2/19/25, 2:03 PM Actual exam for Florida Insurance 2-14 Exam Terms 2025 update|comprehensive questions and verified answers (complete so…
Actual exam for Florida Insurance 2-14 Exam
Terms 2025 update|comprehensive questions
and verified answers (complete solutions)
GRADE A+!!
Save
Terms in this set (350)
Financial protection against loss or harm - An
arrangement by which company gives customers
Insurance
financial protection against loss or harm such as
theft or illness in return for premium payments.
Is based on actuarial or mathematical principles and
Life Insurance guarantees a specified sum of money upon the
death of the person who is insured.
Provide a stream of income by making a series of
Annuities payments to the annuitant for the annuitant's lifetime
or for a specifically designated period of time.
Uncertainty regarding loss; the probability of loss
Risk
occurring for an insured or prospect
Involve the possibility of loss and gain. (Not
Speculative Risks
Insurable)
Pure Risks Involve the possibility of loss only. (Insurable)
Peril Cause of risk (when a building burns, fire is the peril)
Hazards The source of danger
A hazard being of physical nature.
Physical Hazard A person being treated of cancer, the disease is the
physical endangerment. (Blindness & deafness)
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Occurs when individuals evade risk entirely. "If you
Risk Avoidance don't drive, then you avoid getting in an auto
accident."
Takes place when the chances of loss are lessened.
Risk Reduction
Changing a lifestyle to minimize a known risk.
Being aware of the risks involved and taking
Risk Retention precautions for financial protection. Auto policy's
deductible is an illustration of risk retention
The act of shifting the responsibility of risk to
Risk Transference
another in the form of an insurance contract.
Refers to the tendency for those individuals who
Adverse Selection present less favorable insurance risk to seek or
continue insurance to a great extent than other risks.
Loss must be due to chance
Loss must be definite and measurable
Risk must be predictable
Insuring Pure Risk
Loss must NOT be catastrophic
Exposure to loss must be large
Loss exposures must be randomly selected
Participating policies
Owned by policyholders
Mutual Insurers Vote for directors and trustees
Directors and management have control
Typically higher rates
Assessment Mutual Prohibited in Florida
Insurers
Pure Assessment Mutual Don't pay premium and total loss is divided among
Company members
NOT considered an insurance company
Lloyds of London - An association of individuals and companies that
individually underwriter insurance.
Fraternal Benefit Must be nonprofit, have a lodge system, and offer
Societies insurance to its members only
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,2/19/25, 2:03 PM Actual exam for Florida Insurance 2-14 Exam Terms 2025 update|comprehensive questions and verified answers (complete so…
Insurer that offers relatively small policies with
Home Service Insurer
premiums payable on a weekly basis.
A.k.a. Career agents
Captive Agents Works for only one insurer and sells only that
insurers products
Is self-governing and actually works for himself. This
Independent Agents affords him the versatility to represent several
insurers and their different insurance products.
Usually not license and don't sell insurance. Assist
Special Agents
insurance companies field representatives.
(GA) - Build sales staffs and agents are treated as
Career Agency System employees. They are recruited and trained. A
principal of the company supervises agents.
(PPGA) - The agent supplies his own working
environment. Agents hired by a PPGA are
Personal Producing
considered employees of the PPGA, not the
General Agency System
insurance company, and are supervised by the
regional salary.
Agents represent several insurers through signed
Independent Agency
contracts and are paid on commission or fee basis,
System
not through salary.
Legislation
Regulating the business
The Court System
of insurance
State Insurance Departments
- State tried to control insurance domiciled from
another state.
- U.S. Supreme Court sided against insurance
Paul v. Virginia
company
- Upholding the right of sate to regulate insurance
- States WIN
United States v. - Ruling is a form of interstate commerce
Southeastern - Should be regulated by the federal government
Underwriters Association - Fed Gov. WINS
(SEUA)
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- Gave back some regulatory authority to the states
The McCarran-Ferguson - Did not provide the states to regulate individually
Act - Insurance regulated by state law "is in the publics
best interest"
- Dealing with variable annuities
- Securities and Exchange Commission (SEC) should
regulate the variable annuities (since they're used
Intervention by SEC
for investments) & variable life insurance.
- Therefore, agents must obey the rules to both SEC
and state regulation.
- Fair and accurate report of information about
consumers
- Insurers must inform them about any investigations
Fair Credit Reporting Act
being made
- Then insurers must let the applicants know the
name of the reporting agency
- Revoking the Glass-Steagall Act
- This changed the industry so commercial banks,
Financial Services
investment banks, retail brokerages, and insurance
Modernization Act
companies can now enter each other's lines of
business
Admitted insurance - Office of Insurance Regulation has licensed them
company to carry out business in Florida
Nonadmitted Insurance - Have not been licensed by the the Florida Office
Company of Insurance Regulation
- An action which eliminates the original policy or
Policy Replacement
diminishes its benefits or values
- Most the first year's premium is consumed by the
commission
Bad policy remplacement
- The premium is higher due to the insured's
issues
advanced age
- Waiting periods begin anew
- Improper use of premiums collected by an
insurance producer
Misuse of Premiums
- Depositing a client's premium in own personal
account
https://quizlet.com/1007882722/actual-exam-for-florida-insurance-2-14-exam-terms-2025-updatecomprehensive-questions-and-verified-answers… 4/39
Actual exam for Florida Insurance 2-14 Exam
Terms 2025 update|comprehensive questions
and verified answers (complete solutions)
GRADE A+!!
Save
Terms in this set (350)
Financial protection against loss or harm - An
arrangement by which company gives customers
Insurance
financial protection against loss or harm such as
theft or illness in return for premium payments.
Is based on actuarial or mathematical principles and
Life Insurance guarantees a specified sum of money upon the
death of the person who is insured.
Provide a stream of income by making a series of
Annuities payments to the annuitant for the annuitant's lifetime
or for a specifically designated period of time.
Uncertainty regarding loss; the probability of loss
Risk
occurring for an insured or prospect
Involve the possibility of loss and gain. (Not
Speculative Risks
Insurable)
Pure Risks Involve the possibility of loss only. (Insurable)
Peril Cause of risk (when a building burns, fire is the peril)
Hazards The source of danger
A hazard being of physical nature.
Physical Hazard A person being treated of cancer, the disease is the
physical endangerment. (Blindness & deafness)
https://quizlet.com/1007882722/actual-exam-for-florida-insurance-2-14-exam-terms-2025-updatecomprehensive-questions-and-verified-answers… 1/39
,2/19/25, 2:03 PM Actual exam for Florida Insurance 2-14 Exam Terms 2025 update|comprehensive questions and verified answers (complete so…
Occurs when individuals evade risk entirely. "If you
Risk Avoidance don't drive, then you avoid getting in an auto
accident."
Takes place when the chances of loss are lessened.
Risk Reduction
Changing a lifestyle to minimize a known risk.
Being aware of the risks involved and taking
Risk Retention precautions for financial protection. Auto policy's
deductible is an illustration of risk retention
The act of shifting the responsibility of risk to
Risk Transference
another in the form of an insurance contract.
Refers to the tendency for those individuals who
Adverse Selection present less favorable insurance risk to seek or
continue insurance to a great extent than other risks.
Loss must be due to chance
Loss must be definite and measurable
Risk must be predictable
Insuring Pure Risk
Loss must NOT be catastrophic
Exposure to loss must be large
Loss exposures must be randomly selected
Participating policies
Owned by policyholders
Mutual Insurers Vote for directors and trustees
Directors and management have control
Typically higher rates
Assessment Mutual Prohibited in Florida
Insurers
Pure Assessment Mutual Don't pay premium and total loss is divided among
Company members
NOT considered an insurance company
Lloyds of London - An association of individuals and companies that
individually underwriter insurance.
Fraternal Benefit Must be nonprofit, have a lodge system, and offer
Societies insurance to its members only
https://quizlet.com/1007882722/actual-exam-for-florida-insurance-2-14-exam-terms-2025-updatecomprehensive-questions-and-verified-answers… 2/39
,2/19/25, 2:03 PM Actual exam for Florida Insurance 2-14 Exam Terms 2025 update|comprehensive questions and verified answers (complete so…
Insurer that offers relatively small policies with
Home Service Insurer
premiums payable on a weekly basis.
A.k.a. Career agents
Captive Agents Works for only one insurer and sells only that
insurers products
Is self-governing and actually works for himself. This
Independent Agents affords him the versatility to represent several
insurers and their different insurance products.
Usually not license and don't sell insurance. Assist
Special Agents
insurance companies field representatives.
(GA) - Build sales staffs and agents are treated as
Career Agency System employees. They are recruited and trained. A
principal of the company supervises agents.
(PPGA) - The agent supplies his own working
environment. Agents hired by a PPGA are
Personal Producing
considered employees of the PPGA, not the
General Agency System
insurance company, and are supervised by the
regional salary.
Agents represent several insurers through signed
Independent Agency
contracts and are paid on commission or fee basis,
System
not through salary.
Legislation
Regulating the business
The Court System
of insurance
State Insurance Departments
- State tried to control insurance domiciled from
another state.
- U.S. Supreme Court sided against insurance
Paul v. Virginia
company
- Upholding the right of sate to regulate insurance
- States WIN
United States v. - Ruling is a form of interstate commerce
Southeastern - Should be regulated by the federal government
Underwriters Association - Fed Gov. WINS
(SEUA)
https://quizlet.com/1007882722/actual-exam-for-florida-insurance-2-14-exam-terms-2025-updatecomprehensive-questions-and-verified-answers… 3/39
, 2/19/25, 2:03 PM Actual exam for Florida Insurance 2-14 Exam Terms 2025 update|comprehensive questions and verified answers (complete so…
- Gave back some regulatory authority to the states
The McCarran-Ferguson - Did not provide the states to regulate individually
Act - Insurance regulated by state law "is in the publics
best interest"
- Dealing with variable annuities
- Securities and Exchange Commission (SEC) should
regulate the variable annuities (since they're used
Intervention by SEC
for investments) & variable life insurance.
- Therefore, agents must obey the rules to both SEC
and state regulation.
- Fair and accurate report of information about
consumers
- Insurers must inform them about any investigations
Fair Credit Reporting Act
being made
- Then insurers must let the applicants know the
name of the reporting agency
- Revoking the Glass-Steagall Act
- This changed the industry so commercial banks,
Financial Services
investment banks, retail brokerages, and insurance
Modernization Act
companies can now enter each other's lines of
business
Admitted insurance - Office of Insurance Regulation has licensed them
company to carry out business in Florida
Nonadmitted Insurance - Have not been licensed by the the Florida Office
Company of Insurance Regulation
- An action which eliminates the original policy or
Policy Replacement
diminishes its benefits or values
- Most the first year's premium is consumed by the
commission
Bad policy remplacement
- The premium is higher due to the insured's
issues
advanced age
- Waiting periods begin anew
- Improper use of premiums collected by an
insurance producer
Misuse of Premiums
- Depositing a client's premium in own personal
account
https://quizlet.com/1007882722/actual-exam-for-florida-insurance-2-14-exam-terms-2025-updatecomprehensive-questions-and-verified-answers… 4/39
