FL Life & Health Exam Flashcards

Q: What is the Florida 2-15 license?

The Florida 2-15 license is the most comprehensive life and health line of authority in the state, authorizing the sale of life insurance, health insurance, AND variable annuity contracts. The 2-14 license covers life and variable annuity but not health; the 2-40 is health-only. Selling variable annuities also requires a FINRA securities registration (Series 6 or 7) because they are securities.

Q: What is Florida's life insurance free-look period?

Florida provides a 14-day free-look period for new life insurance policies, longer than the 10-day standard in many other states. The free-look period is 30 days for Medicare supplement and long-term care policies, and is extended to 21 days for annuity contracts purchased by individuals age 65 or older. During the free-look the policy can be returned for a full premium refund.

Q: What is Florida Rule 69B-162 (replacement)?

Florida Administrative Code Rule 69B-162 governs life insurance and annuity replacement. The agent must give the applicant a signed comparison summary showing the benefits and costs of both the existing and proposed policies, and the replacing insurer must notify the existing insurer of the replacement within 5 business days so the existing insurer can conserve the policy.

Q: What does the Florida Life and Health Insurance Guaranty Association cover?

The Florida Life and Health Insurance Guaranty Association (FIGA) protects policyholders when a member insurer becomes insolvent. Coverage limits are generally $300,000 for life insurance death benefits, $300,000 for annuities, and $500,000 for health insurance. It is funded by assessments on member insurers, not state tax revenue, and agents may not advertise it as a sales inducement.

Q: How many questions are on the Florida 2-15 exam?

The Florida 2-15 Life, Health & Variable Annuity exam has 165 questions (150 scored plus 15 pretest) and a 70% passing requirement. Florida requires 60 hours of approved pre-licensing education for the 2-15 license, completed within 4 years of application, with a passing end-of-course exam score of at least 70%.

Question 1

Florida Department of Financial Services (DFS)

Accepted Answer

The department, led by the Chief Financial Officer (CFO), that licenses and disciplines insurance agents in Florida and handles consumer assistance. Distinguish it from the Office of Insurance Regulation, which regulates the companies.

Question 2

Florida Office of Insurance Regulation (OIR)

Accepted Answer

Regulates insurance companies in Florida — rate filings, solvency, market conduct, and licensing of viatical/life-settlement providers. OIR operates under the Financial Services Commission.

Question 3

Florida Financial Services Commission

Accepted Answer

Composed of the Governor and the full Cabinet (Attorney General, Chief Financial Officer, and Commissioner of Agriculture). It oversees the Office of Insurance Regulation.

Question 4

Florida 2-15 License

Accepted Answer

The broadest FL life and health line of authority: sell life insurance, health insurance, AND variable annuity contracts. 2-14 = life and variable annuity (no health); 2-40 = health only.

Question 5

Variable Annuity Dual Licensing (Florida)

Accepted Answer

A variable annuity is both an insurance and a securities product. To sell it in Florida the agent must hold a 2-15 (or 2-14) insurance license AND a FINRA securities registration (Series 6 or 7).

Question 6

Florida Pre-Licensing Education (2-15)

Accepted Answer

60 hours of approved pre-licensing education are required for the 2-15 license, completed within 4 years of application, with a passing end-of-course exam of at least 70%. The completion certificate is valid four years.

Question 7

Inactive Florida License Termination

Accepted Answer

A Florida agent's inactive license is automatically terminated if not reactivated within 48 months (4 years). During inactivity the agent may not transact insurance business.

Question 8

Florida Life Insurance Free-Look Period

Accepted Answer

14 days for new life insurance policies — longer than the 10-day standard in many states. During this period the owner can return the policy for a full refund of premiums paid.

Question 9

Florida Free-Look — Seniors & LTC/Medigap

Accepted Answer

Free-look is 30 days for Medicare supplement and long-term care policies, and is extended to 21 days for annuity contracts purchased by individuals age 65 or older — an enhanced senior consumer protection.

Question 10

Florida Life Insurance Grace Period

Accepted Answer

At least 31 days for a premium due after the first premium. The policy stays in full force during the grace period; a death during grace is paid less the premium owed.

Question 11

Incontestability Clause (Florida)

Accepted Answer

After a life policy has been in force for 2 years during the insured's lifetime, the insurer cannot contest it for material misrepresentation on the application (fraud exceptions are narrow).

Question 12

Florida Replacement Rule 69B-162

Accepted Answer

Governs life/annuity replacement. The agent must give a signed comparison summary of the existing vs. proposed policy, and the replacing insurer must notify the existing insurer within 5 business days.

Question 13

Purpose of Replacement Regulation

Accepted Answer

Protects the consumer from losing benefits when switching policies (new contestability/suicide periods, surrender charges) and gives the existing insurer a chance to conserve the policy.

Question 14

Annuity Suitability for Seniors (FL 627.4554)

Accepted Answer

The agent must have reasonable grounds to believe an annuity recommendation is suitable based on the consumer's financial situation, needs, and objectives, with heightened protections for senior consumers.

Question 15

Florida Viatical/Life Settlement Act

Accepted Answer

Viatical and life settlement providers and brokers must be licensed by the OIR. A policy generally must be in force at least 2 years before it can be viaticated, unless the insured is terminally or chronically ill.

Question 16

Term Life Insurance

Accepted Answer

Pure death-benefit protection for a set term with no cash value. Lowest initial premium; level term keeps the premium and face level for the term. Coverage ends if the term expires without conversion or renewal.

Question 17

Whole Life Insurance

Accepted Answer

Permanent coverage with a level premium, guaranteed cash value, and a guaranteed death benefit to age 100/121. Cash value grows tax-deferred and can be borrowed against.

Question 18

Universal Life Insurance

Accepted Answer

Flexible-premium permanent insurance separating the cost of insurance, expenses, and an interest-crediting cash account. The owner can adjust premium and death benefit (Option A level vs. Option B increasing).

Question 19

Variable Life Insurance

Accepted Answer

Permanent life insurance whose cash value is invested in separate-account subaccounts chosen by the owner. Cash value and (potentially) death benefit vary with investment performance; requires a securities license to sell.

Question 20

Nonforfeiture Options

Accepted Answer

Cash surrender value, reduced paid-up insurance, and extended term insurance. Reduced paid-up gives lifetime coverage at a lower face; extended term keeps the full face for a limited time.

Question 21

Default Nonforfeiture Option (Florida)

Accepted Answer

Under Florida's Standard Nonforfeiture Law, if the owner stops paying premiums and elected no option, the default is extended term insurance — original face amount for a limited period using the cash value.

Question 22

Dividend Options (Participating Policies)

Accepted Answer

Cash, reduce premium, accumulate at interest, paid-up additions, and one-year term. Dividends are a return of overcharged premium and are generally not taxable income.

Question 23

Settlement Options

Accepted Answer

How death proceeds are paid: lump sum, interest only, fixed period, fixed amount, and life income (with or without period certain). Life income guarantees payments for the payee's lifetime.

Question 24

Accelerated Death Benefit / Waiver of Premium

Accepted Answer

Accelerated death benefit advances part of the face amount for a terminal/chronic illness. Waiver of premium keeps the policy in force without premiums if the insured becomes totally disabled (after a waiting period).

Question 25

Fixed vs. Variable vs. Indexed Annuity

Accepted Answer

Fixed: guaranteed minimum rate, insurer bears investment risk. Variable: separate-account subaccounts, owner bears market risk (securities product). Indexed: credited interest tied to a market index with a floor/cap.

Question 26

Accumulation vs. Annuitization (Payout) Phase

Accepted Answer

Accumulation: premiums paid in and earnings grow tax-deferred. Payout/annuitization: the contract is converted to a stream of income — life, life with period certain, joint and survivor, or fixed period/amount.

Question 27

Annuity Taxation (Non-Qualified)

Accepted Answer

Growth is tax-deferred. Withdrawals before annuitization are taxed LIFO (earnings out first, ordinary income), plus a 10% IRS penalty before age 59½. Annuitized payments use the exclusion ratio.

Question 28

Surrender Charge / Free Withdrawal

Accepted Answer

A declining penalty for withdrawing more than the contract's free-withdrawal amount during the surrender period. Suitability concerns arise when replacing an annuity still subject to surrender charges.

Question 29

Disability Income Insurance

Accepted Answer

Replaces a portion of earned income when the insured cannot work due to sickness or injury. Key terms: elimination period (deductible in time), benefit period, and own-occupation vs. any-occupation definition of disability.

Question 30

Elimination Period

Accepted Answer

The waiting period after a disability begins before benefits are payable (e.g., 30/60/90 days). A longer elimination period lowers the premium; it functions like a time deductible.

Question 31

Guaranteed Renewable (Florida Individual Health)

Accepted Answer

Florida requires individual health policies to be guaranteed renewable: the insurer must renew as long as premiums are paid, though it may change premiums by class — not by the individual's claims.

Question 32

ACA Pre-Existing Condition Rule

Accepted Answer

Under the Affordable Care Act, which supersedes state law, pre-existing condition exclusions are prohibited for ACA-compliant health plans, including individual policies sold in Florida.

Question 33

Long-Term Care (LTC) Insurance — Florida Rules

Accepted Answer

Florida follows the NAIC LTC Model Act: insurers must offer inflation protection, policies must be guaranteed renewable, and a 30-day free-look applies. Covers nursing home, assisted living, and home care.

Question 34

Medicare Supplement (Medigap) — Plan A & Open Enrollment

Accepted Answer

Every Medigap insurer must offer Plan A (core benefits). A 6-month open enrollment begins when the person is 65+ and enrolled in Medicare Part B; during it the insurer must accept applicants guaranteed-issue with no underwriting.

Question 35

Medigap vs. Medicare Advantage

Accepted Answer

Medigap supplements Original Medicare by paying its gaps (deductibles/coinsurance). Medicare Advantage (Part C) replaces Original Medicare with a private plan; you cannot use a Medigap policy with Medicare Advantage.

Question 36

Florida Small Employer Health (FS 627.6699)

Accepted Answer

Applies to small employers with 1 to 50 eligible employees, providing small-group protections such as guaranteed availability. COBRA (federal) applies at 20+ employees for up to 18 months of continuation.

Question 37

Group Insurance Conversion Right

Accepted Answer

A terminating group-plan member can usually convert to an individual policy without evidence of insurability if applied for within a set period (often 31 days) after group coverage ends.

Question 38

Florida Life and Health Insurance Guaranty Association (FIGA)

Accepted Answer

Pays covered obligations when a member insurer is insolvent: generally $300,000 life death benefit, $300,000 annuity, and $500,000 health. Funded by assessments on member insurers, not state taxes.

Question 39

Guaranty Association Advertising Ban

Accepted Answer

Florida prohibits agents and insurers from using the existence of the guaranty association in advertising or as a sales inducement. Solvency, not the guaranty fund, should drive carrier selection.

Question 40

Florida Unfair Insurance Trade Practices Act (FS 626.9541)

Accepted Answer

Prohibits misrepresentation, false advertising, defamation of insurers, boycott/coercion, unfair claims practices, twisting, churning, sliding, and unlawful rebating.

Question 41

Twisting (Florida)

Accepted Answer

Inducing a policyholder to drop or replace an existing policy through misrepresentation or an incomplete/misleading comparison. A serious violation of the Unfair Insurance Trade Practices Act.

Question 42

Churning (Florida)

Accepted Answer

Using the cash value, dividends, or other values of an in-force policy to buy additional coverage from the SAME insurer when doing so is not in the policyholder's best interest. Prohibited in Florida.

Question 43

Sliding

Accepted Answer

Charging a consumer for coverage they did not request, or representing that an additional product is required by law when it is not, in connection with an insurance sale. A prohibited Florida unfair practice.

Question 44

Misappropriation of Premium Funds (FS 626.611)

Accepted Answer

An agent who accepts premium but fails to remit it to the insurer commits misappropriation/conversion — a mandatory ground for license denial, suspension, or revocation in Florida.

Question 45

Fiduciary Duty (Florida Agent)

Accepted Answer

Premiums collected belong to the insurer or insured. The agent must hold and remit them in trust; commingling premium funds with personal funds breaches the agent's fiduciary responsibility.

Question 46

Insurable Interest (Life)

Accepted Answer

Must exist at the time of application (not at the time of death, unlike property insurance). A person has unlimited insurable interest in their own life; others need a financial or close-family relationship.

Question 47

Representation vs. Warranty / Concealment

Accepted Answer

A representation is believed-true to the applicant's best knowledge; a warranty is guaranteed true. Concealment is intentionally withholding a material fact. Material misstatements can void coverage within contestability.

Question 48

Adhesion, Aleatory, Unilateral, Conditional

Accepted Answer

Adhesion: insurer drafts it; ambiguity favors the insured. Aleatory: unequal value depending on chance. Unilateral: only the insurer makes an enforceable promise. Conditional: payment depends on conditions being met.

Question 49

Risk Management Methods

Accepted Answer

Avoidance, retention, sharing, reduction (loss control), and transfer. Insurance is a risk-transfer mechanism handling pure (loss-or-no-loss) risk, not speculative risk.

Question 50

Underwriting & Field Underwriting

Accepted Answer

Underwriting is selecting and classifying risks (preferred, standard, substandard, declined). The agent performs field underwriting by gathering accurate application information and observing the applicant.

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