[Note this article is NOT about settling a disputed claim while you are in court. That article is here.]
When a long-term disability insurance company determines that it may be paying benefits for a long time, they may offer to "buy out" your policy by paying you a lump sum. Acceptance of the lump sum would mean that you no longer have to provide continued proof of disability and they no longer have an obligation to pay you.
Lump some buyouts will generally be made at a huge discount to the actual present value of their future payments and make sense only if one of the four following conditions are true:
- You have an emergent need for cash.
- You are going to die soon, and you know this but the insurance company doesn't.
- You are getting better and expect to be able to return to the workforce.
- You have figured out a way to make money even if you can no longer work in your previous occupation and getting the lump-sum payout would help "bridge the gap" until you get your earnings up.
There is a potential "5th" reason, and that is the stress of dealing with these evil jerks is killing me. Sometimes it seems that this is the insurance company's plan, doesn't it?
If none of the top 4 conditions are true, then it is generally not a good idea to accept the buyout offer. BenGlassLaw can help you figure out the stress part.
Our firm can help you analyze a buyout offer. We will review your buyout offer letter at no cost to you. Most long-term disability companies will reimburse you your attorney fees for an analysis.