[taurus7225]

I was contacted by the insurance company explaining how my lost wages were calculated. I am unable to return to the job I did before my injury. The insurace company sent me to Voc rehab. They found me a job making 25$ per hour less then I was making. They told me my wage differential will be paid to me through my life time which they have calulated at 42 more years. the insurace adjuster said they want to make me a lump sum offer based on presant day value... How does this work?

[4eyedbuzzard]

The calculation itself is pretty simply. It's the present value of an annuity(a future series of payments). You can find several calculators online that do the math.

The inputs to the equation aren't simple though. Is the 42 year life expectancy from actuarial tables? What is the discount/interest rate being used? What is the number of compounding periods? Does it settle the medical and rehab portions of the claim as well?

They won't offer you the true net present value based on realistic interest rates as that would only benefit you. Paying out a large lump sum has to have a benefit for the insurer as well beyond just closing the claim. You get a large sum of money up front(tax-free, of course, and you can enjoy it now, they can never stop paying, etc - hey, you could die the day after and your family would still inherit it). They want a discount for doing this. And their first offer will definitely not be their best or final offer. Lots of WC claimants are hurting bad for money after being out a while on comp, and the insurance companies bank on this. They make low ball offers and hope to settle quick and cheap. A lawyer's going to get 20%, but if he gets you 21% more than you can get on your own, well, you get the picture.

Given that you're settling on a claim that significantly affects your entire future, and a large sum of money, I have to suggest that you get a good WC attorney to make sure you get everything you're entitled to.

[4eyedbuzzard]

Just wanted to add to consider into any limo sum settlement the factors of:

future increases in the benefit level

income you earn as interest/dividend/etc on that lump sum when you invest it will be taxable income

Sorry to confuse the issue further. Just want to make sure you understand how complicated it is figuring out a realistic settlement that's fair to you. I don't like seeing people get hosed.

If they contact you prior to getting an attorney, DON'T sign anything. Tell them you want an attorney to review any lump sum offer.

See if you can get a recommendation for a good WC attorney. Generally the county and state bar associations have referral services for free or $25.

[taurus7225]

I have done everything the insurance company has asked me to do as required by law. They have never and still haven't stopped paying me my benefits. They are now paying me the 66% difference from what I am making now. the adjuster said they normally try to figure it at 6%. I researched online tonight and it says in Illinois the interest is calculated at the maximum rate of interest payable by member banks of the federal reserve system on passbook savings. she told me that my benefits were going to be calculated by 42 yrs

[4eyedbuzzard]

I have done everything the insurance company has asked me to do as required by law.

I'm sure you have.

They have never and still haven't stopped paying me my benefits. They are now paying me the 66% difference from what I am making now.

They are doing what they are supposed to do.

the adjuster said they normally try to figure it at 6%.

Figure it? Figure what? The interest rate on the present value calculation?

I researched online tonight and it says in Illinois the interest is calculated at the maximum rate of interest payable by member banks of the federal reserve system on passbook savings.

What is this in relation to? The current passbook interest rates are barely over 1/2 %.

she told me that my benefits were going to be calculated by 42 yrs

That would be about right if you are 34-35 year old male, or a 39 year old female.

Please be careful. I know you have done the right thing, and so has the insurance company up until now. But no matter how nice they are, they are not your friends. Unfortunately, our system doesn't work that way. You are a liability. Every dollar they pay you comes out of their profits. Up until now, they have had to pay you exactly what the state of Illinois makes them pay by law. But lump sum settlements amounts aren't decided by the state. You need to have someone who really understands workers comp lump sum settlements protect your benefits. I don't know exactly how much you are making or made before, but based on simply a straight 40 hour week at a $25/hr difference in wages, your 66.66% difference would be a minimum of $667 per week for 42 years. At a 6% rate of return the present value of your future payments is well over $500,000 This is a very crude estimate. And it's not legal advice. The advice is that if you don't understand this process you need help from someone who does

Hope all works out well for you.

[taurus7225]

I have a very close friend that has been helping me most of the way through, she is a unit manager for an insurance company and she handles work comp claims every day. I think that is why it has gone smooth so far.
I am a 35 yr old male and was a Mater plumber... you hit the numbers head on with my pay....thank you for your help

[Valentino Rossi]

Also by having a good attorney when it comes time to negoiate there will less chance of them lowballing you! I have witnessed this myself. I wish you the best of luck.