How to Calculate Your Structured Settlement

By: Cash for Settlement Payments Knowledge Database
How to Calculate Your Structured Settlement

Calculating one’s structured settlement has never been easier. In an age where convenience is at the root of many people’s daily lives, it only makes sense that individuals are able to easily access a calculator that provides an accurate estimate of how much their structured settlement is worth. With this, individuals are able to easily calculate without being bothered by competing businesses or brokers. This method is always honest and reliable, not to mention convenient.

Additionally, the structured settlement calculator is easy to use, making calculating a structured settlement payout much easier than it used to be. Once an individual has an idea of his/her structured settlement’s value they can decide whether it is worth receiving the monthly payments or whether a lump sum buyout is more beneficial. The structured settlement calculator is what allows an individual to know whether a lump sum buyout is more beneficial versus the structured settlement.

Structured settlement calculators can be found in numerous places on the Internet, specifically on websites that cater to selling and buying structured settlements. Only a few pieces of information are required when using the calculator. This includes entering:

  • The year the payments started
  • The year the payments are expected to end
  • Monthly payment amounts
  • Payment frequency

With these four simple pieces of information, low and high range estimates can be made.

However, while the structured settlement calculator can determine value and whether a lump sum buyout is worthwhile, it is not 100 percent accurate. There are a variety of factors that can affect the value of structured settlements or annuities. Some of these factors include whether the payment amounts have increased over time, whether some payments have been sold, and how much of the payment is remaining.

How to Use the Calculator

The settlement calculator calculates the rate of a structured settlement factoring transaction. The output that this settlement calculator provides is known as a discount rate and is the discounted rate that that a company will pay for ones structured settlement payment rights. The calculator can be used to determine the discount rate of a present value. If a company offers a lump sum of money for a future cash flow, this is known as the present value of the cash flow or payment stream. A suitable discount rate for a structured settlement is between 8-14%.

Cashing Out

Many structured settlement companies are also tying the calculators into a way to generate business as well. Depending on the calculator and website, after receiving a cash payout estimate from the calculator, users are able to receive a fully reliable, no-obligation quote. A structured settlement can be cashed out partially or completely. For example, if you only want $10k to clear your debts or invest, think of cashing out only part of your structured settlement. This will permit you to maintain a steady income, though less than before, and make financial decisions your previously were unable to.

Final Thoughts

If one is considering the sale of one’s structured settlement or annuity, in order to find out how much of a lump sum you can expect, one is going to need to know the settlement present value. It is your responsibility to know this since the lump sum of your settlements value is going to be worth less tomorrow than it does today and knowledge is truly power in this instance. There is no excuse in today’s day in age since the calculators are all digital and easily accessible on numerous websites. With the structured settlement calculator, one is able to also take into consideration inflation, and how the buying power of the dollar is forever dwindling.

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"When we needed a lump sum of cash to make a down payment on our home, selling an annuity just made sense."

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