A long term disability buyout can make sense in some cases, but accepting one means giving up future monthly disability benefits for a lump sum.
Before you accept a buyout offer, look at how much you may still receive under your policy, the strength of the medical evidence supporting your disability, and what could happen if you continue receiving monthly benefits instead.
The right answer is different for everyone. What matters is understanding what the insurance company is offering and what you would be giving up in return.
What Happens If I Turn Down a Long Term Disability Buyout?
Turning down a buyout does not guarantee that your monthly benefits will continue forever.
The insurance company can continue reviewing your claim and asking for proof that you still meet the definition of disability under your policy. If they decide you no longer qualify, they may try to terminate your benefits.
That uncertainty is one reason a buyout can be tempting. You receive money now instead of continuing to rely on monthly payments from the insurance company.
But once you accept the buyout, you are giving up the future benefits covered by that agreement.
3 Things to Consider Before Accepting a Long Term Disability Buyout
1. How much could you receive if your benefits continue?
Start with your long term disability policy. Look at how much you receive each month and how long your benefits could continue if you remain disabled.
Then compare that with the amount the insurance company is offering you to settle the claim.
A large lump sum can look attractive, but you need to understand how it compares with the benefits you may be giving up.
2. How strong is the medical evidence supporting your disability?
Your medical records are an important part of your long term disability claim.
MRIs, scans, testing, doctors’ notes, and other medical records can help document why you cannot work.
Some valid conditions, including chronic pain and fibromyalgia, can be harder to measure with a specific test. That makes consistent treatment and detailed medical records even more important.
Keep seeing your treating doctors and make sure your records explain your condition, your limitations, and why you cannot work.
3. What happens if your benefits are denied later?
If you turn down the buyout, the insurance company may continue reviewing your claim.
If your long term disability benefits are later denied or terminated, you may have only 180 days to file an appeal.
Your medical records, doctors’ opinions, vocational evidence, and other information submitted during the appeal can become part of the administrative record if the case later goes to federal court.
That is why it is important to keep your medical records organized while you are receiving benefits instead of waiting until there is a problem.
Is a Long Term Disability Buyout Worth Accepting?
It can be, but not every buyout offer is worth accepting.
The decision depends on your policy, your medical condition, the strength of your claim, the amount being offered, and the future benefits you would be giving up.
A lump sum gives you certainty now. But if the offer does not fairly account for the benefits you could continue receiving, you could be giving up a significant amount of money.
Before making the decision, make sure you understand exactly what the insurance company is offering and what happens to your future benefits if you accept.
Received a Long Term Disability Buyout Offer?
If your insurance company offered you a buyout, talk with our team at Donahoe Kearney before accepting the offer.
We can review your long term disability claim, the buyout offer, your policy, and the medical evidence supporting your disability so you have the information you need to make the decision.
If your benefits have already been denied or terminated, contact us right away. You may have a limited amount of time to appeal.
Contact Donahoe Kearney About Your Long Term Disability Claim
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Have Questions About a Long Term Disability Buyout? Contact Our Team