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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.

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