Wookilar said:
And it's not considered income, so honestly I don't know why anyone would take the monthly payout. You could put the award into investments (which VAC pays up to $500 for the financial planning professional) and gain much more over time than you ever would getting it monthly for the next 7 years or whatever.
Wookilar, here's one way of looking at it...and why so many folks are against the NVC and the lump-sum award. Say you're a younger CF member, 25 average age let's go with, and you get injured in Afghanistan. Let's also say your injuries amount to a 50% total assessment.
Pick one:
a) 50% under the NVC - whichever way you want to slice it up with those options, works out to $146 654.21 (2012 rate of 100% at $293 308.42). Lump sum, spread over X, doesn't matter. It's still just under $146k. This is Charlie's scenario.
b) 50% under the
Pension Act, works out to 1273.74 (single person, no wife, no kids) per month. This is Bob's scenario.
Now, a) looks pretty good, right? Charlie's got enough to start a life, buy a truck, a house, etc. He doesn't really think of investing or putting away for a rainy day.
But do some math, and it's a different story. Let's say Charlie and Bob live to 81, the latest stats show. That's 56 years. Let's round it to 55, since that $146k may well be spent in that first year.
Charlie's got a truck, a house (or a downpayment towards one, depending on the truck, community he's looking to live in, etc.). But he didn't put anything in investments or plan ahead. And he's still got 55 years to live.
Bob gets 1273.74 a month. $15 284.88 a year. Sure, he may have to make payments on the truck to get it, but it'll be paid off in six years. Anyway. Now, the rate also goes up every year, too, but I'm keeping the math simple. There are also increases for when he gets married, has kids...
55 years at $15 284.88 = $840 668.40. For a difference between Charlie and Bob of -$694 014.19.
For an older veteran, who may only have a life expectancy of another 10 to 15 years, okay, maybe the lump sum makes sense, he's already got his pension, house is paid for, etc. He can use the lump sum to travel, make a renovation, help his kids out, whatever.
But for Charlie, it isn't so great.
And as Occam points out, that lump sump, when suffering from an OSI, can quickly disappear.
There are advantages and disadvantages to both systems, and neither one is perfect. Even a melding of the two at this time would not create a perfect system.
Monthly rates
Lump sum rates