If you are already receiving long-term disability but are thinking about a lump sum buyout for any reason, it is important to consider all aspects and to consult with your ERISA lawyer first. Where lump-sum buyouts may be beneficial to some, others find them lacking. Reasons to consider a lump-sum buyout include:
- Not having to be accountable to the insurance company. Being monitored and tracked by the insurance company in order to receive payment is not enjoyable for anybody. A buyout of benefits allows you to live your life without the constant shadow of having to prove, again and again, that you do actually suffer from a disability. Constant documentation and medical corroboration become things of the past.
- Not having to worry about your disability claim being denied or terminated. Having payments end at the discretion of the insurance company and under their specific clauses is a constant fear of those who depend on those disability benefits. A lump sum agreement can prevent the insurance company from terminating a claim once the claimant falls under the category of being unable to work “at any occupation”.
- Peace of mind. There always exists the possibility that the insurance company offering the benefits may go bankrupt, insolvent or shut its doors, unable to pay outstanding or due benefits. A lump-sum buyout ensures that the claimant is not suffering financial hardship should this happen.
- Doing what you need with your benefit payments. While receiving monthly payments, that money is to be budgeted for paying monthly living expenses. If you should get a lump sum buyout, you can use those funds where needed and where you see fit; investing the money when and where desired.
Remember, that every situation is different and you should get advice as to whether a buyout is the right step for you and your circumstance. Discuss the options with your disability attorney before making the determination.