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Is my disability insurance company required to offer me a lump sum buyout of my disability policy?

Whether you have an individual disability insurance policy or an ERISA governed group disability policy, the disability insurance company’s only obligation is to pay you disability benefits on a monthly basis if you continue to satisfy the definition of disability. Some of the disability insurance companies have a business strategy of reducing their long term risk on a disability claim and will offer a lump sum buyout of a disability policy. Another reason that some companies will offer a disability policy buyout is that they want to reduce their insurance reserves.

If a disability company reduces their insurance reserves, then they have the ability to sell more disability coverage or other insurance products. We have also found that if a disability insurance company is publicly traded, they can reduce their financial liabilities and possibly make their annual financial performance look better to investors.

Not every disability company offers lump sum buyouts, but at least half of the largest disability insurance companies will offer a buyout for certain types of long term disability claims. Our disability attorneys have obtained and negotiated hundreds of buyouts for our clients. Contact us if you are considering a buyout of your policy or have received a buyout offer from your disability insurance company.

There are 40 opinions so far. Add your comment below.

Christolyn R. Shepard:

I am interested in a lump-sum buyout of my disability insurance. I am repaying Aetna after I did not turn over my SSDI payment. The overpayment will be satisfied in February 2015 and the benefits will begin again. My disability is only going to get worse and I will not be able to work again. Can you help me with this process? Aetna has helped to a degree with hardship but I am sometimes not able to eat (seriously). So much has changed in my life since being on disability. I need some serious help.

Attorney Stephen Jessup:

Christolyn,

Please feel free to contact our office to discuss how we may be able to assist you with securing a lump sum buyout.

Louis Palles, III, MD:

To Christolyn,

You are in a mess and need the services of Dell and Schaefer. I also have a long term disability that is only getting worse. Aetna is not your friend. They are watching out for Aetna. Dell and Schaefer are worth the fee, because they do valuable and great work.

Attorney Stephen Jessup:

Dr. Palles, thank you for your kind words.

DJ:

Hello. I was a competitive swimmer and PhD in Technology before an Endoscopy went wrong in June of 2012. I had to have a Thoracotomy. Which has left me disabled from Intercostal Neuralgia. My LTD Policy has me disabled because I am not able to do a job that is at 80% of my previous earnings. Even a job that isn’t my normal career.

Cigna is the LTD Carrier. I am also in Phase 1 of my SSDI application. My Cigna payments have been in place since November 2013. When my SSDI claim gets approved I will have to pay back my SSDI amount $2,180 a month to that date to Cigna. Cigna currently pays me $5,750 a month.

I am 44. According to life calculations I am supposed to live 34 more years. Though that’s arguable. Suicide rate is very high here. As are other debilitating conditions.

Let’s assume that my policy caps at age 65, and that I don’t get approved for my SSDI until I am 45. That leaves 20 years of Cigna having to pay me. Their total would be $856,850. Not including SSDI.

Now let’s say I were to get an offer for lump sum of 70 percent at 600,000. Would I lose 40% of that for Lawyers fees? Is their room to make that 25%?.

I need to make sure my family has a home and health insurance. I couldn’t do that on 360,000.

Cigna has thrown so many hurdles my way. Including now introducing a mental health component to my claim. Which is ridiculous – of course I am depressed and have PTSD. However, what this does is have them pause and re-review my claim at the 24 month period.

This has been as you can imagine the most stressful period of my life.

Attorney Stephen Jessup:

DJ,

I would be surprised if any attorney would charge you that high a fee to negotiate a lump sum buy out on your behalf. Please feel free to contact our office to discuss your claim further and the options available to you as they relate to our ability to represent you to explore a buyout.

Scott S.:

Hello, thanks for this great site.

I am 54 year old male and started LTD with Cigna Feb, 2013 my LTD is $3458 per month. They hired a consulting firm to apply for my SSDI which was just awarded with 20 months back pay of $28,900. I just got the check. They also told me to claim my kids as they figure another $14,500 will be awarded as well. I have 2 children, 18 and 11, I was told the back pay on my now 18 year old (turned 18 Dec 29, 2013) would result in a check made out in his name for approx. $6300, and the remainder would go to me since my 11 year old was a minor. Of course all this is due back to Cigna. They calculate approx. $43,000 overpayment. I have been awarded $1570 per month SSDI and $750 per month for my daughter till she is 18 which will be 10/2020.

1) What if my son did not turn the check over to me since he is now an adult, am I still responsible to pay that back to Cigna? I also learned he may have additional months because he was still in H.S. until May 2014 but did not graduate and is now still in school working on getting his GED.

2) If I live ’till 65 years old I figure my benefit pay from SSDI would be $2310 of the 3458.00 until my almost 12 year old turns 18 so Cigna would be paying approx. $1148 X 72 months = $82,656 until I am 60 and my little one is 18. Then I would have 5 years remaining with SSDI paying just roughly my $1600.00 per month for 5 years 60 months X $1858.00 (Cigna’s portion for 5 years) = $111,480. So over the next 11 years if my benefits were to continue Cigna would be out of pocket roughly $195,000. I just learned that If I can do some work, which is highly doubtful, I would be able to earn up to $1070.00 per month without affecting my SSDI benefit.

Bottom line question: is this a good time to try to settle? They have not offered, can I initiate and how much do you think I can settle for? The worst part of all this for me is that I had a nice life insurance policy that I can no longer afford and was told when I got hurt that I may qualify for a waiver of premium and they would continue to pay my life insurance. They eventually ruled I did not qualify, not disabled enough. I appealed, I lost! Now no life insurance for my family. Yet they hired a consulting firm to prove my disabiilty to SSDI and got it done. I hate Cigna and all they stand for, how can this logic be ethical? It’s all about them reducing their obligation and I am now out of life insurance and fear the worst for my family when I pass. I would like to keep my back pay and settle and have them out of my life, is this the best time to try to negotiate?

Thanks! Sorry for the long vent! :)

Attorney Stephen Jessup:

Scott,

If you have only been on since 2013, chances are Cigna will not be interested in negotiating a lump sum settlement. Typically they wait till after 2 years of benefits have been provided and/or you have passed into the any occupation period of disability.

Paula:

I am a 56 year old female currently receiving LTD benefits from Reliance Standard. I have been declared disabled by Social Security. My question relates to life insurance waiver of premium through Reliance Standard. I had applied for 5x my salary when employed. I know I will never be eligible for life insurance at reasonable rates again so this is very important to me. I completed the necessary paperwork requesting the waiver of premium in October 2013. I have called them several times and they continue to state that I will be receiving info back very soon. Still no word from them. Have you dealt with this issue? Should I contact my state insurance commissioner? Please advise.

Attorney Stephen Jessup:

Paula,

No. I cannot think of a time when it took over a year for a carrier to make a determination as to the Waiver of Premium. You indicated that you have called, but I would highly suggest you put your inquiry in writing and send it via certified mail/FedEx/UPS so you confirm and verify receipt. They will typically respond in writing to written correspondence.

Ivy Billings:

I am 56 year old lady, on Disability Insurance, due to mental disorder. I had Insurance through my work place and they have agreed to pay the waiver of premiums. However, they have denied my disability insurance. Does this make sense? What should I do in resperct to this?

Also; Case #2… I have three private insurances for which I have been denied due to 1. Pre existing Condition. 2. Mental disorder… I have fought and fought those cases but seem to be up aainst a brick wall. Can you possibly offer some good news or enlightement on this matter. Be aware, I live in Canada.

Attorney Stephen Jessup:

Ivy,

Unfortunately, if your policies are situated in Canada (meaning that is where they originated or were purchased) then we would not be able to assist you as we are not licensed to practice in Canada.

Mario M.:

I am a 42 year old man living in California that just signed a C&R with my employer’s worker’s compensation insurance company. I have Unum as a third party Ltd insurance which was offered through my employer but I solely paid the premiums. Unum wants to deduct my total settlement amount from my future payments minus my attorney fees even though the settlement is a lump sum, includes reimbursement for mileage and even though I have been P&S by my primary doctor prior to the worker’s compensation judge signing off on my C&R. Can Unum legally do this?

Attorney Stephen Jessup:

Mario, under most policies Unum does have the right to reduce its benefit by worker’s compensation and the language of the policy will often dictate how they will pro-rate lump sum settlements. You will need to secure a copy of your company’s policy to verify how Unum will apply any potential offset.

Chris:

I have been collecting ltd for 3 months it was approved in November 2015 I also applied for ssdi in November 2015 and was approved in February 2016 retro to November . My policy calls for a 5 yr payout max. With reliant, my question is are they likely to keep paying without issues since I was approved by ssdi so quickley and would a lump sum be possible? What kind of company are they and what should I expect from Reliant?

Attorney Stephen Jessup:

Chris, historically it would not be likely for a carrier to offer you a buyout so soon after an award for benefits, not to mention they have no affirmative duty under the policy to do so. Although receipt of SSDI is proof of disability, it does not in and of itself mean a private carrier has to abide by the ruling indefinitely. You will still need to meet any and all conditions under the policy as they relate to disability. Please feel free to contact our office should you have additional questions.

Chris:

Mr Jessup,
I guess my question was is Reliant a good company ? And the fact that they aren’t giving me any hassle and being approved so quickley by ssdi are they likely to hassle me like you read from so many other people or are they a company that’s likely to leave me be as long as the the status quo stays the same. In your opinion does Reliant settle these type of short (5yr) policies by lump sum or are they unlikely to?

Attorney Stephen Jessup:

Chris, I have no experience with them as it relates to any buyouts so I cannot speak as to their protocol as to same. Additionally, they are not a very common disability insurance company so there is not necessarily a lot of information as to their techniques, reputation, etc as there are for the larger disability insurance carriers. I am sorry that I can’t be of more help in answering your questions.

Nancy N.:

Sunlife has offered me literally less than pennies on the dollar for a buyout of my LTD policy for less than 30,000. I am less than 50 years of age and would normally have a salary of 55,000 if was still gainfully employed. I am wondering if they will make another offer, or if this pitiful one is the only one they will make. They said this one will be withdrawn in 14 days.

Thank you

Attorney Stephen Jessup:

Nancy, please contact our office with a copy of the letter so we can review the contents. Sun Life usually offers minimal value on a claim if they are intending to deny future coverage. There stands a chance that they are just trying to strong arm you into relinquishing rights under the policy.

Eve:

I am 45 years old female and started LTD with MetLife Feb, 2013 my LTD is $2368 per month. I was recently approved for SSDI which was just awarded $43,503. I just got the check. They also told me to claim my kids as they will be awarded as well. I have 3 children, 19, 18 and 16, this resulted in a check made out in their name except for the 16 year old.. Is this all due back to MetLife or is it for my children to keep since it was made out directly to them?

1) What if my 2 older kids do not turn the check over to me since they are now adults, am I still responsible to pay that back to MetLife?

2. Will MetLife be willing to negotiate a lump sum settlement with me? I’ve been on disability since February 2013. Its been over 2 years of benefits provided by them and I have passed into the any occupation period of disability by them.

3. Will I be in any legal problems if I keep the overpayment by SSDI? I would love to be able to catch up with my mortgage.

Attorney Stephen Jessup:

Eve, MetLife would almost certainly still have rights to recover all sources of DSSDI, even the amount sent to your adult children. MetLife has just recently begun negotiating lump sum settlements of disability claims so that could be an option for you. Legally, failure to repay the amount could result in MetLife sending you into collections if they are not willing to engage in discussions regarding a repayment plan. Also, a buyout could possibly be negotiated that takes into account the SSDI and DSSDI overpayments. Please feel free to contact our office to discuss.

T:

Hi, I am have been receiving total permanent disability payments since 1996 through approval by Maryland workers comp commission, from prince George’s county md. Paid through corvell company. Is this something that your office could handle for a lump sum payment ?

Attorney Stephen Jessup:

T, unfortunately, we do not handle worker’s compensation claims and would not be able to assist you. You would need to consult with a worker’s compensation attorney to determine what your options may be. Please feel free to contact our office as we may be able to assist you in contacting an appropriate attorney.

Manuel:

I get hurt at work in April 2016, my work claimed preexisting which was true but work probably contribute. I get attorney but in meantime I go on short term disability for a year because my work deny responsibility. My work take responsibility in April 2017 and paid Short term disability back and continue to pay me until September 1, 2017. At that time I file a claim with my Aetna LTD i pay through my company. I didn’t apply until then because I don’t need. Aetna tell me I take to long and should have applied over a year before. They deny me. I have OWN occupation for 2 year then ANY occupation. Do I have a case to appeal and then sue if I need to?

Attorney Stephen Jessup:

Manuel, we would need to see a copy of the denial letter and policy to determine your available legal rights. In some case untimely filing of a claim can bar you from having legal rights under the policy.

Deb:

Hi, I’m currently drawing cigna long term disablity and have been offered a lump sum buyout. I was injured in an auto accident that resulted in my disablity. There has been a long going auto lawsuit that has not been settled. If I take this the lump sum buy out, can Cigna come back and get over payment from my auto accident lawsuit once settled?

Attorney Stephen Jessup:

Deb, no. The settlement should waive all rights to all parties as it relates to the policy. You can ask that your attorney specifically request a clause in the release that indicates Cigna waives all rights to any potential overpayment stemming from the accident case.

M. Driscoll:

Hello. I had what I thought was a simple question. I am receiving LTD benefits and SS disability payments. My LTD benefit ends when I turn 65. I assumed that my disability income would then convert to retirement income.

Initially, I received approximately 1900/month from ssdi. When my LTD started, it reduced the ssdi payment to 1068/mo and paid 906/mo to me. When the LTD payment stops at 65, does the 906 return to the ssdi payment so that I am again receiving approximately $1900/mo.?

I also receive a disabled widow’s benefit, a small monthly amount. My husband earned more than I did. Should/Could my retirement payments come from his record?

Feel free to redirect my questions if this is not an appropriate forum.

Thank you.

Attorney Jay Symonds:

M, SSDI payments are not reduced by private group insurance benefits however private group insurance benefits are offset by SSDI benefits. The termination of your private group insurance benefits at age 65 will have no impact on your receipt of SSDI benefits. SSDI benefits do convert from Social Security Disability benefits to Social Security Retirement benefits once you reach retirement age but retirement age is not age 65 unless you were born before 1937. Depending on the year you were born they may not convert until as late as age 67.

Nate:

Hello-I was assaulted back in 2017 and it resulted in a TBI/brain hemorrhage. This left me with permanent short term memory loss. Cigna has approved my LTD 4 months ago and put me on a 2 year program. My doctor has ruled me unable to fulfill my prior work duties because of my condition. If I showed them written documentation from my PCP (which they requested) proving my condition, are they likely to buy out my policy? Thank you

Attorney Jay Symonds:

Nate, each carrier has its own guidelines regarding which claims may qualify for a lump sum buy-out. I suggest you contact our office and speak with one of the attorneys to address your specific questions regarding your situation.

George:

Hello,

I have a question I’m looking for an answer for. I was injured back in 2007 while on a job. Since then I have had three surgeries on the same shoulder. If I am approved for medical disability, am I entitled money for the injuries? As of today I am on workers comp, and is due for a hearing this month. Thank you for any information in regards to this question.

Attorney Rachel Alters:

George, I am not sure how to answer your question as I only specialize in private disability claims. If you have a disability policy through your employer or privately and you cannot work you can file a claim. Otherwise you would need to contact a workers comp lawyer.

Jody:

Hi my name is Jody. I receive 1,191.00 from The Hartford monthly sence 1996. It was reduced by the amount I get from SOC SEC DIS. I am 61, my understanding is that I will receive till 65. My question is would I be able to try for a lump sum buyout and would it be wise?

Attorney Rachel Alters:

Jody, you could ask for a buyout of your policy. Hartford will usually pay up to 80% of the present value of your claim if they agree to do the buyout. I cannot say if it is a smart decision as it is personal and depends if you are willing to take less money to get all the money up front. The positive is you no longer have to deal with Hartford.

Mary:

I recently had a STD claim with UNUM approved and have a pending LTD claim. I received a retroactive payment of 10,000 for the LTD claim but was told it was an overpayment because I was receiving California SDI during the period of coverage. I cashed the check before I was told that it was an overpayment and now need to pay UNUM back. However, I am curious if I can withhold repayment until my LTD claim is approved and offset it with my future benefit payments. If I wanted to request a buyout, how long would I need to receive LTD payments before I can request to do so?

Attorney Cesar Gavidia:

Mary, you may be able to reach an arrangement with Unum where they agree to withhold your LTD benefit until the overpayment is repaid. You would need to contact them and discuss what options you have for repayment.

Denora:

I had been receiving Ltd from Cigna since 2012, they paid me out a lump sum in 2018 of 80,000. I just revived a partially favorable decision from SSDI on July 8th 2019. Do I have to pay Cigna any back pay? My disability started on November 2015.

Attorney Jay Symonds:

Denora, there may be a number of variables at issue, I suggest you contact our office and speak with one of the attorneys to address the specific questions you have regarding your situation.

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