Structured Settlement Present Value Calculator
Calculate the present value of a structured settlement payment stream. Compare lump sum vs periodic payments.
⚖️ Legal📐 PV = Sum of (Payment / (1+r)^n)
Annual payment amount ($)
Number of years payments continue
Discount rate %
Lump sum offered ($)
Please enter valid values.
Formula & Reference
| Variable | Formula | Units |
|---|---|---|
| Structured Settlement Present Value Calculator | PV = Sum of (Payment / (1+r)^n) | $ present value |
Step-by-Step Examples
Example 1
$50K/year for 20 Years
$50K annual, 20 years, 5% discount rate.
- Nominal: $1M | PV: $623,111
- If offered $600K lump sum: close call
✓ PV = $623,111
Example 2
$100K/year for 10 Years
$100K annual, 10 years.
- Nominal: $1M | PV: $772,173
✓ PV = $772,173
Example 3
$25K/year for 30 Years
$25K annual, 30 years.
- Nominal: $750K | PV: $384,356 at 5%
✓ PV = $384,356
Real-World Applications
Settlement Recipients
Compare structured vs lump sum settlement offers.
Plaintiff Attorneys
Advise clients on settlement structure options.
Structured Settlement Brokers
Calculate and compare payment stream values.
Insurance Adjusters
Calculate cost of structured settlement offers.
Common Mistakes to Avoid
⚠️
Nominal total vs present value
$1M in payments over 20 years is NOT worth $1M today. At 5% discount rate, it's worth about $623K. Always calculate PV when comparing offers.
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Tax implications of structured settlements
Qualified structured settlements from personal injury are typically tax-free, even the interest/earnings component. Lump sums may also be tax-free but consult a tax attorney.
Frequently Asked Questions
What is a structured settlement? ▾
Periodic payment arrangement in lieu of a lump sum. Common in personal injury, workers' comp, and medical malpractice cases. Provides long-term income security.
Can I sell my structured settlement? ▾
Yes, to structured settlement factoring companies (often at large discounts — sometimes 50-70% of PV). Courts must approve such sales. Generally inadvisable unless desperate.
Which is better: lump sum or structured? ▾
Depends on discipline with money, tax situation, age, and investment knowledge. Structured provides guaranteed income; lump sum provides flexibility and potentially higher return if invested well.