When you are approved for disability insurance benefits, these benefits are typically paid to you in monthly installments for the duration of your time away from work. Once you are medically cleared to return to work, if ever, these benefits will stop and you’ll still make payments on your disability insurance policy in case of future disabilities.
There are some instances, however, when taking your disability insurance benefits as one lump sum is the best option for you. You may need to speak with your insurer to see if this is even an option. Just like with many financial decisions, choosing to take your disability settlement as a lump sum has both its benefits and its drawbacks.
Why You Might Need a Lump Sum Payment
Some people want to buy out the remainder of their disability insurance policy because they aren’t expected to live for much longer and want to make sure their family members receive the benefits they’ve already paid for. Unlike with life insurance, disability insurance doesn’t get transferred to your dependents in the event that you pass away.
Another reason why someone might want to take disability benefits as a lump sum is simply to avoid having to deal with the insurance company anymore. There are always specific criteria that must be met and rules to abide by in order to keep your benefits when you are still paying on a policy, so buyouts are a often great option for those who want to take their money and run.
Reasons Installments Can Make More Sense
Taking your benefits in standard monthly installments could be the better choice for you if your disability is temporary and you hope to keep your policy once you return to work.
If you take your benefits in a lump sum, you’ll no longer be able to collect additional benefits once the policy has closed; if you get sick or become disabled at a later date and have already exhausted your benefits, you may be out of luck and in a financial predicament.
Getting regular installment benefits is also likely to be a better option for you if you want to rely on regular income while you are out of work. Many people who take lump sum payments fail to budget their funds adequately and discover that it’s easy to spend the funds you’ll need to support yourself later.
Call a Los Angeles Disability Lawyer
If you are considering taking your disability benefits as a lump sum but aren’t sure whether it’s the right choice for you, speak with a capable Los Angeles disability lawyer at Haffner Law. We can advise you in accordance with the specific details of your case.
You can schedule a free case evaluation today by filling out the online contact form at the bottom of this page or giving us a call at 1-844-HAFFNER (423-3637).
(This is an attorney advertisement by Joshua Haffner)