For the purposes of this article, we’re going to separate out long-term disability buyout offers, which are offers that are made by the insurance company while you are receiving long-term disability benefits, and settlement offers. Settlement offers occur when you’ve been completely denied benefits and you’re trying to negotiate a settlement with the insurance company either right before or after filing a lawsuit.
This distinction is very important. Let’s go back to buyout offers for a moment.
Again, buyouts are only when the insurance company has acknowledged that it’s supposed to be paying you benefits and is paying you benefits, but they want to give you a one-time lump sum settlement to buy you out. In the long run, this will save the insurance company money that it would have otherwise paid over the lifetime of the claim. Because they have acknowledged that they are supposed to be paying you benefits, they may pay a higher percentage of the total value of the claim.
A lot of people go online, and they read about how when you receive a buyout offer from an insurance company, you may be able to receive 50, 60, 70, even 80% of the total value as a settlement as part of the buyout. Those percentages are totally different in a situation where the insurance company has denied your claim, and you’re trying to do a settlement.
Let’s give you an example: You’ve had to sue the insurance company to get your benefits, and you’re about to go to mediation. In that type of situation, we’ve oftentimes seen that the insurance company is only willing to settle that claim for less than 50%. A lot of people come to us and say, “But wait a minute, I did my own research online. I see that insurance companies will settle cases for 50 to 80%.”
We have to explain to them that that situation is totally different because the 50 to 80% range applies when they’re already paying benefits like they’re supposed to. In the latter situation, in litigation, they’ve already said that they don’t think they should be paying benefits. As a result, those have a lower value and typically settle than less than 50%.
Again, those are situations where the person is already receiving benefits. This is all very highly technical. You should not make a decision without consulting with an attorney about the individual circumstances of your case.
If you have been offered a lump sum settlement payment, we understand that most claimants are tempted to accept a quick cash payment because they are suffering financially as a result of their disabilities, but you should decide whether or not to settle very carefully. The insurance company will be estimating what your disability is worth from the company’s point of view. There is a chance they could undervalue your claim.
What Will a Long-Term Disability Attorney Do for You?
Before accepting an offer you should understand your legal rights and what it will take to fight back against the disability insurance company. An experienced Long Term Disability Insurance attorney can help you evaluate factors such as:
- The present value of your claim;
- Cost of living;
- Mortality rate; and
Don’t Let an Insurance Company or Another Individual Deny You the Security and Success You Deserve
The insurance company may want you to make a quick decision, but take some time to review all your options first. A lump sum settlement will be a final agreement between you and the insurance company. Making sure that the lump sum settlement will meet your needs throughout your life is the most important thing to remember when negotiating. We evaluate lump-sum buyouts from all of the major insurance carriers, including Cigna, Unum, Lincoln, Hartford, Metlife, and more.
We do handle buyout settlements and settlements in litigation, and we’ve even been able to settle cases right before going to court in what we call pre-litigation mediation. If you’d like to see which of these options is available to you, I encourage you to give us a call at (866) 853-4512. If you’d like additional written materials, there’s a free book that I wrote called “The Top 10 Mistakes That Will Destroy Your Long Term Disability Claim” that is available for download.