Yes, they will. That has been calculated into the formula for payment. There will be an interest payment based on a government standard rate for this type of activity.
If you took your lump sum in annual payments over 20 years, there would be actually more money paid out because of that interest factor. But that's simply returning the interest to the veteran.
The flip side would be that if you chose to take it all as a lump sum you would then have the investment opportunity of that lump sum over that same time period.