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Posted 4/29/2011 4:09 AM (GMT 0)
Hi everyone,

I have a private disability policy that I've been collecting on monthly since I was diagnosed with lupus...it's supposed to pay monthly until I'm 65. The insurance company is offering me a lump sum payout instead.

I was just wondering if anyone else has encountered this? Always nice to discuss thoughts and experiences others have had before making a big decision!

Thanks,
Posted 4/29/2011 5:13 AM (GMT 0)
Hi Lynnwood,

I have no personal experience and very few brain cells that fire coherently. What thought does occur to me is that if you have an accountant who does your taxes or friend who might be experienced in that area, he/she might be one to consult for the tax implications.

It is difficult to find investments that I can think of that are guaranteed to grow other than annuities...maybe this would be something.... That's it for my late night thoughts.

Good luck with your decision!

emmie
Posted 4/29/2011 5:21 AM (GMT 0)
Yup, I thought of all those pieces....just gathering bits from all our brains should eventually end up covering everything that needs to be considered! I'm sure I don't yet have all the bits in my head...lupus took a few dozen brain cells.

In my case the insurance was paid for with my personal after-tax dollars, so the monthly payments and/or the lump sum are tax-free. But for most people it is a taxable amount as it was paid for by an employer, pre-tax.

Now when taxes kick in and apply to anything I might want to invest in *after* the lump sum is received....got the accountant/tax pro at work on that!
Posted 4/29/2011 2:34 PM (GMT 0)
I would be careful too... I am no CPA or anything... but recently got my MBA and one thing I learned over and over is that the value of money changes over the years... if you have a lump sum now and then entitlement increases in future years to make up for inflation and all--then you might be out of money that you could otherwise get... Then again I don't know if it would ever change.

I also know that a "bird in the hand is worth 2 in the bush" so to have money now could be more helpful than later... Good luck on such an important decision. I am glad you have an accountant/tax pro at work on it. That would be a good place to start! Nicki
Posted 4/29/2011 5:34 PM (GMT 0)
I'm wanting to find someone to discuss the emotional/mental/spiritual effects they may or may not have experienced related to such an event.

Many pros/cons to both sides financially, but that isn't my concern right now (lots of professionals around to deal with those issues) it's my tender heart/emotions I'm trying to look out for!

Thanks
Posted 4/30/2011 3:40 PM (GMT 0)
Lynn,

Do you know what assumptions the settlement was based on?  The insurance company is assuming that you can invest this sum and produce X income what are their assumptions of return?  It is very difficult to produce a consistent and safe return today and if you invest in stocks or bonds or even mutual funds your equity can be wiped out in an instant as we have seen in the past decade or so.  Sometimes it is better to have a guaranteed monthly amount than gamble on a bigger but uncertain return.

One thing you can assume....the insurance company would not be doing this if it were not to their advantage.

Bill

Posted 4/30/2011 9:44 PM (GMT 0)

Hi!

I agree with Bill, the insurance company isn't offering out of the goodness of their heart, for sure

suetoo

Posted 5/1/2011 12:00 AM (GMT 0)
Just because it's good for them doesn't mean it's bad for me, win-wins *are* possible.

For instance, I don't really relish the thought of being hounded by them 2-3 times a year for 15-20 years. Which is likely with an illness like lupus which doesn't have a definitive test.

Anyway, was hoping to find someone who'd actually done this to see what stress/emotional kickbacks occurred.
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