impact you.