Try Our LTD Lump Sum Settlement Calculator to Find Out If You Are Getting a Fair Shake
A long term disability (LTD) company may offer to give you a lump sum of money to buy you out of your policy. In exchange for a lump sum settlement, you agree to forgo monthly benefits and cancel your policy. The lump sum may seem like a lot of money, but is it really a good deal for you?
How an LTD Insurance Company Determines Your Lump Sum Settlement 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.
Insurance companies use the concept of present value to calculate your LTD lump sum settlement amount and, as you might expect, they 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
- The number of payments the carrier expects to make
Once the present value of your settlement 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 claim. It is important to note that these percentages can vary considerably.
Try Our Free Lump Sum Disability Settlement Calculator Right Now
You can use our free lump sum disability settlement calculator to estimate the present value of your 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—either on your screen or emailed directly to you.
Call Our Long Term Disability Law Office Before Accepting a Lump Sum Payment
The present value of your 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 settlement 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 settlement 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.
That's where we come in. Start your research by using our free calculator, and then contact our office for a free 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.