Once you’ve made a claim against your disability insurance policy and met all of your insurer’s demands for additional documentation and evaluations, you’ll probably find yourself in a waiting game. You obviously want the insurer to agree you are disabled and make payments in accordance with your policy.
When that doesn’t happen, though, you may face a long battle to get the money you deserve. Realizing many claimants simply need cash, some insurance companies will make a settlement offer right off the bat. Other may wait until you secure legal representation and appeal a denial. Some may drag out the process, leaving you to make a settlement offer yourself. In any case, a settlement can be appealing, but before you sign on the dotted line, there are some important facts you need to know.
You Can Say No
Sometimes, when you receive a settlement offer, you may be hesitant to say no out of fear that it could be your only chance to receive any type of compensation. You might think if you do not accept the offer, you cannot make a counteroffer or hold out for more money — or worse, you may fear not accepting the offer means automatic denial of your claim. However, you can reject your insurance company’s offer. You are under no obligation to accept any settlement the insurer offers, and you have the right to request a better offer. Your attorney will help you evaluate any offers and determine your best course of action, but never feel as if accepting a settlement is your only option.
Determining What Is a “Fair” Settlement Is Complicated
It’s important to understand your insurer’s settlement offer is not going to be the result of multiplying the amount of your monthly benefit times the number of months of payment. Insurers use complex calculations to determine the Present Day Value (PDV) of your policy, which is the amount of your expected benefit minus any compound interest that would accrue on your policy over time.
In addition, most insurers reduce benefits by the mortality and morbidity rates, or the likelihood you will die before the benefit is paid in full and the expected reduction of life expectancy because of your disability. These calculations vary, and insurers don’t reveal the numbers they use. The upshot is that most initial settlement offers are for far less than the actual policy value. The complexity of settlement calculations only underscores the importance of seeking legal advice for disability insurance claims in Michigan or wherever you live.
Settlements Must Be Reviewed
You insurance company has made an offer, and you’ve decided to accept, or vice versa. So now you collect your check and go home, right?Not exactly.
When a settlement is reached, a judge reviews the offer to ensure fairness to both sides. The impartial judicial review ensures neither side is exploited and that everyone’s best interests are taken into account. In some cases, such a review works out in the claimant’s favor, as the judge may determine the settlement amount is too low. Rarely does the review find in favor of the insurer and require a reduced payment.
Settlements Come With Costs
When the insurance company presents you with a settlement offer, you might feel relief at the amount of cash coming your way. Before you get carried away, though, keep in mind that accepting a settlement comes with costs. You will need to cover attorney’s fees.The money could be taxable.
You also may have to give up the right to future compensation for the injury. For example, if you accept a settlement but then have complications requiring medical treatment a few years later, you will not be able to make a claim on your disability policy to cover your treatment.
Accepting a settlement could also reduce the amount of future Social Security Disability benefits, so it’s important to work with your attorney to determine the real amount you will receive.
Settling Could Bring Only Short Term Gains
Opting to settle your disability claim rather than embark on a drawn out appeals process or court battle might be expedient in the short term, reducing your anxiety and the hassles of going to court. However, you could end up receiving far less money than you would have otherwise. You will have to determine the level of risk you’re willing to accept before you make a decision.
Never accept an insurer’s settlement offer without thoroughly reading the terms; ideally, you should have an experienced attorney guiding you through the process. It is possible to get the money you’re entitled to via settlement, but you need help to manage the process and avoid losing your much-needed benefits.
Hi. Aarushiana Singh is a para medical professional who is an expert of management and hospitality . She has completed B.Sc (computer science ) and BAMS from Calcutta University . Finally, she has completed MA (Journalism) from AIMT New Delhi Media Management , Speaker, Writer and Photographer. Inspired to make things looks better.
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