Disability claimants may be surprised to find that — despite the fact that they have never lapsed on insurance payments and are submitting a reasonable disability benefits claim — the insurer response is unaccommodating. Disability insurers employ a number of questionable tactics in order to force the claimant into a vulnerable position. For example, if you have been rendered permanently disabled due to a degenerative condition, the insurer may deny your claim, delay your claim, or undervalue your claim. Doing so gives the insurer substantial leverage during later negotiations.
Oftentimes, disability insurers use the “lump sum buyout” to avoid having to pay long-term benefits, or to end the insurance dispute altogether. Lump sum buyouts are not necessarily unfavorable to the claimant, however. Accepting a lump sum buyout is a perfectly reasonable option in some cases.
Let’s explore the basics of an insurance buyout.
What is a Lump Sum Buyout?
In the disability insurance context, a lump sum buyout — otherwise known as an insurance settlement — is effectively an offer to purchase the claim at-issue. Stated simply, the insurer offers to pay some agreed-upon amount in a lump sum, and you (the disability claimant) must agree to abandon your legal rights under the policy. You will not be entitled to receive further benefits under the policy, nor will you be entitled to sue the insurer for damages.
Lump sum buyouts are often used as a way to clean up what may appear to a messy insurance dispute. For example, rather than entering into a long and expensive dispute over the benefits at-issue, the insurer may offer you a smaller settlement in the form of a buyout. This is especially common in situations where the merits of the disability benefits claim are not immediately clear.
Sometimes, lump sum buyouts are cleverly put forth to divest you of your legal right to sue and recover additional (and potentially significant) damages in litigation. For example, if the insurer has acted with bad faith in handling your disability claim, then you could secure both compensatory and punitive damages through litigation — the buyout serves as a last ditch persuasive effort to discourage you from continuing with litigation and exposing the insurer to additional liability.
Lump Sum Buyouts Merit Careful Consideration
Though you should always be wary of any tactic employed by an insurance company, there are many circumstances under which a lump sum buyout is advantageous for the claimant. Lump sum buyouts give you access to the funds (often tax-free) sooner than you might otherwise get access to them, thus giving you the ability to invest the funds more aggressively. Further, lump sum buyouts avoid the hassles and concerns about delayed payments, later disputes, and premature termination of benefits. A lump sum buyout may be attractive simply because you’d like to avoid dealing with the insurer in the future.
Making a decision about a lump sum buyout is difficult. We therefore encourage you to speak with a qualified disability insurance lawyer for guidance.
Consult a Skilled Team of Miami Disability Insurance Lawyers for Further Assistance
Recovering benefits for a disability claim — even if your claim is legitimate and the evidence seems to clearly favor your side — can be quite challenging, particularly if your insurer takes a more aggressive (even hostile) approach and chooses to dispute some aspect of your disability claim. In those situations, a buyout option may be offered. Buyouts are worth serious consideration, though the alternatives must be weighed carefully.
Here at Ver Ploeg & Lumpkin, P.A., our attorneys have represented disability claimants for over 20 years, helping them secure the benefits to which they are entitled. We understand the contours of an insurance dispute, and the tactics often utilized by insurance companies to force an unfavorable settlement compromise. Our attorneys will work closely with you throughout the dispute process so that you are fully apprised of your rights, and made aware of the advantages and disadvantages of all the available options.
Call (305) 577-3996 or submit an online case evaluation form to schedule a free and confidential consultation with one of the experienced Miami disability insurance lawyers here at Ver Ploeg & Lumpkin, P.A.Share