Prudential Financial has been around a long time and is currently the largest insurance company in the United States with assets totaling approximately 1.456 trillion dollars. Their products and services include life insurance, annuities, mutual funds, pension and retirement related investments, administration and asset management, and securities brokerages services.
In the disability sector, they offer short-term disability (STD) and long-term disability (LTD) policies through employers and provide claims and absence management services. Their website states that their LTD policies cover more than 2.8 million people.
Prudential sometimes offers buyouts but not as frequently as seen with other disability companies. However, In the last few years their buyout offers to claimants have increased in frequency.
To be eligible for a buyout with Prudential you must make it beyond any changes in the policy. These changes include a change in the definition of disability, which often occurs after 24-months of benefits but can sometimes occur at the 12-month mark or even 60-month mark in Prudential insurance policies. A change in the definition of disability often leads to claim termination if Prudential determines that you do not meet the next standard of disability—usually referred to as the “any occupation” standard of disability.
A typical buyout candidate will have been on claim for several years and suffering from a disabling condition that is not expected to improve. In calculating a buyout offer, Prudential will take into account various factors that their actuaries will use to calculate the value of your claim and the likelihood they will have to continue paying you until the expiration of the policy.
The typical factors can be broken into 3 main groups:
The present value of anticipated future benefits
Calculating a buyout offer starts with calculating what a lump sum amount of your future benefits looks like. Financial professionals will explain that you have to account for the time value of money in calculating the present value of a future sum of money payable in regular installments until a certain point. A certain amount of money today is not equal to the same amount of money 10 years from now. This mainly has to do with interest that can be earned on a lump sum of money. In other words, the calculation basically comes down to calculating how much has to be paid in a lump sum if invested at a certain interest rate in order to equal the amount of money that will be payable over the period of time remaining on the claim.
The likelihood you will remain disabled under the terms of the policy
As part of the process, Prudential will review all of your medical records, with particular focus on the most recent records, to determine the likelihood you will remain disabled under the terms of the policy. A buyout will only make sense to them if they conclude that it is more likely than not that they will have to pay you until the expiration of the policy. Usually this means benefits will be payable until you reach age 65 or normal retirement age. If you have an upcoming surgery scheduled that could eliminate your functional limitations and render you physically capable of returning to work, then Prudential will not offer you a buyout.
The likelihood you will live until age 65 or the expiration of the policy
As part of the medical record review, Prudential will also consider if you have any life-threatening medical conditions that could cause you to die before the claim reaches the maximum benefit period. If you have a terminal illness and you have 20 years left on the policy, then it is unlikely Prudential will offer you a buyout. Also, certain medical conditions like heart conditions will cause Prudential to discount the total buyout amount if they do decide to make an offer.
You may have an open offer to buy-out your claim, but you are unsure if you should take it or not. Always remember that you are not obligated to accept a settlement offer from Prudential and they cannot force you to do so. But you should carefully consider all your options before deciding to accept or decline any offer.
Staying on claim puts you back in the risk management pool and you will continue to be subject to periodic claim reviews. As long as you are on claim, Prudential is able to exercise any rights available in the policy. This includes, periodic request for updates from you and your doctors, independent medical exams, functional capacity evaluations, in person and telephonic interviews, surveillance and more.
No matter how long you have been on claim there is never a guarantee of continued benefits. Unexpected claim denials, even after receiving 18 years of benefits from Prudential are not unheard of.
If you receive a call or a letter from Prudential offering you a lump sum settlement you should immediately contact an experienced buyout attorney. You may also benefit from speaking with a financial advisor and tax professional to properly guide you and help you understand all your options. The DI Lawyer has a network of professionals who can help in all areas of a buyout.
The relevant considerations when dealing with a buyout offer are not limited to financial factors. It is common for employers to provide, while you are receiving long term disability benefits, continued health insurance benefits, dental coverage, even job protection. Sometimes you are entitled to continued participation in a pension plan if you are on claim. By settling your claim, you could lose these benefits if you have them. You should always confirm with your employer that you will not be losing any benefits by accepting a buyout. Sometimes taking a buyout is worth losing the benefits but the decision should not be made out of ignorance. A buyout lawyer can help you avoid giving up any benefits you may not be aware of.
A lump sum buyout could provide more financial security when your medical records or doctors’ support becomes shaky. If your doctor has announced that he or she will be retiring, then you may be forced to find another doctor for treatment and for the completion of periodic attending physician statements requested by Prudential. The same could happen if you change health insurance providers and your primary doctor is now outside the network of providers. If your doctor has been completing the claim forms for 10 years, then they have likely been consistent and completed in a way to ensure you have the best chances of receiving benefits you deserve. Many doctors have a policy against completing claim forms. Others simply don’t care to be detailed when completing forms. All of these risks can lead to a denial of benefits and taking a buyout eliminates these risks.
You may find a lump sum of money more useful as a single payout for any combination of reasons. You may need a down payment for the purchase of a new home, your children may need money for college, or you may want to invest in educating yourself to enter a new industry with jobs that can accommodate your disability or functional limitations.
You should never reach out to Prudential with a request for a buyout without first speaking with experienced professionals. It is possible to ask for a buyout too early. Also, insurance companies know that most claimants do not understand how the process works and will often take advantage of that. A lawyer experienced with Prudential buyouts will be able to negotiate a higher offer more easily and avoid the insurance company sending low-ball offers.
You should also remember that once a settlement release is signed it is incredibly difficult to get around.
Experienced disability lawyers can help guide you and help you understand your options given your unique circumstances. Buyouts are not good options for everyone, and it is important to speak with an experienced and honest attorney before accepting or declining a buyout offer. The DI Lawyer will never encourage a client to accept a buyout offer that is not considered reasonable and in the best interests of the client.