AD Banker Comprehensive Practice Exam

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Enhance your exam readiness with the AD Banker Comprehensive Exam guide. Includes flashcards and multiple-choice questions with explanations.

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How long can an annuity or pure endowment contract be reinstated after a default in premium payments?

1 year
3 months
6 months
2 years

The correct answer is: 1 year

An annuity or pure endowment contract can typically be reinstated after a default in premium payments for a period of one year. This timeframe is established to allow policyholders a reasonable opportunity to bring their contract back into good standing without losing their accumulated benefits or facing any significant penalties. During this one-year period, the policyholder can generally make up any missed payments along with any applicable interest or fees, thereby reinstating the policy as if it had been continuously in force. This option provides flexibility and helps individuals maintain their financial products despite temporary hardships that may have caused the missed payments. The other options, such as 3 months, 6 months, or 2 years, do not align with typical policy provisions set forth by most insurance regulations governing annuities and pure endowments. These timeframes are either too short or too long according to industry standards, reinforcing the one-year period as the correct timeframe for reinstatement after default.