Pros and cons of lump sum payouts
By: Emma Neynens, Associate Lawyer
When you receive an offer of a lump sum payout to settle your case, there are a few things to consider, depending what type of case you have:
Disability and Section B Benefits
If you were denied benefits or your benefits were terminated and you pursue action against the insurer, they may offer a lump sum payout to settle your action.
You will no longer have to deal with the insurer, comply with their requests, continue to get updated medical notes, and continue to prove your disability.
You will have a larger sum of money right away instead of receiving it in monthly increments.
The insurer will likely offer less as a lump sum than you would receive if you opted for reinstatement of benefits.
If you have an ongoing tort action against a third party, accepting a lump sum can affect your claim.
Legal fees may be greater if you signed a Contingent Fee Agreement.
Motor Vehicle Accident Settlement
If you were injured in a motor vehicle accident and pursue an action against the responsible party, their insurer may offer a global number to settle your action. Things to consider when looking at a global amount versus a detailed amount with a breakdown for the various heads of damages are as follows:
Income tax payable;
Effect on disability benefits;
Divorce proceedings or support obligations; and
Court approval for parties under disability.
If you receive an offer for a lump sum payout or a global settlement and have questions, please contact the Mike Murphy Accident Team for your free consultation.
DISCLAIMER: The publications on this website are intended to provide information of a general nature and not legal advice. The information contained in this publication is current to the date of the publication and may be subject to change following the publication date.