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According to statistics from the U.S Census Bureau, about 19 million American adults of working age are unable to work due to a disability. For business owners and employees who are incapacitated, critically ill, and unable to work, disability insurance coverage offers a form of financial support or income. Over time, your insurance carrier may approach and offer you a settlement offer (lump-sum payment), depending on different factors, to buy out your remaining future disability benefits.
Furthermore, once you accept a buyout and the insurer issues a check to you, you will no longer be eligible for any disability insurance benefits, including monthly payments. Therefore, before taking a disability insurance buyout, there are several factors to consider. A knowledgeable San Francisco, CA disability insurance claims attorney can help you understand what you should consider before taking a buyout.
At The Law Office of Bennett M. Cohen, P.C., we are committed to providing personalized legal counsel and strong advocacy to clients in disability insurance-related matters, including buyouts. As your legal counsel, we can enlighten you about the benefits and potential downfalls of accepting a disability insurance buyout and the factors to consider before taking one. Our firm is proud to serve clients in San Francisco and throughout the state of California.
THE BENEFITS OF A DISABILITY INSURANCE BUYOUT
A disability insurance buyout is a settlement offer by an insurance carrier to purchase a policyholder’s remaining future disability benefits. This involves offering the policyholder a significant lump-sum payment upfront in exchange for monthly payments on their disability insurance coverage. Here are some benefits of accepting a disability insurance buyout:
- The lump-sum payment serves as a boost for your future financial security.
- The lump-sum payment can be included in your trust assets or estate.
- The lump-sum payment can be used to settle debts and achieve financial stability.
- No need to worry about the possible termination of claims.
- Eliminates the need for regular validation of your medical record.
- The lump-sum payment can be invested for a higher rate of return or interest. This will benefit you and your loved ones.
- No need to worry about the deceitful surveillance tactics of the disability insurance providers.
POTENTIAL DOWNFALLS OF A DISABILITY INSURANCE BUYOUT
Though, taking a disability insurance buyout offers numerous benefits. However, there are certain disadvantages. Here are some potential drawbacks of taking a disability insurance buyout:
- Your monthly payments will stop automatically.
- You will no longer be eligible for future disability benefits.
- You are likely to receive a lump-sum payment considerably lower than the full value of your disability insurance claims.
- You may end up outliving the money.
- You may waste the lump-sum payment if you don’t have financial discipline.
- There are negative tax implications when you take a lump-sum payment.
The decision to accept a disability insurance buyout can be financial and emotional. A skilled California disability insurance claims attorney can evaluate your unique circumstances and enlighten you about the factors to consider before you take the disability insurer’s settlement offer.
FACTORS YOU SHOULD CONSIDER
Before accepting a disability insurance buyout, here are some vital factors to consider:
YOUR LIFE EXPECTANCY
Essentially, the disability insurance provider will offer you a settlement amount depending on your life expectancy. If you have a terminal illness or short life expectancy, the insurance provider won’t approach you with a buyout. Conversely, if your policy offers lifetime payouts and your family has a longevity history, it is advisable that you continue under your policy, even if the provider offers you a buyout.
AMOUNT OF TIME REMAINING ON YOUR CLAIM
Furthermore, the insurance provider will offer you a buyout based on your age, the time left on your claims, and your likelihood of untimely death or recovery. The longer the amount of time remaining on your disability insurance claim, the lower the buyout the insurance provider will likely offer you.
YOUR SOURCES OF INCOME
As mentioned earlier, accepting a lump-sum payment will automatically terminate your eligibility for monthly payments. Therefore, if your disability insurance benefits are your main source of income, you should only accept a settlement offer that can cover your financial needs until you get another income source or for the rest of your life.
YOUR MEDICAL DEBTS
Unfortunately, some disabilities or medical conditions require continued medical treatments and may be cost-intensive. You may need money to settle medical bills, co-pays, and deductibles. If you are facing financial hardship due to your disability condition, a lump-sum buyout can provide you with the needed funds or financial boost to pay off your medical debts.
YOUR CHANCES OF RECOVERY
If you have a permanent disability and you’re unlikely to recover enough to live a near-normal life, you should consider taking a buyout.
AVAILABLE INVESTMENT OPPORTUNITIES
Lastly, if you take a buyout, you may be able to invest your money for a higher rate of return. However, you should only invest your lump-sum payment in risk-free investments that can yield higher returns and interests.
However, disability insurance carriers only offer policyholders a lump-sum payment to save money. If you’ve been offered a disability insurance buyout, you should reach out to an experienced California disability insurance claims attorney before accepting it. Your lawyer can evaluate the details and terms of the insurance company’s settlement offer and help negotiate an improved payment that is worth the full value of your claims.
HOW AN EXPERIENCED ATTORNEY CAN HELP
Taking a disability insurance buyout can provide you with a sweet cash infusion to settle your debts. You can also achieve future financial security by investing in your retirement savings. However, monthly payments will stop automatically, and you are likely to receive a settlement amount lower than the actual value of your disability claims. Hence, it is critical that you consult with a skilled attorney to explore your possible options and determine the best course of action.
At The Law Office of Bennett M. Cohen, P.C., our attorneys are poised and ready to advise, support, and guide clients in all phases of disability insurance claims. As your legal counsel, we can review all the details, terms, and provisions of the insurer’s settlement offer and explain the long-term implications of taking a disability insurance buyout to you.
Are you considering a disability insurance buyout? Contact The Law Office of Bennett M. Cohen, P.C. today to schedule a simple consultation with a knowledgeable San Francisco, CA long-term disability buyout attorney. Our reliable team has the strong advocacy and dedicated legal guidance you need to make intelligent decisions. We’re proud to serve clients in San Francisco and throughout the state of California.