Lump Sum Buy-Outs of Long Term Disability Insurance Benefits

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

A lump sum buy-out of your long term disability insurance benefits occurs when a disability insurance company offers to buy-out the insured's monthly disability insurance benefits in exchange for a one-time lump sum payment and the insured accepts the buy-out.  For example, if you are 35 and are receiving $1,500 per month in disability benefits until the age of 65, that would equate to $540,000 in total disability insurance benefits paid to you during the 30 year period.  What if the disability insurance company were interested in negotiating a buy-out for $100,000?  Would you prefer to have $100,000 today, or continue to collect $1,500 per month over the next 30 years?  

Your disability insurance company will review several factors to reach its opinion on the value of the buy-out.  When calculating your buy-out offer, the insurer takes into consideration various factors including:

  • Mortality tables
  • Bond rates
  • Disability abatement probability
  • Present value calculations

As the policyholder, you should consider a number of factors when weighing a buy-out offer, including:

  • Future value of lump sum amount
  • Your realistic life expectancy
  • Risk of insurer terminating your disability benefits
  • Solvency of disability insurance company
  • Freedom from continued insurance company reviews of your eligibility
  • Cashing out and seeking other opportunities

A disability insurance policy buy-out may or may not make sense for the affected person.  Such offers need to be reviewed on a case by case basis. 

You can reach Miami Long Term Disability Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email J.P. directly at [email protected]urattorneys.com.

1 Comments
I was told by the Insurance that Missouri does not allow lump sum payouts for long term disability, is this true, what states DO Allow for lump sum payments? I'm thinking of moving to my son's home and wondered which states allow it. Would help pay for the many medical bills I am experiencing.thank you
by cgroner August 4, 2013 at 10:47 PM
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