LTD Buyout 2027 Calculator
LTD buyout: present value of remaining monthly disability payments. Typical offer 35-60% of total face value. Aggressive negotiate.
| Monthly benefit | — |
| Years remaining | — |
| Discount rate | — |
| Face value (no discount) | — |
| Present value | — |
| Fair settlement (80% PV) | — |
| Insurer offer | — |
| Offer as % of PV | — |
LTD (Long-Term Disability) buyout offers are typically 35-60% of present value. Calculate the true PV using a reasonable discount rate (4-5%) and negotiate to 70-85% range. Critical to use disability attorney — first offers are systematically low.
Why Insurers Offer Buyouts
Insurers want to close their reserves. They offer 30-50% of PV expecting acceptance. Disabled claimant cash-constrained → accepts low offer. Attorneys negotiate to 70-90% of PV. Tip: get attorney before signing anything — adversarial process.
Tax Treatment
If you paid premiums with after-tax dollars: lump sum tax-free. If employer paid (group LTD): lump sum fully taxable. Mixed (you paid some): pro-rata. Get IRS opinion or attorney advice before accepting lump sum tax-free claim.
Settlement vs Continued Benefits
Lump sum advantages: certainty, control, single payment, escape insurer hassle. Continued benefits: protect against deflation, no investment risk (insurer keeps PV risk). Choose lump sum if: you have disciplined investment plan + age 50+ with reduced longevity risk.
Last updated May 2026. Sources: DOL ERISA LTD Guide.