Frequently Asked Questions

Our calculator uses the standard Present Value of Annuity formula (PMT = PV × [r(1+r)^n] / [(1+r)^n - 1]) used by financial institutions worldwide. Results are highly accurate for fixed-rate scenarios. Actual settlement amounts may vary based on your specific agreement terms, insurance company rates, and any additional riders or provisions. Always verify with a licensed financial advisor before making decisions.

Yes! Our comparison table automatically shows scenarios for 5, 10, 15, 20, and 30-year payout periods simultaneously at your specified interest rate. You can also adjust your inputs and the chart will update in real-time to help you visualize the difference in periodic payments and total payout across durations.

For personal injury and physical sickness settlements, payments are generally tax-free under IRC Section 104(a)(2). However, punitive damages, emotional distress settlements without physical injury, and annuity earnings may be taxable. Use the optional tax rate field in the calculator to model the after-tax impact on your annuity. We strongly recommend consulting a tax professional for your specific situation.

Yes, completely free. Our calculator runs entirely in your browser with no sign-up required, no data stored on our servers, and no hidden fees. We monetize through advertising to keep the tool free for everyone.

A structured settlement arises from a legal judgment or negotiated settlement (e.g., personal injury lawsuit), while an annuity is a broader financial product purchased directly from an insurance company for retirement or investment purposes. Structured settlements are typically tax-free under federal law; annuities have different tax treatment depending on how they're funded. Both involve periodic payments over time and use the same underlying calculation mechanics.

Absolutely. Our calculator supports monthly, quarterly, and yearly payment frequencies. Monthly payments result in the smallest individual amounts but are typically preferred for covering regular expenses. Quarterly and yearly payments are larger but less frequent. The total payout and interest earned remain mathematically consistent regardless of frequency for the same principal and rate.

For structured settlements, interest rates typically range from 3% to 6% depending on the annuity market at the time of your settlement. For annuities purchased today, rates depend on the insurer and current economic conditions. As a reference: fixed annuities currently offer approximately 4–5.5%, while older settlements may use lower benchmark rates (2–3%). Check your settlement agreement or contact your insurance company for the exact rate applied to your case.

The base calculator uses a fixed interest rate without a built-in inflation adjustment. If your settlement includes a Cost of Living Adjustment (COLA) rider (common in long-term settlements), you can approximate this by using a slightly lower effective rate or modeling multiple scenarios. Inflation-adjusted annuities typically have lower initial payments to offset future increases.

Yes, in most U.S. states you can sell some or all of your future structured settlement payments to a factoring company for an immediate lump sum. However, this typically requires court approval and results in receiving significantly less than the face value (due to discount rates of 9–18%). This should generally be a last resort — see our article on 'Pros and Cons of Selling Your Settlement' in the Learn section for more details.

The right duration depends on your financial needs, age, and goals. Shorter durations (5–10 years) provide higher periodic payments, ideal if you need income soon. Longer durations (20–30 years) offer lower payments but dramatically more interest earned, appropriate for long-term financial security. Use our comparison table to see all durations side-by-side at your principal amount and make an informed decision.