LTD Claims: Settlement Offers vs. Buyout Offers

Hi, I’m Nick Ortiz. I’m a board certified disability insurance attorney. Today, I’m here to talk to you about long-term disability claims and settlement offers versus buy out offers. For the purposes of today’s discussion, I’m going to separate out buy out 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 filing a lawsuit or after filing a lawsuit.

This distinction is very important. Let me go back to buyout offers for a moment. Again, buy outs 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 buy out 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 me give you an example. You’ve had to sue the insurance company to get your benefits, and you’re about to go to a 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 me and say, “But wait a minute, I did my own research online. I see that insurance company will settle cases for 50 to 80%.”

I 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 your individual circumstances of your case. 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 850-898-9904. 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.” You can download a free copy at Thanks for listening.