Lump Sum Versus Payments – Which One Is Best For You?

There are differences between the two, but how do a lump sum versus payments compare? Both have their own advantages and disadvantages, but the comparison is generally pretty simple. Here are some facts that you should be aware of before you make this decision.

For those that are not familiar, lump sum payments are when a company pays out cash as soon as they receive payment. This means there is no payment due at the time of your death, and your assets are distributed to your heirs. However, there is typically an interest rate attached to these payments. Many people who have this type of arrangement think they are receiving a great deal. However, because the interest rate is usually much higher than other loans, this type of arrangement can also become quite expensive.

Lump sum payments are simply a way for a business to pay an employee once they are no longer with the company. They are often much less expensive than a cash out plan. It is important to remember that once you become unemployed, you will still owe money. The difference here is that you will receive the money you were owed on a monthly basis instead of having to wait until you get laid off.

With both of these options, you do need to make sure that you get paid in full before your death. You are also responsible for paying the interest and the taxes. With lump-sum payments, you are responsible for paying off the whole amount. In addition, if you die, your family may be unable to collect the balance that you owe. This is because the IRS will not allow tax returns to be returned after you die without first making sure they have been filed correctly.

Both of these payments may sound great, but some may not be able to handle the amount of money needed to pay off debts. If you choose to lump sum payments, you should know that you will have to sell the remaining assets you have to pay the debt. This is an extra expense, which is why many choose a combination.

Although there are both advantages and disadvantages to lump sum versus payments, the key is to think carefully before you make a final choice. As long as you are completely satisfied with the amount you receive, it can help to make the decision.