What Does It Mean When A State Lottery Advertises The “Annuity Value” Of The Winning Amount?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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Instead of paying the winnings in a lump sum, they will pay installments. Since the installments include some investment earnings, the total number of dollars will be larger than if the prize is taken immediately in cash. But the present value of dollars to be paid in the future is worth less than dollars paid today. Therefore, the total prize will be the same no matter which way you take it. Lottery commissions sometimes buy actual annuities from insurance companies to pay off winners.

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