Lump Sum Payment

You win $100 million in the lottery. Typically, you get a choice. Either you take a lump sum payment, or you get paid in installments.

The lump sum means you get all the money now. You just cash that big $100 million check they handed you. (And pay boatloads of tax.)

Meanwhile, the periodic payments means your amount gets spread out over a period of time. For instance, they could pay off your $100 million winning over the course of 20 years. So instead of getting a single $100 million check, you'd receive $5 million a year over 20 years.

A lump sum would likely involve a larger tax hit, depending on the situation, which might encourage you to take the more-spread-out option. Also, you run the risk of blowing through the money fast (like pressing your luck and buying another 100 million lotto tickets). Taking the periodic payout can help control some of these issues for the financially unsophisticated. And let's face it. If you bought any lottery tickets, it's likely that you are, um...lacking in the realm of financial sophistication.

However, the longer-term option creates the risk of not actually receiving your full amount. A lot can happen in 20 years. If, 15 years from now, the creatures from Zorkon 7 arrive and obliterate all human civilization, you'll be kicking yourself for not taking the lump sum.