What does a cash (lump-sum) payout option for an annuity mean?

A cash (lump-sum) payout option for an annuity means that the annuitant receives the total cash value of the annuity in one single payment. This option is typically chosen when the annuitant prefers immediate access to funds rather than receiving periodic payments over time. Such a payout allows the individual to utilize the money in a way that suits their financial needs, whether that be for investment purposes, immediate expenses, or other personal financial strategies.

In contrast, periodic payments would involve receiving smaller amounts over a set period or for life, while deferring withdrawals until retirement means that the annuitant cannot access the funds until a later date, typically aimed at retirement. Borrowing against the annuity involves taking a loan using the annuity's value as collateral but does not involve a direct payout to the annuitant.