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    Settling LTD claim

    Good morning everyone,

    I am looking to settle my LTD claim. It pays a proportion of my preinjury salary, and has another 27 years left. They've just sent me an offer, which is really low. Has anyone got experience in doing this? How much of the depreciation is normal (compared to monthly amount multiplied? They've offered me about 1/3 of that)?

    My question is about legal representation. Long story, but I'm a British guy living in the UK used to work for an American company, hence the insurance coverage. The whole insurance system in the US very confusing for an outsider, and UK lawyers won't go near this understandably as it's far beyond their expertise as well.

    If I get a lawyer involved in negotiating a better settlement, how much do they normally take out of the award? Does it depend on the state they are based in, or my employer (NYC)? A lot of these firms seem to cover the whole country.

    Thanks

    #2
    It's very normal for those offers to be 1/4-1/3 of the raw dollar value. The industry standard is to apply a 4% annual 'deflation' on the purchasing power of the dollar due to 'inflation', which is a tad high for raw monetary inflation but not unrealistic given prices go up more than that for other reasons year over year as well. Then they take a cut off the top of that to bring the offer just below the line where it makes it in their likely interest it will save them money based on when they have decided (using actuarial science) they believe you most likely to die.

    They won't share any of this with you other than the % they applied for depreciating the value of the money (this is often in the offer itself.) They don't really negotiate, but you could try, I guess. That % is really the only wiggle room, but usually these are 'take it or leave it' gambles in their part.

    They should have offered you some funds to pay for legal counsel to review it on your behalf. If they didn't, I would ask for that. It is required by law in some states in the US, but since you're in UK it might not apply. Maybe it works based on what state the policy contract was signed (where you worked maybe or where the company was incorporated). That's worth looking into IMO, although most of these companies don't break the law, as a matter of course, or accidentally. The laws are written such in their favor they don't really have to. Sadly.

    IMO: It comes down to your willingness to risk the likelihood of you dying prior to the fulfillment of the term, and what kind of (if any) survivorship exists in the plan. If you have dependents and there is no survivorship you may be able to invest the 1/3 and benefit them more in the long run. If there is no survivorship, it might be better to risk it to keep the income coming as long as possible. It is also worth something to have them out of your life for good, as they're likely making you have annual, or regular, medical recertifications of your disability and also re-proving your 'other income' situation at some regular intervals. They count on that annoyance having value to you, and also hope you'll mess up on that at some point so they can cut you off for non-compliance.

    So, if they suck to deal with, you think they might be right about you dying before the end of term, there is no survivorship, you think you could do more with 1/3 of that value right now (via investment or something else), and/or any combination of those plus other things I didn't think about...then it might be worth it.

    Otherwise, rest assured, they didn't make an offer that wasn't in their (statistically generated and likely correct) financial benefit.

    It's not a favor they are offering.

    (There may also be larger tax considerations with a big, one time, lump sum in a single tax year.)

    Its a tough decision to make, to be sure, and usually only comes once per contract term, at the 'break point' when if you accept it they stand to benefit the most. From here on out, the longer you live, the worse their chances of getting out paying you less become.
    Last edited by Oddity; 7 Oct 2020, 10:31 AM.
    "I have great faith in fools; self-confidence my friends call it." - Edgar Allen Poe

    "If you only know your side of an issue, you know nothing." -John Stuart Mill, On Liberty

    Comment


    • Zambi
      Zambi commented
      Editing a comment
      That is extremely helpful, thank you very much.

      They didn't specify the percent value of depreciation that they have applied, but it's clear it's a generous one (To themselves, I mean). I didn't realise there wasn't much wriggle room. They have offered $400 for consultation with a lawyer which I will take them up on and see where it goes. At the moment I'm young and healthy and don't really need the lump sum, but as you say would really rather be done with the stress of constantly having to re-prove my disability, work and income status. Thanks again.

    #3
    Originally posted by Zambi View Post
    Good morning everyone,

    I am looking to settle my LTD claim. It pays a proportion of my preinjury salary, and has another 27 years left. They've just sent me an offer, which is really low. Has anyone got experience in doing this? How much of the depreciation is normal (compared to monthly amount multiplied? They've offered me about 1/3 of that)?

    My question is about legal representation. Long story, but I'm a British guy living in the UK used to work for an American company, hence the insurance coverage. The whole insurance system in the US very confusing for an outsider, and UK lawyers won't go near this understandably as it's far beyond their expertise as well.

    If I get a lawyer involved in negotiating a better settlement, how much do they normally take out of the award? Does it depend on the state they are based in, or my employer (NYC)? A lot of these firms seem to cover the whole country.

    Thanks
    I have workers comp in FL (30 years). I have been approached a few times to settle my case. The last time was 2 years ago where I was offered a big settlement. I had to say no. There was no way I could get the care I needed with what they offered me. That is something you have to also consider.
    Last edited by HACKNSACK44; 8 Oct 2020, 9:46 AM.

    Comment


    • Zambi
      Zambi commented
      Editing a comment
      Thanks for the responding. It's something to think about.
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