This is really a math question that you should consider by reviewing your finances and cash flow. Here's the deal though, they would not be offering you a cash payout if they thought it would cost them more than paying you your monthly amounts. Keep that in mind. They are trying to convince you to take a payout because it will cost them less money. Take it or don't take it but they are not trying to do you any favors. As far as your specific question go, (1) If you do not take the money then for sure the carrier will require continued verifcation of disability. (2) You may get an offer of a higher percentage if you ask but it may be simply standard operating procedure for them to offer the percentage that you have. If you are thinking about taking the payout absolutely demand more than their offer. All they can say is no. With regard to the tax question, you really need to ask a CPA. Hope this informaton helps.
I have handled a few LTD buy-outs, so I'll add my 2 cents here. 60-70% is the approximate range that LTD carriers are willing to pay to buy-out an ongoing LTD claim, but that 60-70% is not calculated based on the value as a normal person might calculate it. When disability carriers settle claims (whether disputed or undisputed claims), they do so based on the "net present value" of the claim.
Since I don't know the numbers on your wife's case, I'll use an example I gave to someone else to illustrate: 16 years of benefits at $800 per month adds up to about $153,000, but that does not take into account the time value of money. The money you are owed for next month is worth $800 today, or pretty close to $800, but the money you are owed for your last month of benefits 16 years from now is not worth $800 today. It's worth what Unum would need to put in the bank today which, once compound interest is calculated, would give them $800 to pay you 16 years from now. Settling an LTD claim is kind of like taking a lump sum when you win the lottery - you get much less when you take it all at once than when you take it over 20 years. The problem is, you never know if Unum is going to keep paying for the next 10 years, or cut you off tomorrow.
Please, please find an attorney to help you on this. Yes, it is possible to negotiate with them and get a little more money - probably not a lot, but some. There are just so many little details involved that it's just not worth the savings of going it alone. In fact, many LTD carriers will offer to help you pay an attorney's fee if it means they can get the claim closed/settled. Either way, best of luck to you.
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This is an offer, and you have a right to counter-offer or reject. Unum, if you do not agree on a buy out, does have a right to periodically assure themselves the disability is continuing.
As for the wisdom of accepting a buy out, all of the relevant information has to be considered.
Regarding taxation, there may be a number of options.
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