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Compare annuity and lump sum.
The major differences between annuity and lump sum are as follows −
Annuity
The payments are spread across the period of time.
An investor who wants regular inflow of payments prefers annuity.
It is short term in nature.
The types of annuity are deferred and immediate.
An amount received is very less to take decision about investment or business.
The cash flow will add up to larger amount.
Lump sum
The payment is made at once.
An investor who is willing to get the money at point of time will prefer lump sum.
It is long term in nature.
There are no types in lump sums.
It includes high tax burden.
The payment is taken upfront.
Updated on: 27-Jul-2020
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