The decision to sell your structured settlement payments is an important one. While there are several factors that affect the value of your settlement, you can get an estimate of what your payments are worth with our payment calculator. Our calculation uses a formula based on your specific contract terms to determine your lump-sum payout amount.
What Factors Impact the Value of My Structured Settlement?
Companies that purchase structured settlements determine the worth of a settlement by calculating its present value. Because of inflation, a dollar today is worth more than a dollar in the future. Therefore, time, or more specifically, the time value of money, also influences the value of your settlement.
Other factors that determine the cash value of your settlement include:
- Dollar amount of your payments
- Number of payments remaining
- Interest rates
- Number of payments you’ve already sold
Because each settlement is unique, this is not an exhaustive list of determinants. The purchasing company you select will give you more details.
How Our Calculator Works
Our structured settlement calculator uses a basic formula that applies specifics from your settlement contract and a fixed discount rate to determine how much your payments are worth.
Some variables, such as payments of varying amounts or irregular payment schedules, cannot be accounted for. Consider this number a baseline, and contact us directly to discuss your options.
What Percentage Do Structured Settlement Purchasing Companies Take?
Purchasing companies subtract — or discount — a percentage from your lump-sum payout to account for inflation and the decreased purchasing power of the future payments, as well as the risk they assume when they buy your payments. For example, the purchasing company assumes the risk of the insurance company failing. This is a rare occurrence, but it can happen.
The percentage the settlement purchaser takes is called the discount rate, and it is determined using a formula that calculates the difference between the present value of your payments and the future value of your payments, along with other factors specific to your transaction.
Discount rates vary widely, with some as low as 6 percent and others as high as 25 percent. The lower the percentage, the better. This means you will keep more of your money.
In some cases, you will have to pay additional fees, so make sure you ask for the “effective discount rate,” as opposed to the discount rate. The effective discount rate is the discount rate plus fees and other costs associated with the agreement.
Regardless of which company you choose to work with, their offer will be less than your payments would amount to over time.
Selling Your Payments
If you are considering selling your structured settlement payments, you should ask yourself an important question: Do I really need this money right now?
Federal and state lawmakers encourage the use of structured settlements as protection for people who have been physically injured by another party. Structured settlements prevent the misspending of money intended to provide income for an extended time, which, in turn, prevents injury victims from relying on public assistance for their basic needs.
Considering this, it makes sense that obtaining a judge’s approval is part of the selling process. But once you’ve determined that selling your payments is the right move for you financially, you shouldn’t have trouble convincing the judge that the sale is in your best interest.
The Selling Process
Once you accept an offer from a purchaser, the company will file a petition to transfer the structured settlement in court in the state where the company is located.
The judge will consider the reputation of the company, the discount rate offered and whether the seller demonstrates a legitimate need for the money.
If the judge approves the sale, the transaction will be completed within three to five business days.
What Are My Options?
When it comes to selling your payments you have options. Depending on your goals and financial situation, you can:
- Sell all remaining payments
- Sell some of your remaining payments
- Sell a portion of each remaining payment
You’ll need to weigh whether the cost of selling all or a part of your settlement balances your need for a lump sum payment. If you’re not sure, now is the time to bring in a professional. A qualified financial planner can help you assess the benefits and drawbacks of each option as it relates to your unique financial situation.
You may also want to enlist a financial expert or an attorney in reviewing your structured settlement contract.
Finally, do your homework and pick a buying company you trust. The company should provide a written offer at no cost and take the time to explain it.
3 Cited Research Articles
- Consumer Financial Protection Bureau. (2018, 2 Feb). What should I know before giving up my monthly disability, personal injury or structured settlement payments in exchange for a one-time lump sum payment? Retrieved from: https://www.consumerfinance.gov/ask-cfpb/what-should-i-know-before-giving-up-my-monthly-disability-personal-injury-or-structured-settlement-payments-in-exchange-for-a-one-time-lump-sum-payment-en-2025/
- National Association of Settlement Purchasers. (n.d.). Benefits of the Secondary Market. Retrieved from: https://www.nasp-usa.com/benefits_of_the_secondary_mark.php
- National Association of Settlement Purchasers. (n.d.). Protect Yourself. Retrieved from https://www.nasp-usa.com/protect_yourself.php