Peachtree Settlement Funding
Call Us: 1-800-821-7773
How It Works
We will buy some or all of your payments for a discounted lump sum. Sometimes, there is confusion surrounding the amounts paid to structured settlement claimants by settlement purchase companies like Peachtree.
A portion of the money you are getting in the future is interest that hasn't been earned yet. The insurance company is simply paying you the interest on the money they invested when you settled your case. The 'amount' of the settlement (ie. the sum of all the future payments) includes a great deal of interest that hasn't been earned yet.
It's the same as with lottery prizes. Many state lotteries now offer a lump sum option instead of the traditional 20 - 30 year annuity payout; however, when you elect to receive a lump sum you typically receive about one half of the advertised prize amount. In fact, what the lottery commissions do is identical to a structured settlement; annuities or U.S. Treasury bonds are purchased to fund the future payments due to the winner.
Still not convinced? Consider the following: It is an axiom that the further in the future you are expecting to receive a sum of money, the less it is worth today, in part because of inflation. Inflation will make the value of the payments shrink in coming years.
The following illustrates the effects of inflation and the power of compounding:
A lump sum grows in value. The Rule of 72 states that an investment at a particular interest rate will double in a certain number of years. You can easily determine how quickly your investments will double simply by dividing 72 by the interest rate that you anticipate receiving in a given investment. For example, an investment that will yield 10% per year will double approximately every 7.2 years (72/10 = 7.2). A 12% yield would mean your investment doubles every 6 years. Below is a chart with the Rule of 72 applied to a $15,000 investment at various interest rates over the course of a number of years. This gives you some idea of how much a lump sum today might be worth in the future*.
*Excludes the effects of taxes or other investment charges.
Future value of a $15,000 investment
| Interest Rate* |
Value after 10 Years |
Value after 15 Years |
Value after 20 Years |
|---|---|---|---|
| 12% | $49,505 | $89,937 | $163,388 |
| 14% | $60,337 | $121,012 | $242,704 |
| 16% | $73,514 | $162,746 | $360,288 |
*Assumes monthly compounding and excludes the effects of taxation. This chart does not represent a predicted or guaranteed future rate of return and is for illustration purposes only.
Future payments aren't worth as much as you think. Inflation is like a cancer eating away at the value of your money. The further in the future you are to receive a sum of money, the less it is worth today because of, at least in part, inflation. Thus, no matter what the source, structured settlement payments, lottery prize or other type of annuity, inflation will make the value of the payments shrink in coming years.
Just look at what inflation has done:
1980 Average Prices:
College Tuition: $28,097 (National Center for Educational Statistics)
New House: $77,867 (Office of Federal Housing Enterprise Oversight)
New Car: $7,574 (Office Of Transportation Technologies)
Imagine how little that 'huge' $100,000 payment due in January 2024 will be able to buy at that time.
