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.