Just because you have private disability insurance does not mean that you want to use this coverage at some point in the future. If you find yourself needing to make a claim it means that something has gone wrong and you are unable to work.
While every disability insurance company has its own process in place, many policyholders find that it’s difficult to receive the payments they are owed.
It’s not always the right decision, but a lump sum disability insurance settlement (also known as a buyout) may be something to consider.
As the name implies, this is a one time lump sum payment that you receive in exchange for giving up your rights outlined by the policy.
Once you complete the buyout process, you no longer have the right to receive disability benefits from the insurer.
What are the benefits?
There are both pros and cons of a lump sum disability insurance buyout, so anyone in position to move forward in this manner should examine all the details. Here are some of the many benefits:
- 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.
Is it a bad idea?
Despite the benefits of a lump sum disability insurance buyout, there are some reasons why this may not make sense. For instance, you may not want to accept a buyout if the insurance company gives you a low ball offer.
Also, this isn’t a good idea if you don’t trust yourself to use the money in a responsible manner.
It doesn’t matter if you want to receive a lump sum disability insurance buyout or are interested in a more traditional payout structure, you need to understand your policy and your legal rights.