Find the present value (lump sum) of your future structured settlement or annuity payments. Calculates true discount rates and factoring company buyout estimates.
Calculate how much cash you'd get selling payments today
A structured settlement pays you tax-free money over time (an annuity). When you decide you want to sell your payments to a factoring company (like JG Wentworth) for a lump sum today, they apply a Discount Rate.
The discount rate represents the cost of cashing out early—it is the yield the purchasing company expects to make on their investment. If a company buys $100,000 of your future payments using a 14% discount rate, you will only receive about $60,000 to $70,000 today depending on the timeline.
Under the Structured Settlement Protection Act (enacted in 49 states), any sale of your settlement rights must be approved by a local county judge. The judge must determine that the sale is in your "best interest" and that the discount rate is fair.
Settlement values depend on dozens of variables — these are the eight that move the dial the most in real-world negotiations:
These general issues can reduce settlement value and should be discussed with a licensed attorney when a claim is significant:
Consider consulting a licensed attorney before negotiating or signing a release if any of the following apply:
Many personal injury attorneys offer consultations and may work on a contingency-fee basis, but fee terms vary and should be reviewed carefully before signing an agreement.
Average settlements vary by injury severity, jurisdiction, and insurance policy limits. Minor injuries typically settle for $3,000–$25,000; moderate injuries for $25,000–$100,000; serious or permanent injuries can exceed $1,000,000. Insurance Information Institute reports a median bodily-injury claim payout of approximately $20,000–$25,000.
Most insurers use the multiplier method (medical bills × 1.5–5) or per diem method ($100–$500 daily rate × days of recovery). Multipliers rise with permanent impairment, visible scarring, surgery, and inability to perform daily activities.
For minor claims with clear liability, some people negotiate directly. For any claim involving permanent injury, disputed liability, commercial defendants, liens, or filing deadlines, consult a licensed attorney before deciding how to proceed.
Simple, clear-liability cases settle in 30–90 days after treatment ends. Cases requiring litigation average 12–24 months. Catastrophic injury and wrongful death cases can take 2–4 years.
Compensation for physical injuries is generally tax-free under IRC §104(a)(2). Punitive damages, interest, and emotional-distress-only awards are typically taxable. See IRS Publication 4345 and consult a tax professional.
Your own uninsured/underinsured motorist (UM/UIM) coverage steps in. Many states require carriers to offer UM coverage equal to liability limits unless waived in writing.
A structured settlement converts a single lump-sum personal-injury award into a stream of periodic payments funded by a qualified annuity. Under 26 U.S. Code § 104(a)(2), payments tied to physical injuries are excluded from federal gross income, and earnings inside the qualified annuity also accrue tax-free under the structured-settlement framework codified in 26 U.S.C. § 130. If you later try to "cash out" by selling those future payments to a factoring company, the transaction is governed by 26 U.S.C. § 5891, which imposes a 40% excise tax on the factoring discount unless the transfer is approved in advance by a court under a Qualified State Statute (every state plus D.C. has enacted one). That court-approval requirement, codified in state Structured Settlement Protection Acts, is the single most important consumer safeguard in the secondary market.
The price a buyer offers you is just present value with a steep discount rate. Three numbers drive every quote: the schedule of future payments, the buyer's internal discount rate (typically 9%–18% per Cornell LII analysis of factoring transactions), and any fees. The math is identical to bond pricing: PV = Σ CFt / (1 + r)t. A 17% discount rate means a $100,000 payment due in 10 years is worth only about $20,800 today — before fees. The U.S. Treasury "applicable federal rate" (AFR) for long-term obligations was roughly 4.0%–4.5% in 2025, so most factoring quotes carry a 12–14 percentage-point spread above risk-free.
| Future payment schedule | Face value | At 9% discount | At 14% discount | At 18% discount |
|---|---|---|---|---|
| $1,000/mo × 10 yr | $120,000 | $79,000 | $64,400 | $55,200 |
| $2,000/mo × 20 yr | $480,000 | $222,400 | $160,800 | $129,600 |
| $50,000 lump sum in 5 yr | $50,000 | $32,500 | $26,000 | $21,900 |
| $50,000 lump sum in 15 yr | $50,000 | $13,700 | $7,000 | $3,900 |
| $100,000 lump sum in 10 yr | $100,000 | $42,200 | $27,000 | $19,100 |
Discount rate ranges per Legal Information Institute (Cornell, 26 U.S.C. § 5891 commentary). Always compare quotes from at least three licensed factoring companies and request the effective annual discount rate in writing — many quotes hide it behind "transaction fees" and "service charges."
| State | Approving statute | Best-interest standard |
|---|---|---|
| California | Ins. Code §§ 10134–10139.5 | Hardship + alternatives explored + independent professional advice |
| Texas | Civ. Prac. & Rem. Code §§ 141.001–141.007 | Best interest of payee and dependents |
| New York | Gen. Oblig. Law § 5-1701 et seq. | Best interest + welfare of payee's dependents |
| Florida | Fla. Stat. §§ 626.99296 | Best interest + court-approved independent professional advice |
| Pennsylvania | 40 P.S. § 4001 et seq. | Best interest + financial counseling disclosure |
| Illinois | 215 ILCS 153 | Best interest + IPA waiver in writing |
| Ohio | R.C. 2323.58–2323.587 | Best interest of payee/dependents |
| Georgia | O.C.G.A. §§ 51-12-70 et seq. | Best interest standard |
| Michigan | MCL 691.1191 et seq. | Best interest + IPA notice |
| North Carolina | N.C.G.S. § 1-543.10 et seq. | Best interest of payee |
| Arizona | A.R.S. §§ 12-2901 et seq. | Best interest standard |
| Washington | RCW 19.205 et seq. | Best interest + IPA |
Always check the current statute text at your state legislature website (e.g., leginfo.legislature.ca.gov, law.justia.com, or the Cornell LII state portal).
Selling makes economic sense in three scenarios: (1) you are facing imminent foreclosure or medical bankruptcy that the structure cannot pay before the loss occurs; (2) you have an investment opportunity with a documented IRR materially above the buyer's discount rate (rare in practice); or (3) you have a terminal diagnosis and life-contingent payments will lapse. In every other case, the math favors keeping the annuity. The tax-free internal compounding inside a qualified § 130 structure is essentially impossible to replicate in any taxable account. This is an informational calculator, not legal or financial advice. Consult a licensed attorney and a fiduciary financial planner in your state before transferring any structured-settlement payment rights.
No, payments that compensate for physical injuries or sickness are excluded from gross income under IRC § 104(a)(2), and the inside buildup of the funding annuity is also tax-free under IRC § 130 — this is the single biggest reason to think hard before selling.
Industry sources (Cornell LII, Annuity.org) document a typical effective discount rate range of 9% to 18%. Quotes above 18% are usually predatory; below 9% usually involve very short time horizons or partial buyouts.
Yes, in every U.S. jurisdiction. Without a court order under your state's Structured Settlement Protection Act, the transaction triggers a 40% federal excise tax under 26 U.S.C. § 5891 and is unenforceable against the annuity issuer.
From application to funded transfer, expect 45–90 days. Required steps include 20-day advance disclosure to the payee, an in-person or recorded hearing, and findings on the record that the transfer is in the payee's best interest.
Yes. A partial sale (specific months or a percentage of each payment) is often the smarter choice — you raise cash for an immediate need while preserving long-term tax-free income. Most factoring companies offer partial-buyout structures.
Potentially yes. A large cash lump sum can disqualify you from need-based programs (SSI, Medicaid, SNAP) if it pushes you over the resource limit, which is $2,000 for an individual under SSI rules as of 2026 per SSA. A special-needs trust may preserve eligibility — ask an elder-law or special-needs attorney before signing.
Beyond the discount itself, expect $1,500–$5,000 in transaction costs: court filing fees, attorney fees for the transfer, notary, and processing. These are usually netted from the cash you receive, so confirm them in writing on the disclosure statement.
Most state statutes give the payee a short rescission window (often 3–10 business days after court approval) to cancel before funds disburse. After that, the transfer is generally final. Read the disclosure carefully — the rescission deadline is required to be conspicuous.
No. Selling a portion does not contaminate the remaining payments. They retain their IRC § 104(a)(2) and § 130 tax treatment.
Ask every buyer for: (a) the gross face value being sold, (b) the net cash to you, (c) the effective annual discount rate, and (d) an itemized fee schedule. The effective rate is the only number that lets you rank offers directly.
Look for membership in the National Association of Settlement Purchasers (NASP), BBB rating of A or higher, and a track record of court approvals in your state. Verify the company name on the most recent IRS Form 8876 filings if available.
Technically yes, but the transaction still requires court approval and the 40% excise tax still applies unless the order qualifies under § 5891. Most intra-family transfers run through a licensed factoring company to satisfy the procedural requirements.