When your long-term disability claim is denied, you are generally required to file an administrative appeal if your policy governed by ERISA. If the administrative appeal is unsuccessful, you then must file a lawsuit. Given the complexities of ERISA, we strongly recommend you hire a long term disability attorney to assist you through this process.
At any point along the way, the insurance company may offer you a lump sum settlement. If this has happened to you, you may be wondering: should you accept a settlement offer for your long term disability claim?
There is no simple answer to this question. Every long-term disability claim is different. If you have a long-term disability lawyer, you should discuss these matters with your attorney. Regardless, below are some factors you may want to think about when considering a long term disability settlement.
Considerations After Receiving a Settlement Offer
An experienced long-term disability attorney will want to make clear several things as you consider any settlement offer, including the following:
1. Long-term disability appeals and lawsuits are very difficult to win. ERISA is designed to favor the insurance companies. The rules and the standard of review used by courts to decide these cases strongly tilts the balance in favor of the insurance companies. That's why many of these cases that are taken through litigation are decided in favor of the insurance companies.
2. Your best day in court is likely an award of past benefits and getting "back on claim". However, the judge cannot award future benefits or guarantee you will qualify for such benefits. As a result, once you're back on claim, you will be required to continue to provide proof that you are disabled.
3. There are time limitations in most ERISA long-term disability policies. For instance, most long-term disability insurance policies require you to be disabled from your own occupation during the first two years. After that, you usually must show that you cannot work at any "gainful occupation". This is a much higher level of proof.
4. Receiving a lump sum settlement may create an unexpected high tax burden. You should discuss this aspect with your financial advisor or accountant.
Reasons You May Want to Accept a Settlement Offer
Some factors that you may want to consider when determining whether to accept a lump sum buyout may include the following:
1. You have an immediate need for cash. Many individuals who are disabled have enormous medical bills and other liabilities and need cash as soon as possible. This is a personal decision and will depend on your own personal circumstances.
2. Your condition is improving and you're expected to be able to return to the workforce. In this case, the likelihood of you receiving disability benefits for the foreseeable future is in doubt. As a result, it may make sense to accept a lump sum settlement as soon as possible.
3. You figured out a way to be employed or otherwise make money. This will impact your ability to claim future disability benefits. In addition, you may be simply needing some lump sum to cover the time between the end of your disability benefits and the beginning of your employment.
4. You are facing a very serious medical condition with an short expected lifespan. If you don't have long to live, you may want to think about ways to maximize your benefits and the present time. This is a personal decision that you will require solid information from your treating doctors.
Our Kansas City Long Term Disability Lawyer Can Help
Barring any of the above circumstances, it is unlikely that a lump sum buyout offer is in your best interest. Our long-term disability law firm can help you understand and evaluate a buyout offer. We will help review your lump sum or buyout offer for free if you live in Kansas or Missouri.
For more information about long-term disability appeals and denials, please contact us at 816-203-0143 or by using the form below. We would be happy to provide a free review of your long-term disability denial letter to help you understand your rights and advise you with the next steps going forward.
You can also instantly download our long-term disability free guide, Danger: Proceed at Your Own Risk, which explains why insurance companies deny claims and how to fight back. Whatever you do, don't wait because these claims have short deadlines that affect your rights.