SIE Exam Question 475: Answer and Explanation

Question: 475

A fixed annuity guarantees all of the following except:

• A. Rate of return.
• B. Income for life.
• C. Protection from investment risk.
• D. Protection from inflation.

Correct Answer: D

Explanation:

D: A fixed annuity does not provide protection from inflation. If inflation rises, the holder of a fixed annuity may end up worse off due to the loss of value of the dollar.