Differences Between Social Security Disability Insurance and Supplemental Security Income
Differences Between Social Security Disability Insurance and Supplemental Security Income
October 26, 2018
Working in Philadelphia While Receiving Social Security Benefits
Working in Philadelphia While Receiving Social Security Benefits
November 10, 2018
Show all
Should You Accept a Lump Sum Disability Settlement?

With some Philadelphia long-term disability claims, an insurance company may offer an individual a one-time lump sum settlement, also referred to as a “buyout” or “washout settlement,” instead of making monthly disability payments. The two situations in which this scenario is most common are when a person has a chronic condition that will not improve and he or she would receive benefits for several years, or when a lawsuit has been filed and the insurer wants to resolve the case without reinstating benefits.

Should You Accept a Lump Sum Disability Settlement?For many people, the idea of a single large insurance payment can seem somewhat attractive, but there can be advantages and disadvantages to accepting these offers. Lump sum payments can be beneficial for certain people, but not necessarily all.

If you have been offered a lump sum settlement to resolve your long-term disability claim, you should contact Edelstein Martin & Nelson, LLP for help determining whether the payment is really in your best interest. Our firm can provide a complete evaluation of your case when you call (215) 858-8440 to schedule a free consultation.

Pros and Cons of Lump Sum Disability Settlements in Philadelphia 

The primary advantage of accepting a lump sum settlement is that you effectively end your relationship with the insurance company. The settlement is effectively the end of your case, and you will no longer have any reason to contact the insurer.

Another advantage of accepting the washout payment is that you avoid potentially having your monthly benefits cut off on the future. Thus, you do not have to worry about having to fight to have benefits restored later.

Depending on the size of the lump sum payment, it could also be to your advantage to have all of your money at your disposal right now. The settlement you are offered is usually what is considered the “present value” of all payments you would be expected to receive in the future.

The time value of money in Philadelphia disability case settlements works much like lottery winnings. Whereas a person could accept a series of monthly payments that have a higher total, the lump sum payment is usually less but is of higher value to the person because he or she has all of the money at his or her disposal right now.

Other important factors should not be ignored either. For example, a claimant’s life expectancy is an important consideration that insurers will often seek to take advantage of.

A person who accepts a lump sum settlement also needs to keep in mind the tax implications of sun a decision. You may also want to be sure that a cost of living adjustment is calculated in determining your settlement amount.

Long-Term Disability Benefits Lawyer in Pennsylvania

Do you need help determining whether a lump sum payment is a good deal for you? Make sure your contact Edelstein Martin & Nelson, LLP. Our firm represents clients in the greater Philadelphia area and Delaware. Call (215) 858-8440 or contact us online to schedule a free consultation.