A lump sum payout means that the Insurer offers you an amount of money and then basically says they owe you nothing more - go away and don’t ever sue them again LOL. They offered me just under a year’s worth of payments (which I then have to pay taxes on and my lawyer). My LTD policy allows for me to be on Disability until I’m 65. So when they cut me off - I had to sue them because they wouldn’t accept my appeal. Most Insurers don’t reinstate - they just say “nope” you haven’t proven you’re disabled - therefore we’re not paying you any longer. So once legal action is taken against them - they opt for a one time payment - and it’s usually such a lowball amount it’s laughable. So you have to make sure you have a strong enough case that could put you both in Court - which is NOT what they want because if they lose - they usually have to pay all legal costs and that’s hugely expensive! Your lawyer would advise you as to whether they think your case is strong enough to go to Court - otherwise they try to come to a consensus on what they think is fair (which it’s usually not - but it’s better than nothing).
If your Insurer reinstates you then yes they will pay retroactively but as my Lawyer said - you’ll just continue to get cut off every 4-6 months until they finally get rid of you - that’s why they usually offer a lump sum payout - it’s kind of like paying you out so you go away. Like I said - it’s a lowball amount so if you think you have a strong case - fight for it but it does come with an intense amount of stress and time.
I remained an Employee for one year from the time they cut me off. However, my Employer had to change my status from LTD (where they paid for all my benefits and pension contributions) to Unpaid Leave. Therefore I had to pay for my own benefits (health, dental, life insurance, pension contribution) on my own. I am forever grateful that my Mom put the money into a bank account from which the Employer could draw the money out of until the anniversary of when the Insurer cut me off. At that point - my Employer then terminated my Employment stating it was a “Frustrated Contract” as I was unable to return to work. I worked there over 32 years - and I got no notice, no accomodation offered and no severance. So I’m going to be suing my Employer as well. You’re very fortunate that your Employer is continuing to pay your disability insurance premiums while you’re fighting with the Insurer.