Lump Sum Disability Insurance Buyouts

Has a disability insurance company contacted you about taking a one-time payment, also known as a lump-sum settlement, to buyout your disability insurance claim? We’ve prepared this section of our website to give you some of the information you need about disability buyouts. You are also invited to call us at 877-583-2524 and learn how we can help. This is too important a decision to make without the help of experienced disability counsel.

What Is A Lump Sum Settlement or Buyout For A Long-Term Disability Insurance Claim?

A buyout, or a negotiated settlement, is what happens when the disability insurance company and the claimant settle on a one-time payment. The claimant can no longer make any claims for benefits, and the insurance company will no longer honor the disability policy that was purchased, whether it was a private policy for a group or ERISA disability policy.

Clients Choose Us Because We:

  • Have recovered $200M+ for our clients.
  • Have seen your situation before.
  • Are aggressive in our approach.
  • Know the tactics used by the insurance companies.
  • Hold high AV Ratings & received the Super Lawyers designation each year.

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How Does A Lump Sum Disability Insurance Settlement Or Buyout Work?

Not all long-term disability insurance policies allow for a buyout. You’ll need to carefully review the terms of your policy, or work with an experienced disability insurance attorney to see if this is an option for you.

The important thing to understand: the insurance company has teams of economists and number crunchers who determine the current and future value of the policy. They are able to do these calculations, based on a great deal of actuarial data. They know what it will cost them to continue to pay benefits, and what they would like to pay you in a one-time buyout.

You're in Good Hands - We've Done This Before

We recently resolved a matter with a major disability insurance company, through its third-party vendor managing the claim, whereby our client will continue to get paid for his lifetime, at a reduced monthly benefit, to resolve the disputed claim and ensure the viability of his benefits going forward.

While our client made a decision to sacrifice a small portion of his ongoing monthly benefit, which we had fought hard to continue during our efforts at resolution and efforts to mitigate the challenges presented by the claim, his comfort was taken in knowing that he will now live free from the ongoing harassment from the insurer, in an effort to impact his treating relationship with his medical provider, and to make determinations as to whether he was undertaking the appropriate care and treatment under the policy to qualify for continued benefits.

In reaching this determination, the client was able to cease medical requirements that provided no benefits, were costly and ineffective, and which caused harm due to the necessity of travel. The client feels relieved to no longer be wondering on a month to month basis whether his claim was being challenged, or terminated. Our role in advocating on his behalf helped move the case from being on the verge of a claim termination challenge to one that is now without need for further involvement.

Read more of what our clients have to say.

You need to go into settlement negotiations with hard facts:

  • What is the future dollar value of your policy, if benefits were to be paid out 100% under the terms of the policy?
  • What is the present dollar value of your policy?
  • What other things will impact upon the valuation of the claim for settlement? This could be mortality or morbidity.
  • What amount of money do you need to live on while you are unable to work?
  • If you were still able to work, what would your income be - including benefits, like retirement fund matching, health care insurance coverage, and all perks.

Can I Negotiate My Own Disability Insurance Buyout?

The first offer for any buyout will be much lower than the value of your policy.

The insurance company relies on the temptation of what seems like a large number to a claimant to entice them to accept a low offer. It is far better for the claimant and the family to be represented by a disability insurance attorney with experience negotiating with insurance companies who can draw on decades of knowledge of negotiating buyouts, to handle this.

Is a Disability Insurance Lump Sum Settlement a Good Deal?

The insurance companies understand the attractiveness of the lump sum and the appeal of not having to worry about investigators, paperwork and requests for medical exams that never end. They count on this to move the negotiations quickly and arrive at a settlement that results in the lowest possible payout.

Your attorney will be able to review the benefits and the downsides.

The benefits of a settlement:

  • Ability to invest your lump sum payment as opposed to waiting for smaller payments to arrive every month.
  • Peace of mind. Once you receive a lump sum disability insurance buyout, you’ll know that you have the money you need to care for yourself and your family in the future.
  • No worries about surveillance, submitting to unwanted medical examinations and surprise field visits at home.

A Recent Success Story

At the request of our client, a disabled chiropractor who was at the time 50 years old, we resolved his lifetime claim with a major disability insurance company. Through this favorable resolution, our client will continue to get paid his full monthly disability until the age of 70 with no proof of loss requirement, other than proof of life (an annual claimant form stating he is not working as a chiropractor), and a generous lump sum payment at the time he executed the Agreement to compensate for benefits payable after age 70.

With this settlement our client did not reduce or compromise any of his benefits for the next twenty years. The client was able to get a large sum of money now to begin the next chapter of his life. While our client made a decision to sacrifice some of his post 70 benefits, he felt the comfort of knowing the next 20 years of payments are guaranteed far outweighed any sacrifice, of future benefits after age 70.

Our goal for the client was to protect his future benefits and obtain a waiver of unnecessary future care and treatment by his doctors since his condition had reached maximum medical improvement. By engaging in a robust analysis of the financial calculations, we were able to help guide the client down a successful path to meet his needs.

Read more of what our clients have to say.

Reaching a Settlement Can Be Beneficial in Several Ways

Quicker resolution of your long-term disability insurance claim means you will receive your benefits sooner. This can alleviate the stress of meeting your financial obligations.

Reaching a settlement also means you will spend less time fighting about your benefits and more time focused on your recovery and not living for your disability claim.

A settlement gives you some control over the outcome. It is always your decision on whether to accept a settlement or not. With the appeal process (following a denied or terminated claim under ERISA) and the court (if that is the last recourse available), the decision and outcome are uncertain.

A Settlement Means No More Surprise Interviews, Surveillance Or Medical Exams

Once a settlement has been made on a long-term disability insurance case, the agony of wondering when the insurance company will stop paying or when you can stop going to see insurance company-paid doctors for evaluations is over.

But There Are Also BIG Drawbacks To Keep In Mind:

  • If the offer is too low, it’s not worth accepting.
  • If you can’t trust yourself to be careful with the money and make it last, it’s not a good idea
  • If you have problems with creditors, a lump sum payment may be attached for liens.
  • Once you sign off on the agreement, you cannot make any further claims for disability from that company.

Aggressive Reputation In Settlement Negotiations

At Frankel & Newfield, P.C., we are known for our aggressive representation of our clients. Our adversaries and clients are aware of this reputation, and it serves our clients well. Insurance companies know we will fight back for our clients. As a result, they sometimes prefer to settle out of court to resolve the case.

We know the process and have worked with the money people at many of the disability insurance companies. Knowledge of the process can be powerful during this important time.

In some instances, long-term disability benefits claims can be settled or resolved without appeals or trials. We are skilled lawyers and negotiators, and our experience and knowledge in the economics of disability insurance benefits provides us with the ability to settle cases in the best interest of our clients, even when we are presented with difficult or complicated situations.

We often have success in getting substantial long-term disability benefits settlements on behalf of our clients.

Call 877-583-2524 or contact us online to schedule a free initial consultation. We are based in New York and represent clients nationwide.

Jason A. Newfield

Written By:

Jason A. Newfield

Disability Insurance Attorney