Disability Insurance Q&A With Glenn Kantor
Q: Do insurance companies normally reinstate a policy after reversing an earlier benefit denial or do they offer a lump-sum settlement?
A: If you win your pre-litigation appeal, they will reinstate your benefits and continue to pay your benefits under the terms of your plan. At some time in the future, if the carrier determines that nothing will change in your status, it might offer you a lump sum buyout, which will most certainly include a significant discount from the true value of your future benefits.
If your appeal is denied, and you enter into litigation, and the matter settles before trial, the result will typically be a buyout of your claim. If you proceed to trial, and you prevail, the Court is limited to reinstating your benefits. Once again, if benefits are reinstated by the Court, at some time down the road, the carrier may offer to buy out your claim.