Decision-Making on a Lump Sum Offer from Long-Term Disability Insurance
Hello! I’m faced with the choice of whether to accept or decline a lump sum offer from my long-term disability insurance.
After crunching the numbers, I found that the lump sum is almost equivalent to nine years’ worth of monthly benefits, even after taxes. To arrive at this figure, I reduced my monthly benefit by 35%, as I anticipate that if I refuse the lump sum, I may need legal assistance to navigate potential future efforts by the insurance company to reduce or deny my benefits. Previously, I had to appeal a denial, and disability attorneys typically take about 33-40% of the benefits, although I opted for a flat fee for my appeal help.
Having become disabled at 30, I still have a significant amount of time ahead of me, and I worry about my mental, emotional, and financial ability to face another potential denial. The aftermath of that experience, which coincided with the challenges of COVID, continues to affect me, as I still deal with PTSD. While I don’t see a clear path to returning to work, the lump sum feels like a guaranteed option.
If I choose to reject the offer, what tactics might the insurance company employ to safeguard their financial interests for the remainder of my benefit period? I’m particularly concerned about the added uncertainty regarding SSDI. If my SSDI payments were to be reduced, my long-term disability benefits would revert to their pre-SSDI amount, which is more than double my current payments due to the offset. If this scenario were to affect multiple individuals, what responses might the insurance company take?
At this moment, declining the lump sum feels like diving into an unpredictable realm where my benefits might be subjected to varying strategies for reduction or denial. I would greatly appreciate any insights or advice that could help me make a more informed decision. Thank you!
Deciding whether to accept or reject a lump sum offer from your long-term disability insurance is indeed a significant choice, and it’s understandable to feel anxious about the implications. Here are some considerations that might help you make a more informed decision:
Financial Stability: Accepting the lump sum provides immediate financial certainty. If it equates to nearly 9 years’ worth of benefits, that’s a substantial cushion during a time when you may not be able to work. Consider how that could support your living expenses, healthcare, and any unforeseen costs.
Future Uncertainty: You mentioned concerns about the insurance company potentially finding ways to reduce or deny benefits if you reject the lump sum. It’s true that insurance companies may look for reasons to limit payouts, especially as claims age. Understanding their strategies can sometimes be challenging. A lawyer familiar with insurance claims might offer some insight, but as you noted, legal fees can be steep.
Mental and Emotional Health: Given your background with PTSD from the previous appeal process, prioritizing your mental and emotional well-being is crucial. If navigating the complexities of ongoing claims feels overwhelming, accepting the lump sum might save you from additional stress.
SSDI Considerations: You’re right to consider how changes in SSDI could impact your long-term disability benefits. It’s essential to stay informed about SSDI policies and any potential reforms. If you do reject the lump sum and something changes with SSDI, you should be prepared for how that could affect your benefits, knowing they may revert to a higher amount if SSDI gets cut.
Legal Consultation: You mentioned you had a positive experience with a flat fee lawyer during your appeal. If you feel comfortable, it might be worth consulting with a legal expert again—perhaps a few attorneys focused on disability insurance—to gauge their perspectives on your situation and provide clarity on the potential risks and benefits of both options.
Ultimately, trust your instincts and consider what feels right for both your financial situation and peace of mind. It’s a complex decision, but weighing these factors thoughtfully can guide you to a conclusion that aligns with your priorities and capacities. Good luck!