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  1. #1
    Join Date
    Sep 2016
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    Default Getting a Lump Sum Settlement of a Disability Insurance Benefit

    A person who receives long-term disability has been offered the opportunity to get a lump sum buyout of all future benefits. The insurance company is offering them 50% of their future benefit. Is that a reasonable settlement, or should they ask for more?

  2. #2
    Join Date
    Sep 2005
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    Default Re: Getting a Lump Sum Settlement of a Disability Insurance Benefit

    Whether or not it is reasonable is an individual determination. As for whether they might be able to get more, if this is a first offer from the insurance company then it's safe to say that it's an amount that is favorable to the insurance company. That doesn't necessarily mean that they'll agree to pay more, but it's safe to say that there is room for improvement of the offer.

    The reasonableness of a lump sum settlement turns in no small part on the assumptions made by the person who is discounting the future benefits to their present value. Different assumptions about future interest rates can have a significant impact on the present value of a future benefit. That's really something to discuss with an accountant or actuary, more than a lawyer.

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