Structured Settlement IRR-Fact or Fiction?
A. The structured settlement proposals that you are likely to see contain an IRR or Internal Rate of Return number which is reflected as a percentage return. Theoretically this allows you to find an interest rate that is equivalent to the returns on the amount of consideration (premium) that is used to fund your structured settlement. Once you know the rate, you can compare it to after-tax rates that you might earn by opting for other structured settlement plans, or that you might achieve by taking cash and investing in different taxable or tax-exempt financial instruments. Clearly the IRR is useful to help determine the best value for money while taking into account need for absolute certainty, available resources, tolerance for the investment risk of the alternatives, needs as to timing and amount of payments and other factors. Care should be taken by Plaintiffs and counsel to understand how the IRR is calculated in a structured settlement proposal where lifetime payments are being c
