Dominate the Series 26 in 2025 – Master the Investment & Variable Contracts Challenge!

The correct answer highlights that variable annuity sales agreements must specify that commissions will be returned within seven business days if the investor redeems the contract. This timeframe is established to protect both the investor and the broker-dealer involved in the sale, ensuring that any potential losses due to early redemption can be quickly addressed.

Having a clear stipulation regarding commission returns within a specified period fosters transparency in the investment process. It allows investors to understand the financial implications of redeeming their contracts shortly after purchase. Not only does this requirement give the investor a degree of comfort, knowing that there's a pathway for recapturing commissions, but it also encourages responsible selling practices among brokers, who must consider the long-term satisfaction of their clients when selling variable annuities.

Various other options reflect longer periods, which would provide less immediate recourse in the event of a redemption, thereby reducing investor protection and potentially leading to customer dissatisfaction. The specified seven-day period strikes an appropriate balance between allowing time for proceedings to occur while ensuring that resolution is prompt.