Structured Settlement Calculator (Buyout Value & Discount Rate)
Free calculator that reveals the true discount rate behind a factoring company's lump-sum buyout offer for your structured settlement payments, so you can compare it to typical industry rates.
What is a structured settlement buyout?
A structured settlement is an arrangement, common in U.S. personal injury and wrongful death cases, in which compensation is paid out as a series of periodic payments instead of a single lump sum. Factoring companies such as J.G. Wentworth and Peachtree Financial buy the right to receive some or all of those future payments in exchange for a discounted lump sum today. This tool works backward from the lump sum a factoring company has offered you to reveal the effective annual discount rate embedded in that offer, so you can judge it against typical industry benchmarks.
Buyout advertisements and quote letters usually show only a dollar amount, not the discount rate that amount implies relative to the payments you are giving up. By entering your payment amount, frequency, remaining term, and the offer you received, this tool instantly converts that offer into a comparable discount rate — the same metric you would need to line up multiple competing quotes on equal footing.
How to use the structured settlement calculator
- Enter your payment amount Enter the amount you receive each period under your structured settlement.
- Choose the payment frequency Select monthly, quarterly, or annual, matching your settlement schedule.
- Enter the years of payments remaining Enter how many more years of payments are left under your settlement agreement.
- Enter the buyout offer Enter the lump-sum amount a factoring company has offered, and the implied discount rate is calculated automatically.
Tips for getting more out of it
- Don't judge a buyout offer by its dollar amount alone — convert it to an implied discount rate with this tool before comparing it to another company's offer, since payment amounts, frequency, and remaining terms can differ.
- The court approval process typically takes about 45 to 60 days. If you need cash quickly, build this timeline into your planning.
- You don't have to sell your entire remaining payment stream. A partial sale lets you cash out some payments now while keeping future income intact — ask any factoring company you're considering whether they offer this option.
- The 9%–18% range used as a reference in this tool is only a general industry benchmark. Your actual offer may be more or less favorable depending on the annuity issuer's credit strength and current market conditions.
When to use this calculator
Deciding whether a buyout offer is fair
Compare the implied discount rate of an offer against the typical 9%–18% industry range to judge whether it favors you or the buyer.
Comparing quotes from multiple factoring companies
Converting each company's dollar offer into an implied discount rate lets you compare them on equal footing, not just by the raw dollar amount.
Considering a partial sale of your payments
If you only plan to sell a portion of your remaining payments, enter just that portion's amount and term to estimate the same figures.
Negotiating settlement payment terms in a lawsuit
Estimate what a proposed structured payment schedule would be worth today if you ever needed to sell part of it later.
Glossary
- Structured settlement
- An arrangement in which compensation from a personal injury or similar lawsuit is paid out over time as periodic payments rather than a single lump sum, typically funded by an annuity contract from a life insurance company.
- Factoring (settlement purchase)
- The sale of the right to receive future structured settlement payments to a third-party company in exchange for a discounted lump sum today. J.G. Wentworth and Peachtree Financial are well-known factoring companies in the U.S.
- Discount rate
- The annual rate used to convert the total value of future payments into today's lump-sum value. A higher discount rate means the factoring company keeps a larger share of the payments' value.
- Present value
- The value today of money you are scheduled to receive in the future, calculated by discounting it at a given annual rate.
- Court approval
- Most U.S. states require a judge to review and approve any sale of structured settlement payment rights, confirming that the sale is in the seller's best interest, before the transaction can be completed.
- Partial sale
- Selling only some of your remaining payments or only a portion of the remaining term to a factoring company, rather than the entire remaining payment stream, so you keep a future income source.
Frequently asked questions
Side Note — how lawsuit payouts became a right to be paid over time
Structured settlements became common in the United States starting in the 1970s. Before then, personal injury awards were typically paid as a single lump sum, and courts and legislators grew concerned after seeing that many plaintiffs — especially those with severe, lifelong injuries — exhausted large lump-sum payments within just a few years, sometimes leaving minors without funds for decades of future medical care once they reached adulthood. That concern helped drive the shift toward spreading payments out over time.
In the 1980s, U.S. and Canadian tax authorities formalized favorable tax treatment for this approach, confirming that periodic payments received under a qualifying structured settlement are exempt from income tax, just as a lump-sum award would be. By channeling the payments through an annuity contract issued by a life insurance company, structured settlements combine that tax-free treatment with a built-in safeguard against a plaintiff spending everything at once.
The demand to convert that "right to be paid over time" back into cash created its own industry. Beginning in the 1990s, factoring companies such as J.G. Wentworth grew rapidly, aided by aggressive television advertising. Early concerns about high-pressure sales tactics and unreasonably low buyout offers led nearly every state to pass a Structured Settlement Protection Act, requiring a judge to approve any sale before it becomes final. The familiar TV-commercial brand names in this space today operate within a regulatory framework that traces directly back to those consumer-protection concerns.