PSI Life Exam Practice Test

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Prepare for the PSI Life Exam. Utilize flashcards and multiple-choice questions with detailed hints and explanations. Ensure success on your exam!

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Fixed annuity payments are characterized by which feature?

Fluctuating based on market conditions
Variable based on the stock market
Stability and consistency
Linked to inflation rates

The correct answer is: Stability and consistency

Fixed annuity payments are characterized by stability and consistency. This means that once the terms of the annuity are established, the payments remain the same throughout the life of the contract, providing a predictable income stream for the annuitant. This feature is particularly appealing for individuals who are looking for reliability in their retirement income, as it allows them to plan and budget without the concern of payment fluctuations. In contrast, options suggesting that payments fluctuate based on market conditions, vary based on the stock market, or are linked to inflation rates do not apply to fixed annuities. Fixed annuities do not change in response to market volatility or stock performance, and they do not have an inherent mechanism to adjust payments based on inflation. Therefore, the defining characteristic of fixed annuities is their ability to provide stable and consistent payments.