TTinCO, believe the terminology you're looking for is present value. They will pay him the full $1m, $50,000 per year for 20 years. The difference is that $1m today is worth a lot more than $1m in twenty years.
In fact, at 5% interest, $1m today is worth $2,712,640.29 in 20 years. That's why they don't pay the full amount if you request a lump sum payment.