Say you are 40 years old and became totally and permanently disabled. Your insurance company is paying you long term disability benefits. Are you entitled to ask the insurance company to instead give you all money up front in one big payment?
Well you can ask. And the answer is maybe. If the insurer is making regular payments and there are no issues then you cannot obligate the insurance company to pay you in advance the and in full benefits up to the age of sixty five.
However, there may be situations where an insurance company may want to make a single payment to close their file. Or there may be situations where you can compel the insurer to make payment in advance.
For example, if there is absolutely no doubt that the disabled person will in fact be disabled until age sixty five then it’s very likely that the insurer will want to pay out in one lump some and close their file. Keep in mind the insurer is only required to pay present day value of future benefits. It’s a complicated calculation but usually means less than a straight line addition because once a lump sum is paid it also earns interest.
Things get a little trickier when the person is totally disabled but it is not certain that they will continue to be disabled until age sixty five. Under most disability policies the insurer has the right to periodically have the disabled person assessed medically by as many different specialists as is reasonable to get a reliable medical opinion. This can be a real hassle to the disabled person and very often the insurer takes full advantage.
And it is at this point when most insurers deny payment of benefits. They obtain a medical opinion that the person is not totally disabled. Often a disabled person who has been denied benefits after an insurer medical assessment will believe that the doctor was ‘bought’ by the insurer. This reaction is totally understandable.
Often when a person has been cut off benefits and hires a lawyer and the lawyer makes a compelling argument as to why the insurer was wrong to deny benefits the insurer will often want to resolve the file and will often offer a lump sum payment resolution instead of simply a re-instatement of benefits.
If a lawyer can convince a court that the insurer has acted in bad faith and denied benefits then then there has been a breach of the duty of good faith and a lawyer can argue that the insurer must make a lump sum payment as it would be unfair to required the disabled person to have to continue to work with the insurer.