Structured Settlement Annuity Rates

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Structured Settlement Annuity Rates

• By
• www.annuitystructuredsettlementpro.com

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What is Structured Settlement?

• A structured settlement is an important
  financial tool available to parties in litigation
  that provides core income stability with tax
  advantages.

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Present Value (PV)

• Present Value ("PV") is merely an attempt to
  calculate a value to future payments in today's
  dollars.
• The mathematical calculation that is used in
  determining present value is dependent on the
  interest assumption (discount rate), which could
  be entirely arbitrary or could be based on an
  average.
• A difference of a percentage point could make a
  major difference in present value, possibly
  hundreds of thousands of dollars

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Rate of Return of a Structured Settlement (IRR)

• The structured settlement proposals that you are
  likely to see contain an IRR or Internal Rate of
  Return number which is reflected as a percentage
  return.
• Theoretically this allows you to find an interest
  rate that is equivalent to the returns on the
  amount of consideration (premium) that is used to
  fund your structured settlement.
• Once you know the rate, you can compare it to
  after-tax rates that you might earn by opting for
  other structured settlement plans, or that you
  might achieve by taking cash and investing in
  different taxable or tax-exempt financial
  instruments.

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Sources 4structures.com irs.gov
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