Best Answer

The difference between a lump sum and annuity is, lump some you get a anywhere between half or 3 quarters of the money. An annuity is where you will get a certain amount of money for a certain amount of years.

User Avatar

Wiki User

2013-06-29 02:06:32
This answer is:
User Avatar
Study guides

A survey question that asks you to write a brief explanation is called

Auto correlation and cross correlation

If a married man cheats does that mean there are problems in his marriage

The nature-nurture question asks whether

See all cards
697 Reviews

Add your answer:

Earn +20 pts
Q: What is the difference between a lump sum and annuity?
Write your answer...
Still have questions?
magnify glass
Related questions

What is the difference between lump sum settlements and an annuity?

Lump sum refers to money that is paid in full up front typically from a settlement. Annuity settlements are when the payments are made over time in installments.

Can you sell your military retirement annuity for a cash lump sum?


How can you sell your military retirement annuity for a cash lump sum?

Explain! Yes is not an answer...

What factors affect one's choice between an annuity or a lump sum pension distribution?

One of the positives of an annuity are guaranteed income for life, but a negative is one would only get a fixed amount each month. A positive of lump sum is one has access to money to do whatever one pleases, but a negative is having a lump sum makes it easy to spend it all at once.

In joint life annuity one person dies does survivor get lump sum?

No, not unless the survivor asked to surrender the policy. If the survivor wants a lump sum, it is available.

Is a annuity worth more or less than a lump sum payment received now that would be equal to the sum of all the future payments?

It is worth more than a one lump sum.

What percentage fee does an annuity settlement buyer usually charge?

Annuity settlement buyers offer you a lump sum in exchange for the future payments you are due to receive. Most of the time these companies offer a 50% - 60% lump sum of the total payments.

Which of the following is a description of an annuity?

the insured agrees to make a lump-sum payment or series of payments to an insurance company...

What is the concept of selling annuity about?

Selling an annuity is basically taking a lump sum withdrawal from it. People use it as an investment tool to defer paying taxes on a portion of their money.

What is the difference between annuity and pension?

Pension fund generates a one sum that can at some time be withdrawn and used. On the other hand annuities are a relatively secure income that starts paying out at one fixed date after you are finished working. Many people prefer annuity precisely because of this security aspect. Under Pensions you contribute periodically and create a lump sum upto a specified minimum Age. In UK it is currently 55. If you would like to stop accumulating at this age, you get a lump sum. With this lump sum you can start withdrawing in selected frequency (note that the capital(lump sum) gets depleted as you withdraw, unless the Capital is not generating any further income. On the other hand you can buy an Annuity, which is a periodic payment to you based on your lift expectancy (how long you live futher). This is called Secured Pension and the earlier withdrawal type is unsecured pension (because of depletion/the Funds under investment not doing good). In India, we call it as pension and annuity are clubbed together. That is you accumulate and start getting an income as Annuity under the same policy. Please note that when you decide to buy annuity with the accumulated amount, universally, you have an option called Commutation or Tax Free Cash (upto maximum of 25%) to take home in lump sum and the rest is used to give you annuity.

Can pension benefits taken as a lump sum be paid in one payment or does it have to be paid in an annuity?

This will your choice that you will have to make. If you choose to take the pension benefits as a lump sum distribution you would receive the total amount at one time. If you choose to receive it as a annuity you will receive periodic payments over a number of years.

What types of penalties may occur when one chooses to sell their annuity payment?

If you sell your annuity payment in exchange for a lump sum, you'll get your money faster but you won't get as much. Annuity selling comes with additional taxes and fees, including a 10 percent tax on the lump sum if you are younger than 60. People who prefer a steady source of income should keep their annuities.

People also asked