With long-term disability insurance claims it is basically where the insurance company and most disability plans say they would pay monthly benefits until the individual reaches the age of 65. So, if you are injured very young and get disabled, the insurance company might offer to pay a lump sum instead of the monthly benefits for the life of the policy. Generally, the offer is beneficial to the insurer. If there is an offer, it’s best to consult an attorney whether it is a beneficial decision for you.
Q: Is the insurance buy out usually a lowball offer?
It depends on the company but often they will offer to pay you the value of this stream of payments. However, they will use the present value rate and a low interest rate which makes the present value of that huge payment low.
Another thing that insurance companies do is pay a monthly benefit but under the plan, the insurance company gets to deduct social security disability payments and retirement benefits. There are a bunch of things the insurance company will use to lower what they offer you on a lump sum payment. A lot of times the insurance companies send out mailings to people and make them fill out an attending physician statement every three or six months, or every year. They will ask them to go to a doctor and get proof that they are still disabled and generally just harass them. The individual will have to decide whether or not it is worth taking the lump sum so that they don’t have to continue dealing with the insurance company harassment.
Q: If I get better after I am approved for lifetime and disability insurance benefits, do those benefits end?
Yes, you will need to go back to work again because you are no longer disabled. That is why every three months or six months or whatever the policy terms say, they get an attending physician statement. The insurance company will deny the disability benefits and you will go back to work.