Long Term Disability Settlement For Lump Sum

John Darer • May 13, 2019

Avoid Lump Sum Disability Settlement | The Math Sucks!

Disability Settlement

 

WARNING! Taking a lump sum disability settlement from your employer or your employer paid long term disability (LTD) insurance company could be a very big financial mistake.

1.Employer paid disability insurance payments are taxable.
2.When you are receiving employer paid LTD benefits, payments are taxable in the year received, whether insured or not.
3. The lump sum you would be paid will be fully taxable if the LTD insurance is an employer paid perk.
4. A lump sum settlement is taxable in the year received.
5. A lump sum settlement could push you and your spouse (if your spouse works and filing jointly) into a higher tax bracket.
6. A lump sum payment could impact asset sensitive public medical assistance to the extent you are receiving it and your expected family contributions for financial aid.for your children's edication
7. In arriving at the lump sum that you are being offered the employer or LTD insurer is using a discount rate to come up with present value of your future payments. The discount rate being used is probably taken from a government or corporate bond index and doesn't take into account the taxes that would be due on a lump sum settlement.
8. In addition to taxes, if you hire a lawyer to represent you the lawyer will be entitled to legal fees and expenses, subject to your retainer agreement with the lawyer or law firm.
9
. Failure to take this into account in taking a lump sum settlement, could be a financial disaster for the employee/claimant, possibly leaving a net of only 1/3 of the settlement and little hope of replacing the income replacement they had previously enjoyed. Don't be fooled!

Structured Settlements for Employer Paid Disability Claims or Employer Paid LTD Insurance Claims

A structured settlement, funded using a non qualified assignment mechanism or periodic payment reinsurance, enables the payee to establish an income stream that is similar to what the employee/claimant was receiving while receiving payments from the employer or employer paid disability insurance.

What if the Employer/LTD Insurer Will Not Agree to a Structured Settlement?

If an employer and insurers are unwilling to sign non-qualified assignment or enter into a reinsurance agreement, then the employee/claimant should seriously reconsider the value of the employer's or employer paid LTD insurer's lump sum settlement offer, because the settlement math truly sucks.

Do The Disability Lump Sum Settlement Math
Discount 1 The higher discount rate used by the employer/LTD insurer which fails to take into account taxes you will pay PLUS
Discount 2 The discount from your attorney fees PLUS
Discount 3 The discount from the taxes you actually pay

Discount+ Discount+ Discount=SUCKS








 

USAA structured settlements
By John Darer July 16, 2025
USAA Life Insurance Company, an A++ rated insurance company, issues structured settlement annuities with 1%, 2% and 3% COLAs. USAA Life structured settlements are exceptionally compatitive on lifetime benefit payments with long duration certain periods for ages under 35.
MetLife Structured Installment Sales Now Available in New York
By John Darer July 8, 2025
Owners of highly appreciated NY businesses or NY real estate may benefit from a structured installment sale tax deferral program as an alternative to a 1031 exchange. MetLife's structured installment sale program is now available in NY and in all 50 states. Call 888-325-8640 for more info
what is a qualified assignment
By John Darer July 8, 2025
A qualified assignment is part of the process to establish a structured settlement that enables a Defendant, Insurer, or Qualified Settlement Fund, to achieve a complete novation of the future periodic payment claim established by suit or agreement, through a substitution of obligors.
structured settlement annuity
By John Darer July 2, 2025
An annuity and a structured settlement walked into a bar, how do you tell them apart? 4structures' John Darer reviews the differences for you right here.
lifetime structured settlement annuity lake tahoe
By John Darer July 2, 2025
A lifetime structured settlement annuity turns part of your settlement recovery  into guaranteed income you can’t outlive that is contractually guaranteed by a regulated life insurance company. A lifetime annuity is sometimes referred to as longevity insurance.
Budgeting and Settlement Planning
By John Darer July 1, 2025
Structured settlement annuities can be very helpful to the budgeting process by providing guaranteed income streams and deferred lump sum payments tailored to specific budget needs and time frames identified in the settlement planning process.
secondary market annuity
By John Darer June 28, 2025
Structured settlement receivables are often deceptfully marketed to investors as annuities. When the originating structured settlement factoring company buys structured settlement payments in a structured settlement factoring transaction, they are buying a receivable not an annuity.
constructive receipt structured settlement
By John Darer June 21, 2025
Avoid constructive receipt if a structured settllement or structured attorney fee is to be established. Care must be taken to avoid constructive receipt.
USAA Life Insurance Company structured settlements
By John Darer June 9, 2025
Financial services provider USAA ranks 94th on Fortune 500. USAA Life Insurance Company, which earns the top rating of A++ from AMBest is often super competitive on longer term payment streams.
Prudential Income Advantage Indexed Structured Settlement Annuity
By John Darer June 2, 2025
John Darer reviews Prudential Income Advantage structured settlement annuity, which provides indexed structured settlement annuity option with the potential to grow personal injury settlement funds while offering protection from market declines. 2 IRS Private Letter Rulings!
More Posts