Settling a serious disability claim with your long term disability lawyer is one of the hardest things you’ll have to do. In fact, most claims settle before trial; court can be much more taxing on an individual. Your long term disability lawyer can take a few approaches to ensure your long term disability claim does not go to trial:
- Buyout or Lump Sum
- Claim Punitive Damages
If you have been at odds with your insurance company, reinstatement of your plan may not be agreeable; it is understandable for someone who has been fighting at lengths to recoup their health or promise of an adequate lifestyle to not want to have to deal with their insurance company at-present.
Buyouts, Lump Sum Settlement Offers
The Present Value
Usually a “lump sum” payment with help of a long term disability lawyer will suffice for a settlement. With a settlement, the insurance company offers to pay the present-day value of benefits. This will usually take into account the overall value of future benefits. Because this can be such a large settlement, you have the option of investing it and recouping your monies on the interest over the course of your hold on the money. Most insurance companies assume that you will do this and factor it into the cost when settling with your long term disability lawyer.
Because the insurance company will lose the interest in paying the money now instead of monthly in the future, their offer for the settlement will be reduced to a “present value”. They will reduce the amount of money which you could earn on the amount in-future. Because of interest rates, this can amount to tens of thousands of dollars. Usually, a 3% to 5% interest rate will be accounted-for when determining the “present value” of a settlement offer.
Mortality Tables are used to estimate your life expectancy before the payout is determined – in order to evaluate the time at which your payments would have stopped had the company paid monthly, or on special terms. Depending on your state of health and age, a long term disability lawyer will fight to ensure the insurance company will not penalize your health based on their poor estimate of your expected lifetime with reference to a mortality table. Insurance companies will also discuss the lengths at which your relatives have lived for. We recommend you discuss this at length with your doctor – who should give you a good estimate. After all, they are your doctor!
Certain policies will tax benefits based on your agreement with the health insurance company, a long term disability lawyer will be able to determine whether your monthly benefits are taxed or not. If you are unsure whether your long term disability benefits are taxed, you should contact your insurance broker, union representative or your employer. In 2015, the Canadian Revenue Agency made significant changes to the taxability of long term disability claims. From a general understanding, issuing lump sum payments to lawyers will result in lawyers having to pay taxes on the monies to Revenue Canada. If you have any questions or concerns, contact us and our long term disability lawyers will be able to help. An intimate review of your policy will dictate how taxation will work on payouts. There may also be way to minimizing the amount of taxes taken out of your insurance company.
In some cases, an insurance company will have conducted a serious breach of obligations to pay settlement offer monies to their benefit-holder. Our belief is that most companies are seeking to capitalize on their claimants; thus, will try many routes to deny and toss-out a claim. Even if the insurance company will pay a lump sum, there is still a possibility of recouping monies based on bad faith in a case against the insurer. At trial, the courts will decide whether or not the insurance company has acted in bad faith. Damages may be awarded against the insurer on behalf of your case. In your settlement, a good long term disability lawyer may seek punitive damages to cover the broad performance spectrum of your insurance company.
In order to maximize the amount a long term disability lawyer will seek in a settlement, they will be required to take many facets of your policy, lifestyle, and considerations into account. It is a task which requires professional skill and knowledge in the area. At TSF Law, we’re always there for you – contact us today for more information on how we can help maximize a long term disability claim.