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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 123 opinions so far. Add your comment now.

Alison:

I have read that 40% off of the future value is a standard amount of a lump sum buyout, though they have often offered varying discounts. I am with Cigna and I understand NPV and Future Value from having been an MBA. With interest rates nearly at 0 today, is there any hopes of getting more than the 40% reduction?

Have you noticed any changes in their figurings with the reduction of interest rates over the past 5 years? Or do they just figure most people can’t understand that and continue to use higher interest rates in their NPV values? What percentages have you seen from Cigna in the past few years? Or ever? Thanks.

Attorney Greg Dell:

Alison,

I am not sure where you heard 40% as that seems to be very low from our experience of negotiating disability lump sum buyouts for clients. The lower interest rate is a great thing for a claimant when considering a buyout. A lower interest rate means that the claimant’s money will grow slower over time; therefore they need more money now. In the past three years the buyouts we have negotiated have been some of the best percentages we have seen. A buyout negotiation involves numerous factors, which depend on a claimant’s medical condition, policy language, mortality issues, reinsurance agreements, and interest rates. If you are considering a buyout we can discuss your potential options if you contact us privately.

Mersud:

Hi, my question is: if you have $500,000 policy or until you don’t reach retirement age and if you are permanently disabled which I am and not able to work, how much can you expect to get in buy out lump sum, and if you do decide to get buy out lump sum can any other party such as SS Disability, healthcare insurance such as United Health Care go after you for medical expenses paid for you medical care? So basically my question is what would the aprox. lump sum be? Thanks.

Attorney Greg Dell:

Mersud:

Thank you for your request. There are numerous factors that go into a buyout and based upon your example I could not give you an approx number. I could tell you that from our experience a really good buyout is anywhere between 65% to 75% of the present value of future benefits. The challenging issue is how the disability insurance company gets to their final present value calculation. In most cases a health insurance company cannot come after you for getting a lump sum buyout. If you have SSDI, then the disability company will usually take this into consideration when a lump sum offer is made. If you would like assistance with a lump sum buyout, we can review your claim and let you know if we can assist you. We do not charge any attorney fees unless you accept the lump sum buyout offer. Not every company engages in disability lump sum buyouts.

Louise:

I am interested in a buyout with Cigna. I have 12 years left. What type of interest rate are they using now to determine the present value of future benefits you mentioned above? Since interest rates are so low, are they only using 1 or 2% now, or are they still trying to use higher interest rates? So they figure the present value and then discount it again?

Attorney Greg Dell:

Louise,

As of February 2013, Cigna and most of the other carrier are using a rate of between 3.5% to 4.25%. While most people can barely get 1 percent at the bank, the insurance companies can actually get 3.5% to 4.25% for their money. The disability insurance companies usually rely upon on the high yield corporate bond rate which is published in the Wall Street Journal. Give us a call if you would like assistance negotiating a lump sum buyout with Cigna.

Ann Smith:

I have a long term disability insurance with the Hartford. Since I have started my retirement with teacher’s retirement they reduced it from almost $3000.00 to $300.00 per month. I requested a settlement and they said maybe they would do that in my case. I have scoliosis and Meniere’s disease, which either is life threatening if I use good judgement. The Hartford said that I am eligible for benefits until 2026. What do you think would be a possible settlement?

Attorney Greg Dell:

Ann,

We would need to know more information to determine a reasonable buyout. If you watch our video you will learn more about the numerous factors involved in a buyout.

Kim M.:

I have been offered a settlement for $12,000 for a long term disability from The Hartford. I am considered permanently disabled and receive $2800.00 a month and will get $319.00 until I am 65. Presently I am 54. Should I take the settlement for $12,000.00, or engage an attorney to get more?

Attorney Stephen Jessup:

Kim,

There are many factors that go into an offer for a lump sum buyout, such as your medical condition, language in your policy, and whether offsets such as SSDI are in place. From the information you provided it is hard to speak as to the sufficiency of the buyout offer. We have successfully negotiated higher amounts from insurance companies after an initial offer was made.

Debra Loves:

I receive $657.00 per month from ING. I’m on SSDI & of course ING received almost all of the money that was awarded me from SSDI, since it was dated back to my accident. I receive $657.00 per month from ING & that will continue until I’m 67. Last year they offered a lump sum of $53,000.00. This year they valued it at $50,000.00. I am permanently disabled but I don’t understand the value ration they are saying is 76%. Is this a reasonable amount to except? If they had to pay me until I was 67, that would amount to $121,545.00. Seems like they would be saving quite habit if $50.000 were all they had to pay. I feel like I’m being shafted!

Attorney Stephen Jessup:

Debra,

If an insurance company is looking to offer you a buyout they are most certainly doing it at a rate that most benefits them. Any offer for a lump sum settlement is based on a percentage of the present value of the policy (to include factoring for mortality ratings). If ING were to pay you out every month for the remainder of the policy the amount you would collect will always be higher than the amount they would offer for a buyout. If you do not feel comfortable with the amount being offered you have no duty to accept and can continue to collect your monthly benefit (so long as you continue to meet the terms and conditions for disability under the policy). If you have any questions about the buyout you can certainly contact our office to discuss how we may be able to assist you.

JR:

In reading through the messages here and taking all in context I am hoping for a ball park range only of what a carrier typical (recent) may offer on a buyout or if a buyout was requested based on these figures please. Again just a range to give SOME idea based on your knowledge since you have handled these before.

Total monthly received from Disability carrier 2,200.00, which is after SSDI is deducted, so this is the amount LTD carrier contract pays each month after SSDI is already deducted.

There are 228 remaining Months remaining till policy ends @ 2200.00 which equals $ 501,600.00.

Given all the variables you have listed in the way the carrier determines present value of claim and interest, what would be a reasonable offer, whether the claimant requested a buy out or the carrier offered a buy out please.

Just a reasonable range that would be typical in the above scenario please.

This is an employer policy. The disability is not life threatening, but sufficient so that there is no chance the claimant could ever perform their own occupation (carrier requested IME and the carriers chosen Physician was in claimants favor in that the own occupation was not possible) the policy also has a clause stating after own occupation if the claimant could NOT make 60% of predisability wages at ANY occupation then claimant is still disabled under terms of policy.

The SSDI was awarded based on the claimant was not able to even perform sedentary work, thus 100% disabled.

So if SSDI for some reason (it happens, I have heard) kicked claimant off SSDI, then the carrier would be liable for all the monthly benefits (revert back to benefit amount they were paying before SSDI kicked in) in turn and reciprocal.

If Carrier at some point wanted to deny the claim (you know how they are) they still would have to prove the claimant could make 60% of predisability earnings in some other occupation, which in my region is impossible.

Just wanted to give all factors in case these would also be considered in either the claimant requesting a buyout or they offered a sum and what a typical range would be reasonable (a range only is fine).

Thank you for the service here, you offer excellent information for many.

Attorney Stephen Jessup:

JR,

Thank you for comment. Please feel free to contact us to discuss how we may be able to assist you in securing the best possible buyout possible.

Mike:

Can you request a lump sum buyout if you owe them back pay?

Attorney Stephen Jessup:

Mike,

Some carriers will engage in conversations if there is an overpayment due on the claim. However, please note that some carriers do not offer buyouts as a company policy. If you have any questions please feel free to contact our office to discuss how we may be able to assist you.

Confused:

My husband is on long term disability since 2007, and received almost $2000 a month. We are going to divorce. What is my best option to have the LTD valued for in order for equalization of assets?

Attorney Stephen Jessup:

Confused,

You will need to consult with a divorce attorney as to any questions you have.

Dana:

Hello, I was denied LTD from my employer insurance company, and didn’t get nothing from them so I applied for CPP disability and get approved. Now if I sue them, how much they will pay me, since I stopPED working in 2011 and I am 52 years old? I was involved in MVA in 2008 and considered with permanent disability. I was only making 12 dollars per hour. Can you please just explaine to me how these work?

Attorney Stephen Jessup:

Dana,

If you did not properly appeal the denial of your claim for benefits you may be precluded from bringing any legal action. Please feel free to contact our office to discuss your claim further to see if we may be able to assist you.

Rick:

I have a MetLife long term disability policy. I was thinking about cashing it out and buying a home. I get 2200 a month till I’m 65. I’m 57 now, 8 more years – about 184,8400. Any idea on the amount I would get from MetLife? What would the taxes be on it? Any help would be great.

Thanks in advance,
Rick

Attorney Stephen Jessup:

Rick,

MetLife is one of the few carriers that from our experience will not offer or discuss any lump sum buyout of a disability policy. You can certainly inquire, but the likelihood of them agreeing to any buyout discussion is low.

Tired:

I am in receipt of LTD from my employer. I have been deemed permanently disabled. I also receive CPP disability. I receive $2000/mth for LTD and $500 for CPP. I am only 35 years old and I want to send a settlement offer to the LTD company. What is the best way to calculate the value (2000 * 12* 33yrs = 792K) and does it have to be done by an actuary? What amount are we looking at?

Attorney Stephen Jessup:

Tired,

Each insurance company has its own protocol to determine whether a claim is a candidate for lump sum buyout, and some do not offer buyouts at all. As such, there is no way to be able to guide you based on the limited information available. Please feel free to contact our office to discuss how we may be able to assist you in securing a buyout.

Daniel K.:

Wonderful Advice,

I am a former Department of Public Works employee that is 35 years old. My former employer is mandated under contract to pay the cost of my health insurance until I reach Medicare age. Currently the department pays $1,194.11month or $14,329/year. If I live until I’m 65 that would equal $429,879 in today’s value assuming healthcare does not go up and the Medicare age stays at 65.

The city has asked if I would be interested in a possible buy out of my health insurance.

What would a “good” buyout look like and is it typical for me or the city to throw out the first #?.

Thanks in advance for your advice.

Attorney Stephen Jessup:

Daniel,

Unfortunately, we would be able to offer little, if any, assistance as it relates to your question. I have yet to see any negotiated buyout for health insurance coverage. The scope of our practice is securing buyouts of long term disability insurance policies.

Help:

I am currently on LTD/SSDI due to Crohn’s Disease. I receive 1200 mth for LTD, 1200 SSDI and I am 42. I have been offered a buyout option of 105,000 from Aetna. My question is, is this a low offer? And if so, does Aetna tend to negotiate counter offers? It seems to me they should at least offer 200,000. Can you help?

Attorney Stephen Jessup:

Help,

Without knowing more about the factors of your claim it would be difficult to assess. Please feel free to contact our office to discuss further.

Molly:

I just received a call from my LTD insurance company. They offered to go ahead & pay the remaining few months of my LTD as a lump sum. They said it would be equal to the same total as if it were paid for each month remaining. I know that I’m a skeptic, but is it unreasonable to question possible ramifications?

Attorney Stephen Jessup:

Molly,

I have experienced situations where insurance companies offer to pay the whole remaining amount of the benefit in one lump sum. In one case it was for the remaining two years of benefits. The only issue that arose in that situation was the fact the whole lump sum amount would be taxable income for the year, as opposed to spread over two years. Additionally, this client’s policy was ending due to reaching the maximum benefit period of age 65. If your claim is “ending” due to some other reason, such as an imposed limitation in your policy, you could be potentially walking away from continued coverage.

Kiki745:

I receive 70k per year on a long term disability policy. I have 15 years left on the policy and was offered 489k to settle. This does not seem reasonable given the fact that my condition is permament. What would a reasonable amount be

Attorney Stephen Jessup:

Kiki,

Determining what a “reasonable amount” for a buyout is an in depth analysis that has to take into account multiple factors. Please feel free to contact our office to determine how we may be able to assist you in securing the best available buyout from your carrier.

Psoriatic Arthritis:

I have group LTD (CIGNA) and Individual LTD (Unum). 300k / year with CIGNA, and 200k / year with Unum. I am about to enter into STD at which point I will have 180 waiting period before my LTD kicks in. I have 37 years of benefit left until the age of 65.

Would you be able to help guide/ advice me on how to approach the coming days, and what to expect. I rely heavily on my income for myself and family, and during these hard times I would like to make sure I fully understand my contracts, what all is involved, and what to expect.

Lastly, at some point, I would like a buy out, so I don’t have to look over my shoulder every time I walk out of the door. I have read some horrible experiences online. I am more anxious about this then any of the above as my policy is a high dollar one, and may undergo unfair discrimination, and extra scrutiny.

Attorney Stephen Jessup:

Psoriatic,

With so much potential income at stake, you would be wise to take the appropriate steps to protect it now. The claims application process sets the tone and strength of a claim for benefits. The carriers could easily exploit any mistake made during the process as a reason to deny your claim. It would be wise to consult with an attorney to guide you through the process. Please feel free to contact our office to discuss how we may be able to assist you.

Sean:

I have a service connected disability from a county law enforcement agency in the amount of $3400/mo for life. Is there an option of buying out the payments? I am currently 43 years old.

Attorney Stephen Jessup:

Sean,

Without knowing the insurer (if there is a company involved) or the terms of the disability pay I would not be able to say. You can certainly inquire.

MJ:

I hurt my back at work hernated dick s1 l4 and l 5 I am getting long tern disability but they say that I could get a job doing a job other than what I hurt my self at. I have been looking for work and because of my restriction no one will hire me. If I sit for too long feet really become numb if I stand to long same thing…

I do not understand all this stuff; been on LTD for 8 months and they want to do a 2 year buyout @ 20K.
I will not be able to return to the type of work I use to do.

Attorney Stephen Jessup:

MJ,

Has your insurance company issued you a formal buyout offer letter? If so, please feel free to contact our office so we can review same and discuss with you your options.

Lydia Young:

I owe an overpayment to Prudential totaling $89000. I requested a buyout. They considered it. Then denied it due to mortality issues. However, some of the information they had was wrong. They said I use long term opiates, which I do not. They also said I smoke which I no longer do, for two years. They said I have clinical depression and anxiety which I do not. It was situational depression, and have not had any medication for depression since I was diagnosed with MS. I did take Cymbalta for pain issues. Is there a way to appeal their decision? I have an appointment with my PCP to update my records and clarify any discrepancies. They said I need less than 500 pints in order for them to approve it. They automatically give 350 points for MS, however they do not take into account the different types of MS.

Attorney Stephen Jessup:

Lydia,

You can certainly present these discrepancies to Prudential, but ultimately they have no affirmative duty to offer you a buyout and can decline same for any reason.

Gail:

I have a long term disability policy with an insurance carrier. I have been receiving $1,430 per months since 2006. I will receive this amount for another 6 years 8 months which will be $116,688. A month ago, I was offered a buyout of $69,000. This amount seems quite low. What do you think?

Attorney Stephen Jessup:

Gail,

Based on the information provided we would not be able to properly ascertain the sufficiency of the offer. Furthermore, you need to take into account present value of your benefit, as the future benefit is not worth the full $116,688 in today’s dollars. Please feel free to contact our office to discuss the buyout offer, as well as to discuss how we may be able to negotiate a larger buy out amount for you.

Lydia Young:

I understand the pdv of claims, and also the percentage of that they may offer, but how do I figure in the mortality rate they may also use? Prudential does not offer buyouts to people who have a mortality rate over 500%. Using that as the highest rate how would I figure that into the equation?

Attorney Stephen Jessup:

Lydia,

Each carrier uses their own calculations and numbers so there is no concrete way to determine what your mortality rating would be.

WinterDaze:

I am out on long term disability through Unum. I am being paid under the 24 month M&N provision. I have 9 months left on claim @ 2016.00 per month. PDV of $18,144.00. I want to request a settlement. The disability process has been very stressful, and I am paying out of pockets for doctors visits. Unum has now requested I apply for SSDI. I honestly can’t deal with the stress anymore. How should someone go about requesting a settlement? I know typically it’s reversed and the insurance company initiates the offer, but I am over it. Any help would be appreciated.

Attorney Stephen Jessup:

WinterDaze,

It is not likely that Unum will negotiate any lump sum buyout of your policy as they are applying a 24 month limitation and you have not been awarded SSDI, which they would seek repayment of any overpayment if you are approved.

Sandra B.:

I have been on LTD with Aetna since Oct 2010. Mine is a permanent disability because of a 3 level cervical fusion surgery, arthritis, chronic myofascial pain syndrome, I have to take 8 different pain meds to help with the pain (including opana and hydrocodone which are opiates) and degeneratuve disc disease, and severe depression and anxiety brought on by the constant harassment. I’m only 43. My policy is for 2184 a month (60% of my salary) until 2036. My question is… is it normal or acceptable to approach them to settle it out so I can change doctors or actually have a life where the vultures aren’t calling me every couple of weeks and jerking my chain making my blood pressure rise? Do they ever settle, fairly? Believe it or not I was in perfect shape healthwise before all this started. I really just want to live my life and not have to jump through their hoops every 3 months. I have been doing this for 4 years and it’s gotten VERY old. Thank you.

Attorney Stephen Jessup:

Sandra,

Aetna does not offer a lot of lump sum buyouts on policies, but it is possible to negotiate with them. Please feel free to contact our office to discuss your claim further to determine if we can assist you in securing a reasonable and fair buyout.

J:

Hi,

I was recently contacted by the Hartford to see if I would be interested in a settlement. I don’t have any amounts yet. I currently get 1700 a month plus SSDI. I am only 31 and have been on disability for 2.5 years due to lupus. My questions are what should I expect if I go this route? I read online that The Hartford sometimes approaches a claimant about a settlement in order to get them into a IME (independent medical exam) so they can deny them, do you hear this often? How many people on LTD take settlements? I am still struggling with the idea of never working again. What happens if I take a settlement and want to try to work again? What are the pros and cons of settlements?

Attorney Stephen Jessup:

J,

Hartford offers limited insureds lump sum buyout opportunities. As you have many questions it would be best to discuss over the phone. Please feel free to contact our office to discuss same.

California Raisin:

I have been receiving benefits since 2014. I have already been approved and received back pay for SSDI. I don’t owe any offsets. Wanted to know if I may qualify for buyout through Prudential. My diagnosis was Cancer.

Attorney Stephen Jessup:

California,

Prudential does not typically look into offering lump sum buyouts until the change in definition from own to any occupation has occurred. That being said, it might be possible – please feel free to contact our office to discuss your claim in further detail.

Emma Wheeler:

I forgot to mention in my previous comment that I am on SSD and LTD from Fibromyalgia, peripheral neuropathy, Charcot Marie Tooth disease, debilitating pain, memory impairment, cognitive impairment, Cushings disease from years of steroid injections to treat chronic trunchator bursitis, depression and anxiety as a result of the chronic pain. Also my rheumatologist stated that due to all of the heavy narcotics that I am on, I am not to drive as I am not coherent enough to be behind the wheel of a car.LTD approved me after a FCE, which they are now saying is invalid and that I self limited…which is BS. Also reasoning that because my Major depressive disorder is managed finally by medication, I am now able to work “at any job”.

Attorney Stephen Jessup:

Emma,

Please feel free to contact our office to discuss the denial of your claim and your rights going forward as they relate to appealing the denial.

Marci:

Above you indicated that a good lump sum settlement would be in the range of 65% to 75% of present policy value. Would this percentage apply to a policy with a provision for annual cost of living adjustments, (COLA) or without? Put another way, when figuring the “present value” of any policy, do you figure the cost COLA on the front end, and then shoot for the 65% to 75%?
Thanks.

Attorney Stephen Jessup:

Marci,

65 to 75% is about the best offer one could ever see, and rarely do companies negotiate that high. That percentage would take into account all benefits, to include COLA. Please fee to contact our office if you wish to discuss securing the best possible lump sum buyout offer.

Sandi Kubler:

My policy benefits are not HUGE. I had been receiving LTD through Assurant for 2 years, then suddenly received a letter of denial with very THIN justifications. I also began receiving SSD before I got my LTD from Assurant. Social Security has approved lifelong disability for me. I am going through the process of appealing the decision, but realize that ERISA is on the side of the insurance companies.

My Assurant benefits were $600 month cash after making the adjustment for SSD, yearly IRA account deposit of $4600 until I reach retirement age (8 yrs. from now), they also paid $400 a month to my COBRA insurance premium (which I have now lost because the policy has lapsed from lack of payment), the monthly premiums for my & husbands life insurance through my previous employer, also 5% of my gross monthly wage into retirement account with previous employer.

My question is, how in the world can I calculate what to expect from them in a lump sum offer to know if it’s reasonable?

Attorney Stephen Jessup:

Sandi,

If your claim is governed by ERISA you have to go through the administrative appeal process prior to the filing of a lawsuit. Please feel free to contact our office to discuss your rights going forward and how we may be able to potentially assist you.

Cindy:

I have a policy with Guardian that is being managed by Berkshire. My condition is fixed and permanent 100% disabled. In your experience, does this company consider buyout offers? If so, would it be lower if initiated by me?

Attorney Stephen Jessup:

Cindy,

Unfortunately, we may not be able to assist you as Guardian/Berkshire does not typically offer lump sum buyouts.

Sandi Kubler:

Does Assurant typically offer a lump sum buyout? I am going through an Administrative Appeals process now, they paid me from August of 2013 until May of 2015, then suddenly denied me for very frivolous reasons. But my questions is, as I know some companies absolutely do not offer buyouts, does Assurant offer them to your knowledge?

Attorney Stephen Jessup:

Sandi,

To the best of my knowledge they do not offer buyouts on contested (denied) claims during the administrative appeal process.

Jennifer:

I get LTD from Unum. They have offered a settlement that is 65% of PDV. Can I ask for 70-75% or is 65 the most they are likely to offer?

Attorney Stephen Jessup:

Jennifer,

You are certainly free to request it, but Unum is known to not necessarily negotiate above a certain point. If you do have questions we would be more than willing to review the offer letter and discuss with you in greater detail.

Tracy D. K.:

I was dx’d with viral cardiomyopathy caused by coxsackie after returning from Guatemala on a mission trip. I was approved for ssdi the 1st time I applied. My ejection fraction was 20 in ’09. It was 18 in Jan. 2015. Can I buy out my Ltd? It’s through my former employer. United Healthcare.

Attorney Stephen Jessup:

Tracy,

Who is your LTD carrier?

Annabel:

Ireceived a settlement from unam for 69 percent of my total cash value They estimated present value at 4,4 percent Was this legal and can I fight for more on the grounds I didnt understand what this mesnt

Attorney Stephen Jessup:

Annabel,

Yes it is legal for them to offer a buyout and the rate and percentage of present value is higher than normal for them. Unfortunately, if you voluntarily entered into and signed the settlement agreement the effect is legally binding.

Tracy D.:

My name is Tracy D. K. I get 353.00 a month until 2,028. My LTD insurance policy is through united healthcare special benefits. I have cardiomyopathy which has worsened since April ’09 when I was diagnosed. Does Uhc offer a buyout & if so what could I expect?

Tracy D.:

What $ amount might I expect in a buyout?

Attorney Stephen Jessup:

Tracy,

Has your insurance carrier indicated they are interested in discussing such a buyout? Who is the insurance company handling the claim for United Health? Please feel free to contact our office to discuss your claim further.

Mark:

I will be 50 on March 5, 2016. I am currently receiving Ltd benefits from Unum in the amount of $1040 a month. I am considered permanently disabled by Unum with no probability of returning to work. I’ve been on Ltd since March 5, 2013 and have 17 years left on my policy, at which time I’ll be 67. I have moderate to severe disc degenerative disease, bone degenerative disease, sever depression with psychosis, anxiety disorders, panic attack disorders. I am interested in a lump sum buy out from Unum, so would like to know what the potential present day value and net present day values are and am I good candidate for a buy out. I have private health insurance, so I would primarily like the money to invest and pay to start to repair my credit rating so I can buy my first home.

Attorney Stephen Jessup:

Mark, please feel free to contact our office to discuss how we can assist you with a buyout in greater detail.

Cheryl:

I am 45 years old and have been on LTD since 2011 with RBC. I receive $1,100.00 per month from them. What would be a possible payout amount in your opinion? My disability is insomnia, anxiety disorder and Bipolar.

Attorney Stephen Jessup:

Cheryl, please feel free to contact our office to discuss your claim and review applicable policy provisions to determine how we may be able to assist you.

Scott:

I have a dibilitating disease which is not fatal but I will never be able to work again. I have been on LTD for about 4 years now. I have about 14 years left which should be around 1.5 million left. If I did a buy out, after attorney fees and Buyout, ball park would would I end up with in actual dollars?

Attorney Stephen Jessup:

Scott, unfortunately, without detailed information on benefits, current overall health, policy provisions, insurance carrier info, etc there would be no way to even provide a ball park figure. Please feel free to contact our office to discuss these items in detail and to discuss how we may be able to assist you in securing the best possible buyout.

Chris:

Does Reliance Standard offer lump sum settlements? I have been on ltd since last November and I just got awarded ssdi. As of November they pay me 2365 mo and Reliance pays me 2899 mo, there is 5 yrs left. The policy says something about after 18 mo any occupation 20% of indexed earnings. I am not sure what that means but do they settle and if so how would I go about it?

Thanks
Chris

Attorney Stephen Jessup:

Chris, RSL does offer buyouts; however, they typically will not offer a buyout until after the change in definition for disability from the inability to perform your own occupation to the inability to perform any occupation. Please feel free to contact our office to discuss your claim further.

Nurses Rock:

Hello. I was injured in 2004. LTD in 2007. Hartford pays 714.00 and SSD Pays 1200. Hartford has made lump sum offers in the past in which I denied. I am disabled to work any occupation. I am 54 and will receive benefits thru age 68. I am asking for a lump sum payment from Hartford, in the mean time SSD has sent me a letter to notify me that SS is reviewing my case. What is the probability I lose SSD and settle with Hartford for the greater amount to include what SSD would have paid. Thier offers in the past were at most 30% of total claim. What can I expect and are lump sums negotiable. Thank you…..

Attorney Stephen Jessup:

Nurses Rock, the real risk would be if the SSA terminates your claim for benefits there would stand a likely chance that Hartford would then follow suit. If you would like to discuss lump sum buyouts, please feel free to contact our office to speak with one of our attorneys.

Anthony:

Hello, I was just approved for Ltd from Metlife but only payable for the next 24 months. I receive my check once a month and was wondering if they would consider a buyout if the remaining 24 months of payments? If so how much would I receive and if they do buyout the claim if in say 16 months I’d be able to return to work work I half to pay the remaining buyout back or no? Please let me know. Thanks for the info.

Attorney Stephen Jessup:

Anthony, it would not be likely that they would negotiate any lump sum buyout at this point, especially if SSDI benefits have not been approved. Are they claiming your case is limited to 24 months due to the disabling condition you have, or simply that you are entitled to 24 months of benefits due to the inability to perform the duties of your own occupation? Please feel free to contact our office to discuss your situation in greater detail.

Tony:

Does Lincoln Financial Group Insurance Company offers lump sum buyout?

Attorney Stephen Jessup:

Tony, in very limited situations. If you would like to discuss the potential for a buyout as it relates to your claim please feel free to contact our office to discuss.

YC:

I Am under Hartford LTD benefits since 2008. I currently get 1800 a month plus SSDI. I am only 45 and have been dissable for 8 years due to fibromyalgia and arthritis. They sent me two times to IME (independent medical exam) and stop my benefits. I appealed and they restored my benefits. Just one year after the last evaluation from an IME, they are requesting documents and medical info again. Eventhough a year ago the IME determined that I continue dissable, the still pushing back again. Do you think I might be able to get a Lump sum buyout, in order to get out of these yearly evaluations. As I mentioned before they stop my benefits two times based in their nurses evaluation, I appealed and they restored my benefits. I still struggling with the idea of this continuous IME evaluations that resulted in stopping benefits, and depress myself going throughout this process.

Attorney Stephen Jessup:

YC, please contact our office to discuss as it would seem with your claims history you are in a good position to discuss lump sum buyouts.

Jose:

Hello,
I am 47 years old. I have been on LTD with The Standard Disability Insurance for 18 months due to Lateral Epicondylitis (tennis elbow). When can I request a buyout or is it too soon? I am asking this because my medical bills are stacking up and I need to pay them. 1,200 a month is not enough to cover my monthly expenses. Please advise.

Thank You,
Jose

Attorney Stephen Jessup:

Jose, most insurance carriers will not consider buyouts until a claim is at least 24 months old- or has already been approved into the “any occupation” standard of disability, and SSDI benefits are in place. If you meet the above criteria there certainly stands a chance. Please feel free to contact our office to discuss further.

Gin:

I have been receiving Ltd from Sunlife for 2 yrs as of 10/06/16 and that is the date where the definition of disability changes from disabled from my previous job to disabled from any job. They called this morning and offered me a lump sum buyout of $30,000. They didn’t tell me if I met the criteria of total disability or not. However I assume I do or they wouldn’t have offered me me a settlement. Should I do a counter offer or can i? I’m onot 38 and have 3 children. 12 and under and that would be close to what I would draw from them in 1 yrs time.

Attorney Stephen Jessup:

Gin, the offer Sun Life made is more than likely much lower than the actual value of your policy. Sun Life is known for offering low value buyouts on claims during the any occupation review process, and when if they are rejected Sun Life typically denies the claim requiring the filing of administrative appeals and potentially civil lawsuit. If you do wish to be done with Sun Life and have your policy bought out you can certainly negotiate, though they historically will not go too much higher. Please feel free to contact our office to discuss your claim in greater detail.

Chris:

Have you ever dealt with a Mutual of Omaha ltd buyout? I am 48 years old and have Parkinson’s and had to give up my job but was very blessed to have ltd insurance provided by my company. I have been on it for 22 months and they are reviewing it now to decide if I will continue to receive my benefit. I have been thinking about asking if they are interested in a lump sum buyout.

Attorney Stephen Jessup:

Chris, if SSDI is in place Mutual of Omaha may consider a potential buyout, but typically an insurance company will not contemplate a buyout prior to the completion of the any occupation review. Please feel free to contact our office to discuss your claim futher.

Dawn Daughter of Fran:

My mother was receiving LTD from her job. Recently she received a letter informing her that they are doing away with the LTD and will be sending her a check for the basically what she would be receiving from now until the age of 70 when the LTD would be cancelled regardless. She just received this check in her account as they only allowed for a direct deposit. The issue we now have is the amount of taxes she is going to have to pay on this lump sum. Is there anything we can do, take that money out put into her IRA, anything to prevent her from having to pay a lot of taxes next year.

Attorney Stephen Jessup:

Dawn Daughter of Fran, as we are not tax professionals we cannot provide any direction. You will need to consult with an accountant or tax professional to determine what can be done.

Tay:

My husband is on disability. It would be stupid for us to accept the buyout we have been offered… we were surprised to get an offer at all. The amount was very low. We would not accept it anyway. We have to live from month to month, year to year. People think seriously about this… you are selling out and for no reason…

Bran:

I have been on LTD from Guardian Life Insurance which was through my employer for approx 7 years. I was also granted SSDI shortly after so there was no money owed to Guardian. I have had a FCE that was initiated from Guardian which I was classified fully disabled. My question is, does Guardian offer or entertain buyouts? I’m currently 45.

Attorney Stephen Jessup:

Bran, Guardian is not known for offering buyouts on ERISA disability policies but I cannot speak as to whether they have any “no buyout” stance on them. Please feel free to contact our office if you would like to discuss your claim further.

Worried:

Hi. I have been contacted by Cigna LTD and made a lump sum offer for 300k, based on their valuing my claim at $448K at 3.6 % interest rate. I’m permanently disabled but expected to live until 2032 when their payments would normally end ( which by contrast would pay out from today another $657k if I continue to receive their monthly payments till then). Is this a good offer? In your experience, does Cigna negotiate? I’m calculating this offer to be about 67% of their assessment on the current value of my claim. I am worried that after taxes, this will amount dwindle quickly over the next few years. Thanks!

Attorney Stephen Jessup:

Worried, please contact our office so we can discuss your case further to determine the sufficiency of the value. From a standard review of the numbers it is in the ball park of percentages an insurance company will pay, but there does appear to be room for some negotiation.

Tim C.:

I just settled an ERISA case with Prudential for back pay and reinstatement, I prevailed and am now back on payment at $2040.60 per month after the initial two years. I am 60 years old and will receive payments until 65. I asked about a buyout and they declined based on a history of substance abuse in my medical record. I have in my medical record that I am in recovery for 30 years. I do not drink, smoke, or take drugs. I haven’t had as much as a beer since May 1987. How is that a factor in deciding a mortality rate, and the worth of a policy that has less than 5 years for them to pay on?

Attorney Stephen Jessup:

Tim, as an insurance company has no duty to offer or negotiate buyouts there is very little that can be done to force their hand our even fully understand much of their flawed logic. That being said, based on what you are saying there would seem to be more to the story. Please feel free to contact our office to discuss your claim and the buyout situation.

Maria G.:

Hello, I have pstd, fybromyalgia, degeneritive disc in my spine, my arms went numb the other day, I am seeing 2 specialist, but I just cannot work no more, I commute 5 hours a day, I leave my home at 5 am, don’t get home umtil 8 pm. I have been employed 8 years, I am 58 years. I never participated ssi so I do not have that, so I am in a pickle, some days I cannot even get up, so much pain, income monthly 5300. Gross. I work non profit, I can’t do this no more, I am getting worse, my short and long term carrier is Lincoln Insurance. What is your experience with them? I don’t know what I should do.

Attorney Stephen Jessup:

Maria, if you are unable to work and have a doctor to support your claim for disability you can explore the filing of a claim for disability benefits. If you have copies of your policies please feel free to contact our office for a review of same and to discuss how we may be able to assist you.

Cheyenne T.:

MetLife contacted me about a buyout. I have a permanent disability but am in good health and stable. The offer amount is 50%. Can I counter offer? Does your firm aide in that process? If so can you tell me how much it will cost? Thank you.

Attorney Stephen Jessup:

Cheyenne, please feel free to contact our office to review the offer provided. From my experience MetLife does not negotiate their buyout offers, but we may be able to shed some more light on how they arrived at their offer.

Kim:

I have been on LTD for 2 years and they left a message on my VM to settle. I am 48 years old and receive 1994.00 per month. This coverage is thru Sun Life. I have my hearing for SSDI on about 6-9 months. Any idea what amount they would be offering based on your experience with Sun Life? I have called them back but still waiting for their response.

Attorney Stephen Jessup:

Kim, we would have no idea on what they may offer, but given the fact you have been on claim for approximately 2 years and SSDI is not in place, it will likely be a nominal amount in relation to the policy value. Sun Life often tries to settle for small amounts before a change in definition from “own” to “any occupation.” This occurs when they are planning on denying the claim into the any occupation period. When you do receive the letter please feel free to contact our office to discuss your options further.

Chester:

Hi Counselor, My wife receives $115 a month from SunLife disability insurance on top of her social security disability check. They are offering her a buyout of $15,500. We like the idea of receiving 11 years worth in a lump sum, but we also like the security of having them represent us if the feds suddenly deciding that my wife is no longer disabled. Is that even a thing? As long as she fills out her bi/tri yearly reviews, and her doctor is complying, is there anything to worry about as far as losing benefits from SS?

Attorney Stephen Jessup:

Chester, if the SSA were to terminate your wife’s claim Sun Life would not assist her in fighting to get it back – however, they may contract a third party to handle it. That being said, termination of SSDI claims is rare, especially in comparison to disability insurance claims. We do not handle SSDI claims, but from my experience representing insureds who also receive SSDI, I have not had a situation where the SSA terminated disability benefits.

Randy:

I have been on LTD with Met life for 8 years. They called and wanted to do a lump sum payout. I have 96 months left before I turn 65 and payments end and at this time I receive about $400 a month from them. I was wondering what kind of settlement I could be looking at. Met life stated they knew that I would never be able to return to work because of the multiple sclerosis. SSDI is only $1500 a month. I’m hoping that you can give me an idea before I even allow them to make an offer because I don’t want to waste my time if it doesn’t come close to the benefit I get now.

Attorney Stephen Jessup:

Randy, we would need to know more about your claim and policy before we could give you any realistic idea. Please feel free to contact our office if you would like to discuss the possibilities in greater detail.

Lowballed:

I’m 43, on DI with Sun Life until age 65. Monthly payment of $1950 but was offered a buyout (out of the blue) of only 225,000. If I decline , what are the chances that in the next few years Sun Life will offer another buyout? Is there a chance that the next offer might be a better figure than what is being offered now?

Nance:

Out of the blue I get a letter for a alternative payment option one-time, lump sum payment which would be full and final settlement of my long term disability claim from Unum. I have 5 years left. They want to offer me 70% under their consideration factors. My consideration of 70% is higher. But I would be losing almost 29,000.00 without the cost of living adjustment for the next 5 years. My disability check is nontaxable and they said the payout would be the nontaxable too. I don’t know if that is correct. Also they tell you to check with your employer to make sure this lump sum does not impact other benefits I may be receiving such as pension or health care benefits. That I am waiting on because I don’t get a pension by my life insurance premium is waivered since I became disabled. I have been collecting my checks 17 years. Now at 60 I get this. They want financial and medical info. My doctors have always given them their forms every year but why the financial info request? I feel my SS paper is sufficient to show. Also I get SS disability and Unum always said they don’t go my SS guidelines, they have their own. Getting forms completed by doctors are very stressful as I am just a number. I do not have a lawyer or doctor in the family. If it comes back that I lose the waiver of my life insurance, I do believe this offer is off the table. But why are they trying to buy me out for a small amount. You would think they go for the bigger monthly payments of others. Are there any things I need to be aware of that are hidden?

Attorney Stephen Jessup:

Lowballed, buyout offers typically decline over time as the company has continued to pay benefits resulting in the policy value being less. As a word of caution, Sun Life sometimes offers buyouts and if they are not accepted Sun Life will conduct reviews in an attempt to terminate benefits. If you are interested please feel free to contact our office to discuss and review the offer made – there does stand a chance that the offer could be increased.

Attorney Stephen Jessup:

Nance, an insurance company will never offer the full value of a policy as a buyout offer. They will compute the present value of your policy and then pay an percentage of that amount- thus the likely difference in what you each deem to be 70% of value. With respect the requests for information, specifically the financial info request, Unum commonly asks for that information in a majority of their claims. A buyout of the disability policy would not affect your waiver of premium claim. If you would like to discuss their offer in greater detail please feel free to contact our office.

Nicole:

Hi – I had a question about calculating lump sump benefits. My husband has three years left on his LTD policy, when benefits will terminate when he turns 66. Currently, the LTD carrier gets an offset for SSD benefits and his pension. However, SSD will terminate when he turns 65 (I guess he ages out?), so for that last year the LTD carrier will be on the hook for the full amount (less the pension offset). I understand that, in calculating the lump sum, the LTD carrier can basically do anything they want. But would it be typical for the LTD carrier to keep claiming the SSD benefit for that last year in calculating the lump sum? The only potential argument I can think of is if he were to take social security retirement for that last year. However, I don’t see why he would… if the claim continues, he’d just be giving away that money if he took it!

Attorney Stephen Jessup:

Nicole, yes, the carrier would likely continue to apply the SSDI offset as they will essentially treat the social security retirement offset as the same. Have they indicated they wanted to offer a buyout? Most carriers would not look to offer a lump sum settlement on a claim that only has three years left.

Nicole:

He just passed the two year mark (and switching to “any occupation”) and the claims rep said someone would be contacting me about it…so if the claim continues, can they force him to take social security retirement? I know his policy said he was required to apply for SSD (which he did and was approved first time around), but they couldn’t have forced him to take his pension retirement benefits, he only did that so he could get retirement health benefits through his old employer. I don’t get how they could “force” him to take SSD at 65, before his full retirement age…

Nicole:

Sorry, I meant how they could “force” him to take SS retirement at 65, before full retirement age (typo…)

Savannah:

I receive LTD from Metlife in the amount of 449.04 through 2036 which would total 105067.07 at time of offer in May 2017. I have been receiving benifits since 2001. They offered me a settlement of 47451.96 which is 45 % of what my policy would pay if i let it pay me out through the end date. Is this a usual amount ? I felt at least 65-70 % would have been a fair offer so I have not accepted. Is there any chance in your opinion of receiving a better offer closer to what I feel is fair. Because even at 70% they would be saving 31500.00.

Attorney Stephen Jessup:

Nicole, as the policy will allow them to apply an offset for a source of enumerated “Other Income” which includes social security retirement, they can certainly factor that in the event they consider a lump sum buyout.

Attorney Stephen Jessup:

Savannah, unfortunately, from our experience, MetLife does not negotiate the amount of their buyouts once an offer is made.

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