Lump-Sum Policy Settlement
If our client is interested in a lump-sum settlement, we use our extensive legal experience with disability insurance claims and carriers to advocate on our clients’ behalf during negotiations. Lump-sum buyouts typically occur in one of two scenarios.
If a court rules that an insurance company has acted in bad faith, the court may also determine that the policyholder should not have to continue his or her relationship with the company. Under this scenario, the insurer and policyholder present their respective estimates of the value of future benefits under the policy, taking into account factors such as the nature of the disability, mortality and morbidity (i.e. the policyholder’s health), and the estimated rate of return on investments. A jury then determines how much the future benefits are worth, and the insurer is ordered to pay that amount to the policyholder.
Alternatively, the insurance company may also offer, or we may request, a voluntary settlement in order to prematurely end the relationship with an insurer and provide our client with peace of mind. Insurance companies typically do not enter into voluntary settlements unless they believe that a policyholder is totally and permanently disabled and, in most instances, an insurer will not consider whether this is the case until a policyholder has been on claim for at least two years. In addition, if the insurance company believes there is any prospect of terminating benefits in the future, they will either refuse to settle or only offer to settle for an amount that dramatically discounts the value of the future benefits due under the policy.
When litigating or negotiating a lump-sum settlement, we know what a policy is worth and what settlement amount is fair. With knowledge of the insurance company’s practices and understanding of our client’s legal rights, we eliminate the unequal bargaining position that exists between the insured and his or her insurance company to get our client the desired result.