Compare annuity and lump sum.

The major differences between annuity and lump sum are as follows −


  • 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.