Structured Settlement Calculator
Structured Settlement Calculator is an online calculator used to determine the amount of payment to receive from a structured settlement. It is based on the assumptions that the recipient of the settlement will have a regular and predictable monthly income for the duration of the offer. It is assumed that the person receiving the settlement will have a regular and predictable income for at least five years, and that they will maintain this consistent monthly income throughout the years of the settlement. The numbers obtained using a Structured Settlement Calculator are hypothetical; no payment has been received, and no obligations are entered into the calculator.
A structured settlement calculator provides an approximate value of the amount of payments an individual could receive from a sale of their annuity. Answers from the calculator give a fairly accurate estimate of the payout amounts. Please note that even if a buyer offers a discount rate, this will not reduce the payout. please also note that a discount rate does NOT reduce the lump sum payout; only the percentage of the total payments that are received. Also keep in mind that most people receiving payments from a structured settlement are not receiving high lump sums of money. Most individuals receive less than 10% of the total settlement.
Future payments are also considered in the equation. Future payments refer to those payments an individual would receive from an annuity upon retirement from employment. The total payments actually received from the annuity cannot be deducted from future payments. To determine the amount of future payments, a Structured Settlement Calculator can be used. This tool provides inputs into the beneficiary’s potential retirement benefit based on their salary and other information such as marital status, health and other pertinent information.
Life insurance is not considered in the equation. The reason for this is because life insurance is a tax-deductible expense. It is not “tax-free” income for the beneficiary. A lump sum payment from a structured settlement calculator can be used to enter estimates of potential tax-free income such as a life insurance settlement. Potential tax-free income is also used in determining the amount of future settlement payments an individual may not receive.
All of the above factors must be considered in order to determine a realistic value of future structured settlement payments. In order to do this, it is often required that an individual consult with a certified public accountant. Using a structured settlement calculator to determine an estimate of future settlement payments can be an extremely helpful tool.
These calculators allow the consumer to enter relevant information to determine a realistic lump sum amount that would be received upon retirement or death. Once this information is entered, the results will determine what the payment amount will be and if a lump sum payment is necessary. From these results, it becomes easy to see which payment options are better options for a person. However, it is important to remember that these numbers are only estimates and should not be used in the place of talking to a certified public accountant or a financial advisor on the best course of action for a particular case.