AboutBruce Julien Expertise I can answer questions on and raise issues clients overlook in the areas of Estate Planning as far as taxes and distribution flow problems, Asset Management as far as appropriateness of assets and allocations for a desired goal and the value a consumer gets for their costs, Tax Planning related to Income and Estates, and Insurance/Annuity questions particularly in light of suitability to the consumer.
Experience I became a CPA in 1991 and began offering financial advice in 1992. I am a Registered Investment Advisor which means I sign off on putting clients' interests first in a fiduciary role.
Education/Credentials BA in Accounting, University of Maryland 1990
Expert: Bruce Julien Date: 6/28/2008 Subject: buyout offer
Question I am 61 years old born 06/07/1947 I am getting $427. @ month for a long-term disability it pays until I am 65. I will get 59 more payments for a total of $25,193. Aetna Insurance has offered to buy me off for $13,000. Is this a good deal or not? Should I ask for more. If so what would be a fair (reasonable) amount.
Answer It might be complicated beyond this forum based on your other financial planning concerns but in a vacuum:
They are discounting your payments at about 13%. If you can invest the $13,000 at 13%, you will have $25,193 in 5 years. If you can't get that rate of return, you will have less than $25,193 in five years and would be better off taking the monthly payments.
If you can get only 3% on your money, you need about $21,700 to break even. Doubt they offer you that much. Splitting the 3% and 13% to a midpoint of 8% it is about $17,000. I'd still take the payments.
I haven't figured in the benefit to you of investing the :427 a month in your own bank at a rate of return.
Of course if there is a bad man chasing you for his $13,000 you owe him, or that medicine you need costs $13,000, you better take the money today right?
