If you are a high-income professional on claim, meaning you have filed for a disability claim with one or more LTD insurance companies, at some point you may be approached by the insurance company and offered a settlement. The settlement, a lump-sum – typically in one payment, will require you to waive any future claims against your long term disability insurance policy.
Should you accept it? What are the risks? Are there other benefits being waived with this settlement? Jason Newfield has negotiated many lump sum settlements for his long term disability insurance clients. As an experienced long-term disability insurance attorney, he understands that making the decision to negotiate a settlement or continue with ongoing benefits requires a careful and strategic approach, particularly for high-income individuals who often have more at stake. In this blog post, we will explore the challenges high-income professionals face when considering whether to retain an LTD attorney to negotiate a settlement, where their claim will be paid one last time and no further benefits will be received from their insurance policy.
Understanding the Implications of a Lump-Sum Settlement
A lump-sum settlement provides the claimant with a lump sum, often one-time payment in exchange for the future cessation of benefits. (Sometimes, if taxable, benefits are paid in installments to defer or defray taxes). For a high-income professional, the lump sum option may be particularly attractive for several reasons, such as the desire for financial independence, or the need to move forward with a sense of closure and certainty. However, high-income individuals must understand the full implications of accepting a lump sum.
While it can seem like an appealing solution, the lump-sum payment is not being offered out of the goodness of the insurance company’s heart. A team of actuaries has done the calculations to determine the cost of the claim to the company and it has deemed it worthwhile to offer a claim rather than continuing to pay. Offers occur more often when interest rates are higher (as most recently), because of present value discount calculations.
Offers occur in two forms. One is where there is NO negotiation, take it or leave it. This is outlined in an offer letter. The other is where usually, the first settlement offer is a small amount of what you would receive if the disability benefits continued for the long term. Additionally, there are sometimes tax implications to consider. Depending on the specific structure of the benefits (LTD or IDI and who paid premiums), it may be subject to income tax, which could significantly reduce the overall value of the settlement. High-income professionals must carefully weigh whether accepting the lump sum is truly beneficial in the long run or whether the ongoing payments may provide greater financial security, especially if their disability is permanent.
Do You Need an LTD Attorney for the Settlement Negotiation Process?
The short answer is yes – if negotiations are to occur. An experienced long-term disability insurance claims attorney becomes an invaluable asset – having insight into the levers to pull to secure a higher resolution, and the arguments worth developing further to support those issues. High-income professionals may feel confident in their ability to make decisions independently, given their success in the professional world. However, negotiating with disability insurance companies with the inherent complexities of the process is an entirely different challenge, and these companies have teams of adjusters and attorneys working to minimize resolution payments.
Jason Newfield begins by providing claimants with the information they often do not have about the value of their claim, and how this process will work. Discussing the likelihood of the professional’s ability to return to work, the ongoing support of the provider, and other factors will guide the discussion. His knowledge of what the claim is worth goes far beyond simple calculations, as there are many other aspects in determining the claim’s value. Each client will carry personal intangibles which are often significant, despite carrying no financial weight. Incorporating that into the analysis, we then works to secure a higher lump sum resolution for closure.
Future Financial Security and the Challenge of Preserving Wealth
For high-income professionals, the future financial security of their family and themselves is often a major consideration when deciding whether to accept a lump-sum settlement. A substantial portion of their income may have been tied to their career, which may no longer be an option due to their disability. As such, the ability to preserve wealth becomes a priority.
Many high-income individuals have complex financial situations, with investments, business interests, and other assets to consider. In these cases, the individual may have different risk tolerance levels, which can influence whether they prefer the certainty of a lump sum or the security of ongoing monthly payments. A settlement that is too low may leave them financially vulnerable in the future.
Jason Newfield works with clients to create a strategy that balances these concerns, working with financial planners and other experts to develop a comprehensive plan for the settlement funds. This ensures that the claimant’s financial needs are met not only in the short term but also for the future.
Psychological Impact and Emotional Stress
When a large part of your identity is tied to your work, becoming disabled and at the mercy of your condition, a schedule of healthcare visits and the worry of having the insurance company decide not to pay your claim takes an emotional toll.
The offer of a large settlement and never having to deal with the insurance company again can create an emotional response that should be considered when deciding whether or not to engage a disability insurance attorney to handle the negotiations.
While the desire for closure and certainty is understandable, professionals must also be mindful of making decisions under duress or based on a desire to move forward quickly. Jason Newfield provides clients with an objective perspective and prevents claimants from making impulsive decisions that might negatively impact their long-term financial well-being.
The Complexity of Policy Language and Exclusions
Disability insurance policies are extremely complex and filled with exclusions and conditions that may not be immediately apparent to someone unfamiliar with insurance law. High-income professionals may find themselves facing complicated policy language that impacts their ability to collect benefits or qualify for a settlement.
For example, a professional might have a policy with certain exclusions for pre-existing conditions, or they may be uncertain whether their disability qualifies under the terms of the insurance policy. Long-term disability attorney Jason Newfield has the expertise to read and interpret these policies, protecting the full benefits to which you are entitled.
Closing Thoughts
The decision to retain a long-term disability insurance attorney for settlement negotiations is not to be taken lightly, particularly for high-income professionals who face additional complexities due to their financial situations. Navigating the challenges of lump-sum settlements and considering the implications on long-term financial security require an informed and nuanced approach.
If your LTD insurance company is offering a lump sum settlement, you are invited to call Jason Newfield to discuss your situation and see if he might help. The call is free and the information to be provided could be life-changing but surely informative.
