A buyout of your future LTD benefits is a
risky proposition. 

A buyout of a disability claim occurs when the insurance company offers you a lump-sum payment in exchange for you giving up all of your future rights to receive or claim benefits under the policy.  In some circumstances, the insurer will propose a buyout "out of the blue" or offer a buyout, at our client's request.

 

This can be a tempting option for some clients who would prefer to receive a lump sum payment upfront rather than receiving ongoing monthly disability payments. However, it is important to carefully consider the terms of the offer and seek legal advice before accepting a buyout.

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We have decades of experience negotiating buyouts of our clients' ongoing LTD claims under both group and individual LTD policies.  We urge you to contact us if you need our help weighing the risks and determining if the insurance company's proposal is fair; as well as knowing how you should respond to a proposal; and how the buyout will impact your life and LTD claim, in the future.

 

We will discuss your claim and your medical condition as well as your prognosis and plans for the future.  We will also discuss your finances and the risk of no longer having a monthly income once the lump sum payment is spent.  We will weigh the cost and benefit of a "divorce" from your LTD insurance company and help you decide if accepting a buyout offer is worth the risk. 

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We can also help you decide if and when you would like to propose a buyout to the insurance company.  The timing of such a request, in the context of your medical condition and the status of your CPP Disability claim, will be important to the success of your proposal and your desired outcome.

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Top Five Factors to Consider for a Buyout

 

In making your decision to accept a buyout or propose a buyout of your LTD benefits, our Top Five Factors to Consider are:

1. Your Financial need: If you need immediate cash to cover essential expenses, accepting a buyout may be a viable option. However, if you can manage your expenses without the lump sum, it may be wiser to keep receiving the regular payments to ensure ongoing financial stability.

2. The long-term impact: Accepting a buyout means giving up your future rights to receive disability benefits, which can be a significant loss if you are unable to return to work or your condition worsens or you face new disabilities. The amount offered in the buyout may not be enough to compensate you for the potential loss of future benefits. 

3. Your mental health: If your dealings with the insurance company have caused you serious emotional distress to the extent that your condition is aggravated whenever you must communicate with them.  Ongoing communication is a requirement under the LTD policy. The only way to end communications is to accept a buyout.  The financial risk may be the price you pay for your mental health.  You may hope that you recover faster when you  are no longer required to communicate with the insurance company.  However, there are no guarantees.

 

4. Your pension, benefits and employment status: A buyout could result in serious consequences to your pension, if your disability pension is conditional on you receiving monthly LTD benefits.  Your employer may be notified and terminate your employment and extended health benefits if you are no long on approved LTD or if they believe you will never return to work due to your disability.  The waiver of your life insurance premiums will end and you may lose your life insurance coverage or you may need to convert it into an individual life insurance policy and pay your own premiums at a higher cost.  

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5. Legal and financial advice: Before accepting a buyout, it's crucial to seek professional advice from a lawyer or a financial advisor who can explain the legal and financial implications of the decision and help you assess your options.

Ultimately, the decision to accept or reject a buyout of disability benefits depends on your individual circumstances and goals, and requires careful consideration and consultation with experts. 

 

You may also be wondering what happens if you reject the buyout offer from the insurance company or they reject your request for a buyout offer.  The answer to that question is that we never know exactly what an insurance company will do.  We do have some idea based on our experience.  It is best to speak with us about your specific case rather than speculate and cause any unnecessary anxiety. 

 

We encourage you to contact us if you need help with a buyout.