In the context of this article, it’s important to distinguish between long-term disability buyout offers and settlement offers. A buyout offer is extended by the insurance company while you are actively receiving long-term disability benefits. On the other hand, a settlement offer arises when you have been fully denied these benefits and are in the process of negotiating a resolution with the insurance company, either immediately before or after initiating legal action.
This distinction is very important. Let’s go back to buyout offers for a moment.
Again, buyouts are only when the insurance carrier 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 insurer 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 assess the value of your disability claim from their perspective, which carries the risk of potentially undervaluing your case.
How Will a Long-Term Disability Attorney Help With My Claim?
Before accepting a lump-sum buyout offer you should understand your legal rights, the value of your claim, and what it will take to fight back against a low-ball offer from the disability insurance company.
Utilize our lump-sum disability settlement calculator to gauge the fairness of the offer at hand. Alternatively, our experienced Long Term Disability Insurance attorney can assist you in assessing various critical elements, including:
- The current monetary worth of your claim;
- Living expenses and inflation;
- Life expectancy and mortality rates; and
- Tax implications.
If you think the offer is too low, you can contact the Ortiz Law Firm and request that our long-term disability attorney negotiate a higher amount on your behalf.
Conclusion
The insurance company might press you to make a hasty decision, but it’s important to carefully evaluate all your available options first. Opting for a lump sum settlement represents a conclusive arrangement between you and the insurance provider. The most important thing to remember when negotiating is to make sure that the lump sum settlement will meet your needs throughout your life.
We evaluate buyout offers 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 would like to discuss your options, I encourage you to give us a call at (888) 321-8131. 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.
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