Bringing the Future Into the Present

When you hear people talk about structured settlements, there are a lot of terms that are freely used. I think half the time they are using the terms without really understanding what they mean. That is not unusual when you have terms which are not really used often in everyday conversation.

For example, do you really know what is meant by “discounted present value”? When you are getting a stream of payments, the discounted present value is the value of the future payments right now if you could invest a certain sum at a published interest rate. In other words, if you had a lump sum you could invest in something earning interest, the value over time would be equal to the payments you are supposed to get in the future.

It can be very confusing, but it is really important to understand the terms so you know when you are being offered a great opportunity. The discounted present value of an annuity is one of those terms you must be familiar with use when you decide to sell a structured settlement or an annuity.

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