How do disability insurance companies calculate lump-sum buyouts?
- How Do Disability Insurance Companies Calculate Lump-Sum Buyouts?
There are multiple factors that a long term disability insurance company will consider when doing a buyout.
The No.1 factor is whether or not the carrier thinks they are going to have to pay you for the maximum period of your disability policy.
No.2 is whether or not the carrier thinks whether or not you are going to live till the end of the maximum benefit period.
And No.3 is the value of your policy throughout the maximum benefit period. What that means is that the disability carrier will look to pay you the present value of your long term disability policy.
Clients usually ask me when they call me, “what’s my policy worth?” And the way that long term disability carriers buy out policies, is that, they buyout for present value dollars, which means, if your benefit was going to pay you a 100,000 dollars a year, and you had another 10 years remaining on your policy, your policy isn’t worth a million dollars which would a be 100,000 times 10 (100,000 x 10). Your policy is worth the present value of a million dollars, which means, how much do you need to have today in order to get to a million dollars over the next 10 years.
While it sounds complicated to come to that calculation, we regularly work with actuarial consultants who this calculation for us and let us know what the present value is of your long term disability policy.
There are 52 opinions so far. Add your comment now.
Request a Free Consultation
Click here or call 800-682-8331 now!
We respond the same day.
We represent disability insurance claimants all over the United States.
We have handled thousands of disability claims and you can read about them.
- Aetna overturns decision to deny LTD benefits for claimant suffering from post-concussion syndrome and neurocognitive disorder
- Dell & Schaefer ERISA Administrative Appeal Proves to MetLife that Client is Still Disabled and Claim Not Subject to Certain Policy Limitations
- Mutual of Omaha Approves Dell & Schaefer Client for Short Term Disability Benefits After Administrative Appeal
- CIGNA overturns decision to terminate benefits of telephone sales representative with severe degenerative disc disease
Read what our clients say about us.
- Joe C. ·After being denied twice for my short term disability benefits I called Dell & Schaefer. Then I filed my appeal on my own and was once again denied.After the denial...› continue
- Sabrina J. ·Rachel, Anneli, Carolyn... They were all WONDERFUL! I never would have gotten anything accomplished without their superior knowledge and worth! I would recommend this...› continue
- ShaRhonda D. ·Rachel Alters and her assistance Michal Mizrahi were a godsend. When I contacted their office, Metlife denied my appeal and I was too sick to get out of bed, let alone...› continue