A common question from our clients is: “How much are my long term disability benefits worth?” Determining the current value of your benefits (also referred to as the “net present value”) isn't as complicated as it may seem on the surface. It can also be useful for many reasons.
- Your long term disability insurer may have offered you a “buyout” or a settlement of your benefits. That is, the insurer may have offered a lump sum payment in place of the long term disability benefits you receive every month. In that case, you’ll want to know how the lump sum offer compares to the total value of your benefits.
- An insurer may have terminated your benefits, and you would like to know just how much the present value of those benefits is worth. Is it worth appealing the termination of your benefits? Or if you have already lost at the appeal stage, is it worth litigating the termination of your benefits?
- You may need to know what the present value of your long term disability benefits is for purposes of deciding whether you have sufficient assets to take on some other additional financial burden, such as a home mortgage or line of credit.
Below we’ll explain some of the key terms and the considerations you should take into account when determining the net present value of your long term disability benefits.