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Neurosis is characterized by the presence of anxiety and emotional distress while maintaining a grasp on reality. Individuals experiencing neurosis do not lose touch with reality; they may experience symptoms like obsessive thoughts, anxiety, and compulsive behaviors but recognize that their thoughts and feelings do not reflect the actual state of the world. This ability to understand and interpret reality distinguishes neurosis from more severe mental health conditions, such as psychosis, where individuals might experience delusions or hallucinations.

In contrast, options that include a loss of reality, delusions, or hallucinations pertain to psychotic disorders rather than neurosis. Additionally, while neurosis can affect coping mechanisms, it does not universally equate to an inability to cope with daily life. Many individuals with neurotic tendencies can function adequately in society, even if they face psychological challenges. Thus, maintaining a reality that remains intact is the cornerstone of what characterizes neurosis.

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