Which annuity payments increase with the cost of living?

Which annuity payments increase with the cost of living?

• A. Integrated Annuity
• B. Indexed Annuity Payments
• C. Impaired Life Annuity
• D. Prescribed Annuity

Answer: (B)

Payments that increase with the cost of living are provided by indexed annuity payments. They tie each payment to a price index (such as the CPI), so as inflation raises living costs, the annuity payments rise accordingly within specified limits. This indexing helps preserve purchasing power over time. Other annuity types don’t automatically adjust for inflation: an integrated annuity typically offers guaranteed income without inflation indexing; an impaired life annuity increases payments due to shorter life expectancy, not inflation; and a prescribed annuity follows tax rules and usually provides fixed payments.

Payments that increase with the cost of living are provided by indexed annuity payments. They tie each payment to a price index (such as the CPI), so as inflation raises living costs, the annuity payments rise accordingly within specified limits. This indexing helps preserve purchasing power over time. Other annuity types don’t automatically adjust for inflation: an integrated annuity typically offers guaranteed income without inflation indexing; an impaired life annuity increases payments due to shorter life expectancy, not inflation; and a prescribed annuity follows tax rules and usually provides fixed payments.