The combination of the services involved in your particular case will depend on where you are in the process and your unique circumstances.
Not all disability carriers will offer buyouts. If you happen to receive an offer to buy out your policy in writing or by phone you should carefully consider your options before agreeing to settle. There are many reasons why your insurance company may want to settle your claim, but you can be certain that your insurance company would not be offering you a buyout if it was not found to be in the best interest of the company.
The insurance company’s actuaries and medical specialists will carefully assess the risks of your claim before deciding on a range of what might be offered to you to buyout your policy. A buyout is feasible only after the insurance company concludes it will likely have to pay your benefits to the expiration of the policy. Normally, this is to age 65 or your normal retirement age but if your policy pays lifetime benefits then you may not want to accept the insurer’s first offer. In deciding whether a buyout is practical, your insurance company will consider your age, the period of time remaining on the claim and the amount of money it has set aside in reserve for your claim.
Before you consider agreeing to a lump sum buyout, you should arm yourself with as much knowledge as possible surrounding how these settlements are calculated and make sure you fully understand the fine print—and everything in between—including the often confusing terms and conditions in the settlement agreement.
When you accept a buyout, your monthly disability benefits will end along with your coverage under the insurance policy.
The DI Lawyer will review any offer and help you understand the pros and cons of accepting or rejecting a lump sum buyout.
The Pros of Accepting a Buyout Offer
Accepting a buyout can be beneficial but it always depends on your unique circumstances. A lump sum payout could allow you to invest the money toward long-term retirement or help you pay down your debts.
Most long-term disability policies do not offer survivorship benefits so, if you pass away, your spouse and family will not continue receiving your monthly benefit checks. Taking a settlement can offer more security for your family in the unfortunate event that something happens to you while your family is relying on those benefits.
Taking a buyout also means you no longer have to worry that your insurance company will unexpectedly terminate your benefits. After handling numerous claims with all the major disability carriers any experienced private disability lawyer can tell you that no disability claim is guaranteed no matter how long you have been receiving monthly benefits. Each time your insurance company performs a medical review or requests information from you or your doctors presents a new opportunity to find a reason to cut off your benefits.
The Cons of Accepting a Buyout Offer
While a buyout may be a good option for many people, it is not always right for everyone. In calculating the amount to be offered, your insurance company will use a formula that discounts the total value of your claim. That formula will reduce the already reduced present value of your future benefits. If the insurance company’s offer is significantly less than the benefits you would expect to receive by staying on claim, a buyout may not be the best financial decision for you.
If you have difficulty managing your own finances, receiving a lump sum payment may not be in your best interest. Also, the younger you are the lower the offer will tend to be given the time value of money and the morbidity ratings factored in to discount the claim’s value. Morbidity ratings are calculated by your insurance company’s actuaries after accounting for the probability you will return to work in the future by analyzing their claims history of past claims. The same rating also considers the possibility of changes or advancements in medical treatment and technology.
The tax implications from taking a one-time payout are often significant and it is crucial to properly assess the pros and cons with the right team. Tax questions should always be discussed with an experienced accountant. The DI Lawyer’s growing network of attorneys, accountants, actuaries, and other financial specialists can provide aide in the arena.
Your initial consultation with The DI Lawyer will include a thorough review of a written buyout offer or a discussion on why your insurance company may only give you verbal offers over the phone. If your insurance company makes you only a verbal offer this is often in an attempt to coerce you into accepting a low-ball offer by threatening to cut off your benefits early in the claim. You should never accept a verbal offer without speaking with an experienced disability buyout attorney first.
The DI Lawyer can provide an honest assessment of what your claim is actually worth and whether an open offer is a good offer or a bad offer that could and should be negotiated.
The focus is on working with your insurance company and negotiating the highest possible settlement for you. There are many factors that affect the amount offered and having a skilled attorney with experience in these types of negotiations is critical. The DI Lawyer will review your settlement offer and negotiate based on various factors including:
Determining whether a buyout is right will depend on each client’s unique situation and needs but it takes a comprehensive legal analysis and the right financial team to ensure you receive the best offer possible if you determine a buyout is right for you.
Insurance companies will not use the same rates that you and your team will use to calculate the present value of your claim which is why their buyout offer will likely be substantially less than what you deserve. While the factors used to run the numbers are all basically the same among financial institutions, each insurance company has its own formula for handling the buyout process and the range of what they consider reasonable to buyout a claim.
Insurance is an industry that revolves around risk. You buy an insurance policy and pay your premiums to protect you and your family in the event you suffer a loss or disability. Insurance companies will sell you coverage through an agent or through an employer and collect your premium, hoping they will never have to pay out on a claim. In this sense, both you and the insurance company are taking a risk. As soon as you successfully file a claim and your insurance company starts paying you benefits, they are already losing money.
The insurer always has an incentive to cut its losses to maximize profits by terminating claims. If they don’t find a reason to cut off your benefits, then a buyout can be the best way out for the insurance company as well as for you. It’s just a numbers game for them but to you it’s your livelihood.
Understanding How Insurance Companies Operate
Whether your insurance company approaches you with an offer or you decide you want to engage them in settlement negotiations, it’s crucial to have an experienced attorney negotiate the highest possible amount.
If you are interested in approaching your insurance company for a buyout it is important to make sure your claim is ready for a review. People are often nervous about approaching the insurance company to ask about a buyout out of fear it will cause them to become suspicious. While asking alone may not cause any damage, a buyout review will require a medical review and it is important that the medicals be complete.
Pursuing Buyout Negotiations
The DI Lawyer has represented numerous clients, successfully negotiating private disability lump-sum buyouts and has experience working with nearly every major disability insurance company. His comprehensive understanding of how insurance companies assess claims ensures he can maximize buyouts for clients.
The DI lawyer can go over your claim history with you and discuss your medical status to determine if your claim is ready for a buyout. If it is not ready, then a plan can be crafted to prepare your claim for the best possible buyout.
It is to your benefit to prepare yourself and your claim before engaging the insurance company. Also, the timing can be key, and you should consider speaking with an experienced disability buyout attorney before even thinking about asking your insurance company.