Most individuals who sign on the settlement dotted line are perfectly content and happy with their decisions to rid themselves of insurance harassment and abuse. However, there are some, who after making a decision to accept lump sum payments as full settlement of claim, go through a period of mourning when monthly benefits no longer arrive. Although this doesn’t happen in every case, it happens often enough for me to write about it.
Perhaps without realizing it, some insureds live through a build-up of stressful anticipation and fear just before monthly checks arrive, followed by relief and a sense of protective paternalism when the money actually arrives in the mail. Insureds live through the nail-biting worry of “I hope I get my check this month”, followed by, “thank God, it’s here.”, month after month and year after year. Over time Insurance companies become very much like parents, who pay their kids an allowance every month. Worry followed by overwhelming relief becomes an emotional habit that’s hard to break.
Second, as long as tangible cash benefits still arrive, there are those who associate the money with the career or job they once had. In a strange way, insureds my not fully accept the loss of a career or occupation as long the money is regarded as a substitute for personal identity and self-worth. As many of you know, our culture and work ethic encourage us to believe in the looking-glass self that defines us by what we do for a living. When asked the question, “Who are you?”, most Americans will respond, “I’m a secretary”, “doctor”, or “fireman.” We define ourselves in terms of how we make money – that’s the American way.
Post Settlement Syndrome is a process of “mourning” the loss of receiving a monthly benefit even when intellectually insureds know it was the right decision for them to make. Characteristics described above, such as the habit of overwhelming stress, followed by relief/security, and the identification of benefits with self-worth, can push insureds into “regret mode” wherein for a period of time insureds tell me they wonder whether a settlement was the right thing to do.
Insureds describe reactions of continual crying, not being able to eat or sleep, and constant worry when there are no monthly benefits to look forward to. “Perhaps I did the wrong thing…..What about the economy? Did I get enough money to live on? I’m panicking because I know there’s no monthly benefit anymore. What do I do?”
Allow me to further explain that DCS Inc. takes the position that decisions to settle disability claims are individual life decisions and neither a consultant nor an attorney should advise anyone to take or not take a settlement. The role of settlement counseling is to provide knowledge concerning calculations, present value, discount rates, process and value, so that insureds can have information necessary to make good decisions on their own. Once the decision is made to sign a settlement release and accept a payable lump sum the relationship between insurer and insured is forever severed.
Post Settlement Syndrome seems to involve a sudden realization that former jobs, careers AND monthly benefits are gone, and for a period of time there is no focus whatsoever on the lump-sum sitting in the bank. Old habits are hard to break, and although there is no monthly benefit check’s arrival to worry about anymore, insureds who have signed on the dotted line substitute “settlement stress” for “benefit stress” and the cycle repeats itself for a period of time.
In addition, once monthly benefits checks cease to arrive, there is total realization of loss of career followed by confusion. If we, as Americans, identify ourselves by what we do for a living, and the monthly disability benefit goes away, there can be a period of re-examination and definition of self and what’s in store for the future.
Mourning a settlement decision is actually the pathway to ultimately achieving financial freedom and a desire to have the quality of life that, at least in part, caused you to settle the claim in the first place. Knowing why you’re feeling so awful and regretful after accepting an insurance settlement is a first step to moving forward. There are some insureds who are so physically and emotionally affected by Post Settlement Syndrome that they actually call the insurance company and give back the money. While we don’t recommend doing this, we certainly understand it. (If you had an attorney negotiate the settlement for you, there really is no turning back!)
Disability claims are not all business and financial reserves; there is a very personal and human side to managing through the disability claims process including emotions, stress and worry after the settlement process.
Here are a few helpful suggestions that may help with Post Settlement Syndrome:
- If you receive a lump-sum settlement offer, think it through. Read the letter carefully and determine if it makes sense.
- Draw a line in the middle of a sheet of paper. On the right side write in all of your living expenses including prescriptions, rent/mortgage payments, doctor’s bills etc., and on the left side all sources of income if you were to take the settlement. If you have a spouse who is still working, include his/her income along with any other sources of income from rents, interest or dividend income. Determine if there is a surplus or deficit.
- Explore investment opportunities with either a financial advisor or CPA before accepting the settlement. How will you invest the settlement money to provide interest or dividend income in the future?
- Talk to your CPA about any tax consequences. This is a real cost and reduces the amount of actual cash available in the future.
- Discuss the option of settlement with your spouse or partner and agree on any changes in lifestyle, or downsizing that may be necessary. The important thing is to make decisions everyone in the household can agree to and live with.
- Think about any emotional conflicts or ongoing issues with your insurer that may be pushing you to accept a settlement when financially it may not be the right thing to do. Have clear expectations as to why you are moving in the direction of settlement.
- Ask yourself if you have the skills and personality to manage money well. Lump-sum settlement won’t do you much good if you spend it all in 6 months.
- Make settlement decisions based on the probability of future financial security balanced with any emotional goals to be free from insurance scrutiny.
- If you do not understand any aspect of the settlement offer, obtain help and assistance from those who know.
- Decide for yourself and your family whether a decision to accept a lump-sum settlement offer is right for you.
There is life after an insurance settlement, but sometimes you have to do the work to feel comfortable with your decisions.
Knowing why you’re feeling so depressed after an insurance settlement is the first step toward achieving your own family goals for the future. The good thing is that Post Settlement Syndrome does end and most people do not regret their decisions to settle.