Try Our Lump Sum Disability Buyout Calculator to Find Out If You Are Getting a Fair Shake
A long-term disability (LTD) company, such as Cigna, Hartford, Lincoln, MetLife, Standard, Prudential, and Unum, may offer to give you a lump sum of money to buy you out of your disability insurance policy. In exchange for a lump sum buyout, you agree to forgo monthly benefits and cancel your disability insurance policy. You will no longer have an active disability claim with the insurance company. The lump sum may seem like a lot of money, but is the lump sum buyout really a good deal for you?
There are many factors to consider, such as the number of future monthly payments left, COLA increases, discount rates, and life expectancy. The lump-sum disability buyout calculator below will help you determine if accepting the lump sum buyout would be better than continuing to receive monthly disability benefits. If you accept the offer it will be impossible to have your monthly disability benefits reinstated.
How an LTD Insurance Company Determines Your Lump Sum Buyout Amount
Present value is an important concept in the world of finance, and it accounts for the fact that the money you receive today is worth more than the money you receive in the future. To illustrate: if you invest $90.91 today at 10% interest compounded annually, you will have $100 in one year. In this simple example, $90.91 is the present value of $100: in other words, a payment of $100 one year from now is worth $90.91 today.
Present value is also an important concept in the disability insurance world. Insurance companies use the concept of present value to calculate your LTD lump sum buyout amount and, as you might expect, the insurance companies will do everything possible to ensure the calculation works in their favor. The calculation is based on a variety of factors including:
- The value of your policy
- How long the carrier thinks you will live
- COLA increases (if applicable)
- The likelihood that you will return to work
- The number of payments the carrier expects to make
Once the present value of your claim has been calculated, the LTD insurance company will offer you some percentage of that amount—typically between 50% and 70% of the total value of your disability claim. It is important to note that these percentages can vary considerably. The initial offer may be just the starting point – some insurance companies may be willing to negotiate.
Try Our Free Lump Sum Disability Buyout Calculator Right Now
You can use our free lump sum disability buyout calculator to estimate the present value of your disability claim and get a feel for whether you are getting a good deal.
This calculator does the heavy lifting for you and even considers a cost of living adjustment (COLA) if your policy has one, past monthly benefits and interest owed to you, and attorney fees and costs. If you don’t need those functions, you can just let them default to zero.
Once you enter the necessary information, the calculator will provide you with the present value of your policy—taking fees and costs into consideration. If you choose, it will also provide you with a detailed report showing the present value of your future payments.
Call Our Long Term Disability Law Office Before Accepting a Lump Sum Buyout
The present value of your LTD claim is just one piece of the puzzle. It is also important to consider a number of other factors including:
- How eager you are to end negotiations with the insurance company
- Whether you think you may be able to find work in the future
- How confident you are in investing the money from your lump-sum payment
- Other personal factors relevant to accepting a lump sum payment
With all of these issues to think about, the decision to accept a lump sum long-term disability buyout offer can be difficult. Not only is it hard to determine if the amount offered by the insurance company is fair, but if you do accept an LTD lump-sum buyout offer, the decision is final—you can’t go back to the insurance company and ask for more money. For these reasons, you need to consider your options carefully before you give up your monthly disability insurance benefits.
That’s where we come in. Start your research by using our free calculator, and then contact our office for a consultation with a member of our experienced long term disability legal team. We are happy to review the facts of your case and help you come to a decision that is right for you. And remember, the offer you received may just be the starting point. A disability lawyer may be able to assist you in negotiating for a higher amount.
After using the calculator, you may still have questions about whether to accept an insurance company’s lump-sum buyout offer. Please contact our experienced LTD disability legal team today for a consultation. We would be happy to answer all of your questions related to your LTD claim and to help you make the decision that is right for you. Call us at (888) 321-8131 or contact us online.