Pennsylvania Life and Health Insurance Exam Practice Question
Each of the following are characteristics of a fixed annuity contract EXCEPT
Correct Answer: C
Rationale: A fixed annuity contract is designed to provide stability and predictability in returns. It features a guaranteed interest rate (A), ensuring that the investor knows their earnings over time. The funds are typically placed in a general account investment (B), which is managed by the insurance company, allowing for lower risk. Fixed payments (D) are a hallmark of these contracts, providing consistent income. In contrast, option C is incorrect, as fixed annuities do not invest funds in a separate account; this characteristic is associated with variable annuities, which carry more investment risk.
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