Standard is one of the top 10 disability companies in the country with over 7.5 million customers and they offer both group and individual disability policies. If you are covered under a group employer sponsored policy, then your claim is likely governed by the federal law ERISA (Employee Retirement Income Security Act). However, The Standard also provides group policies through other organizations as well as Individual policies through agents. In New York they also sell disability policies through The Standard Life Insurance Company of New York. Such policies would be covered under state law and require The Standard to follow different rules and procedures in evaluating claims.
Regardless of what kind of policy you have from The Standard, a lump sum buyout is an attractive option offered to many claimants.
The factors used in buyout calculations can be broken down simply into 3 categories:
What is the value of the policy throughout the maximum benefit period?
In calculating the value of the policy, The Standard will calculate the present value of anticipated future benefits payable on the policy. Typically, Moody’s Composite corporate bond rate is used to calculate the discount rate that will be applied to figure the present value. The present value accounts for the time value of money and the interest that could be earned on a current lump sum of money over the period remaining until the claim would end.
Does The Standard believe they will have to pay your claim for the maximum benefit period in your policy?
The Standard’s actuaries will calculate morbidity ratings based on the history of past claims with The Standard. They will also consider things such as the frequency with which people tend to return to work after being claim, interest rate fluctuations, unforeseen accident and other uncertainties of the future.
Does The Standard expect you to live until the policy expires?
The same actuaries will calculate mortality ratings and determine the likelihood that you will live until the end of the benefit period. They will take into account your recent medical records and medical history and account for possible advancements in medical technology. They will use this rating, along with morbidity ratings, to discount the value of the claim.
No more claim forms, IMEs, FCEs, phone interviews and surveillance
Staying on claim with The Standard requires you to comply with their repeated requests for updated claim forms. You are also at the mercy of The Standard when it comes to Independent Medical Evaluations (IMEs), Functional Capacity Evaluations (FCEs), in person/telephone interviews, and surveillance. Every insurance company has an incentive to investigate their claims and The Standard will periodically check to make sure your activities and current functionality match your complaints listed on claim forms. Evaluations are rarely “independent” and every time The Standard requests that you undergo an evaluation sets you up for a possible denial.
No more risk of claim termination
Accepting a buyout eliminates the risk that your benefits will be cut off and comes with a certainty level with which you can more confidently plan your life. While the buyout amount comes at a discount, the money is a fixed amount. Staying on claim with The Standard does not guarantee that your monthly benefits will continue to be paid.
Money to invest
With the right strategy you may be better off taking a buyout and investing the money into something that can generate more money in the long term. This could be financial, but it could also mean investing in additional education that will prepare you to work in another field that can accommodate your disabling conditions.
You can attempt to work without risking a claim denial
Unless you have residual disability policy language, any attempt to work could prove fatal to your claim. If you have a group disability policy and you attempt to return to work with a different employer, you will likely lose your policy all together in which case you will not be able to get back on claim. Even if you have the proper language in your policy, returning to work in a limited capacity should be strategically planned to ensure you minimize the risk of being terminated. Taking a buyout will give you the flexibility to try to work without the fear of losing your benefits.
Tax implications could be severe
Whether or not your benefits are taxable should determine the taxability of a buyout settlement. If your benefit is taxable and you take a large payout in one year, the tax implications could make the buyout a bad idea. This should be carefully reviewed with an experienced buyout lawyer and tax professional. Often, even if the benefit is taxable, a settlement annuity specialist could help put a plan in place that will minimize your tax bill. The DI Lawyer has the resources to help in this area.
Asking at the wrong time could cause suspicion
It is possible to request a buyout too early in a claim. Typically, The Standard will not even consider a buyout if you have been on claim for less than two years. Asking for a buyout this early could also cause suspicion. The Standard may wonder why you are asking for a settlement so early and open up an investigation into your claim. This could involve a medical review, physician evaluations and even surveillance. If you are interested in approaching the Standard with a request for a buyout you should first contact an experienced professional to determine your best steps.
You have to be able to manage your money
You may have to prove you have the capacity to manage your own finances before The Standard will agree to a buyout. Even if they do not require this, you should evaluate yourself and your ability to manage a lump sum of money since this money may have to last you a lifetime. Careful planning should be strategized with a financial advisor before agreeing to a buyout if you feel you are lacking in this area.
You take a huge loss by taking the money early
You must be willing to lose sometimes 30-40 percent of your total benefit by agreeing to a buyout. The Standard will always discount the total claim when making a settlement offer and you have to understand this before going in. If the loss outweighs the benefits you will get from a buyout then you should not take a buyout.
Whether or not you decide to stay on claim will depend on your unique circumstances. Only you can decide if a buyout is best for you, but the decision should be made only after consulting with experienced professionals including a disability buyout attorney, financial advisor and tax professional.
If you expect major changes which could affect your ability to continue to qualify for benefits, it may be a good idea to consider a buyout. If you are having trouble with your doctors and they are no longer willing to complete claim forms, then you can expect trouble with The Standard during the next medical review. Settling your claim while it is still strong could be the answer.
The best disability buyout lawyers will be experienced with handling claims with The Standard at every stage. The DI Lawyer has successfully handled numerous claims on behalf of Standard disability claimants. He has experience with The Standard Disability denials, The Standard disability appeals, The Standard disability lawsuits, and The Standard disability settlements.