One of the ways insurance companies will "get" you -- they know that you need cash, now.
If your long-term disability insurance company (the Hartford, Guardian, MetLife, MetMutual) determines that they may be on the hook for your benefits for a long time, they may offer to "buy out" your policy by paying you a big payment all at once (lump-sum). If you were to accept the lump sum, you would no longer have to provide continued proof of disability. On the flip side, they no longer have an obligation to pay you.
Generally speaking, the insurance company is going to save money by giving you a lump sum if you are going to be out of work for a long time. Accepting a lump sum makes sense only if one out of the four following conditions apply to your situation:
You truly have to have the cash, now.
You know that you are going to die soon, and the insurance company doesn't know this.
You are almost recovered and will soon be able to return to the workforce.
You have learned make money in a different occupation and/or:
You need the lump sum payout to "bridge the gap" while you are working on getting your earnings up.
If none of these conditions apply to you, then it is generally not in your best interest to accept the buyout offer.
Give us a call to see if your offer is reasonable. We’re happy to help.