Structured Settlement Annuity Calculator

Model periodic payments, present value, and implied yield of structured settlements

Model a structured settlement annuity from a purchase price: compute the level periodic payment, the total payout, and the implied annual yield. Or solve the implied yield from a payment schedule to evaluate a factoring or buyout offer. It runs free in your browser on Gera Tools, with nothing uploaded.

Last updated Source: Gera Tools

What is the implied yield of a structured settlement?

It is the annual interest rate that makes the present value of all the annuity's future payments equal to its purchase price. It is the internal rate of return baked into the annuity — the higher it is, the more value the schedule delivers per dollar of premium.

A structured settlement annuity calculator works in two directions. From a purchase price and target yield it derives the level periodic payment and total payout an annuity would fund. From a known payment schedule and a buyout offer it solves the implied annual yield — the internal rate of return — so a factoring or lump-sum offer can be judged against market rates.

How it works

A level payment from a fixed premium uses the standard annuity formula. With per-period rate r and n payments, payment = price × r / (1 − (1 + r)^−n). When a cost-of-living adjustment (COLA) applies, each payment grows by a fixed percentage, so the tool uses the growing-annuity relationship and discounts each escalated payment on its own.

To find the implied yield, the tool solves for the rate r that makes the present value of the whole schedule equal the purchase price. Because that equation cannot be rearranged algebraically, it is solved numerically with a bisection search: the tool brackets the rate between 0% and a high ceiling and repeatedly halves the interval until the present value matches the price to within a cent.

Implied yield = the rate r where Σ payment_t / (1 + r)^t = purchase price.

Example and notes

Suppose an annuity costs $200,000 and is meant to pay monthly for 20 years. At a 4% annual yield, the level monthly payment is roughly $1,212, for a total nominal payout near $291,000 — the gap over the premium is the interest the insurer credits.

Run it the other way: if a factoring company offers $120,000 today for those same 240 payments of $1,212, the implied yield they are charging is well above 4% — a signal the offer is steep. Most transfers require court approval, and a fair buyout yield typically sits near safe-investment rates plus a modest margin. This is a financial model, not financial or legal advice.