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 62 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.
- Attorney Cesar Gavidia successfully appeals Cigna claim denial after Cigna and its medical consultant deny claim alleging that restrictions were not medically supported by the medical records
- Dell & Schaefer Successfully Appeals Denial of Benefits to Fedex Employee
- Dell & Schaefer gets Cigna to Reinstate Long Term Disability Benefits for Former Maryland Teacher Suffering from Crohn’s Disease
- MetLife Reinstates Disability Benefits to Attorney on Appeal
Read what our clients say about us.
- Annissa M. ·Before I started working with Stephen, I was unsure how I was going to navigate the Long Term Disability process. I had already been denied once and was very...› continue
- Sheila W. ·I would like to make sure that whomever Alex's boss is knows how good he is. He was always was so kind and I felt like he would take good care of me. His opening...› continue
- Janet ·I worked with Rachel Alters, who was very knowledgable about ERISA, my health condition and the best way to present information to my private LTD company. Being...› continue