Cashing in suggests handing something back to the company that issued it and receiving a surrender value. That is how an annuity you bought yourself works. It is not how this works, and the difference catches people out at the first phone call, so it is worth stating plainly before anything else.
There is nothing to surrender
The annuity paying you was bought by the obligor and is usually owned by it or an assignment company, not by you. Surrender is an owner's right and you are not the owner; what you hold is the right to receive the payments. So there is no surrender value to ask for and no early-withdrawal charge to weigh. The only route from future payments to money now is a transfer of those payment rights to a third party, which is a sale and not a surrender.
What a transfer is instead
A buyer pays you a discounted sum today for some or all of the payments you would have received. Nothing is handed back to the insurer; the insurer is simply told to pay the buyer instead once a court has approved it. The trade body's reported discount range across the market is between 9% and 18%, and that discount is the price of getting the money now rather than on the schedule.
What a New York court has to find
New York is the statute on this record that looks hardest at the money. The court must find the transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependants, and whether the transaction, including the discount rate used to determine the gross advance amount and the fees and expenses used to determine the net advance amount, are fair and reasonable. It also requires the payee to have been advised to seek independent professional advice and the agreement to be written in plain language.
Questions people ask about cash in structured settlements
Does a court really have to approve this?
Yes, in every state. The federal exception in 26 U.S.C. 5891(b) applies only where the transfer was approved in advance in a qualified order finding it is in the best interest of the payee, taking into account the welfare and support of the payee's dependents.
What is the single biggest variable in the price?
The discount rate, and after that how far in the future the payments fall due. The reported range across the market is between 9% and 18%.
Do you take a share of what I get?
No. Buyers pay a flat fee for the enquiry itself, never a share of the discount and never anything contingent on a transfer completing.