Even if it's totally worth it, surely you can get a better deal than effectively taking out a loan with a 100% interest rate, or whatever it works out to.

Edit: 30%. Not quite 100%, but still really bad.

Can you get a 30% APR loan if you have no job or savings and credit rating close to 0? Payday loans are 300%-1000%. People would go for the 30% loan you mention instead if they could.

In a typical situation, no. But this is very much atypical. The person in question has a guaranteed source of long-term income. It's better than any job; they'll never get fired, or get fed up and decide not to come in anymore. It sounds like you can even redirect the payments so they go directly to the company making the lump-sum payment. The only risk is bankruptcy by the payer. It ought to be safer than a high-quality mortgage or car loan, which right now are available at 4% or less. (My car loan is 1.11%, which is completely ridiculous and not all that unusual.)

"It may make perfect sense." I didn't say it makes sense in most situations.

The $180k isn't NPV, unless you have a 0% discount rate. The payment schedule from the root comment was $500/month over 30 years, which comes to $6k/year. So this year you would have $14k more by accepting the $20k.

For the $20k lump sum to be worth the same as $6k/year for 30 years, you would need a rate of return of 43% (if my Excel-fu is correct). It would be better to take the $6k/year and take $20k as a cash advance on a credit card.

Sorry, I misinterpreted the meaning of the verb "worth" and worked backwards from what I assumed was the NPV. (and pulled a 20-yr term out of an orifice instead of the 30 years in TFA, whoops)

You could put it on eBay and get a better deal than that!