Florida 2-15 Insurance License Exam – 2026/2027
ULTIMATE REVIEW WITH DETAILED SOLUTIONS
• Insurance -✓✓ Financial protection against loss or harm - An arrangement by which
company gives customers financial protection against loss or harm such as theft or
illness in return for premium payments.
• Life Insurance -✓✓ Is based on actuarial or mathematical principles and guarantees a
specified sum of money upon the death of the person who is insured.
• Health Insurance -✓✓ Evolved from scientific principles to provide funds for medical
expensed due to sickness or injury and to cover loss of income during disability
• Annuities -✓✓ Provide a stream of income by making a series of payments to the
annuitant for the annuitant's lifetime or for a specifically designated period of time.
• Risk -✓✓ Uncertainty regarding loss; the probability of loss occurring for an insured or
prospect
• Speculative Risks -✓✓ Involve the possibility of loss and gain. (Not 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
• Physical Hazard -✓✓ A hazard being of physical nature.
A person being treated of cancer, the disease is the physical endangerment. (Blindness
& deafness)
• Risk Avoidance -✓✓ Occurs when individuals evade risk entirely. "If you don't drive,
then you avoid getting in an auto accident."
• Risk Reduction -✓✓ Takes place when the chances of loss are lessened. Changing a
lifestyle to minimize a known risk.
• Risk Retention -✓✓ Being aware of the risks involved and taking precautions for
financial protection. Auto policy's deductible is an illustration of risk retention
• Risk Transference -✓✓ The act of shifting the responsibility of risk to another in the
form of an insurance contract.
,• Adverse Selection -✓✓ Refers to the tendency for those individuals who present less
favorable insurance risk to seek or continue insurance to a great extent than other risks.
• Insuring Pure Risk -✓✓ Loss must be due to chance
Loss must be definite and measurable
Risk must be predictable
Loss must NOT be catastrophic
Exposure to loss must be large
Loss exposures must be randomly selected
• Mutual Insurers -✓✓ Participating policies
Owned by policyholders
Vote for directors and trustees
Directors and management have control
Typically higher rates
• Assessment Mutual Insurers -✓✓ Prohibited in Florida
• Pure Assessment Mutual Company -✓✓ Don't pay premium and total loss is divided
among members
• Lloyds of London -✓✓ NOT considered an insurance company
- An association of individuals and companies that individually underwriter insurance.
• Fraternal Benefit Societies -✓✓ Must be nonprofit, have a lodge system, and offer
insurance to its members only
• Service Providers -✓✓ Contract for and sell medical and hospital care services.
Participants are known as subscribers.
• Home Service Insurer -✓✓ Insurer that offers relatively small policies with premiums
payable on a weekly basis.
• Captive Agents -✓✓ A.k.a. Career agents
Works for only one insurer and sells only that insurers products
• Independent Agents -✓✓ Is self-governing and actually works for himself. This affords
him the versatility to represent several insurers and their different insurance products.
• Special Agents -✓✓ Usually not license and don't sell insurance. Assist insurance
companies field representatives.
,• Career Agency System -✓✓ (GA) - Build sales staffs and agents are treated as
employees. They are recruited and trained. A principal of the company supervises
agents.
• Personal Producing General Agency System -✓✓ (PPGA) - The agent supplies his
own working environment. Agents hired by a PPGA are considered employees of the
PPGA, not the insurance company, and are supervised by the regional salary.
• Independent Agency System -✓✓ Agents represent several insurers through signed
contracts and are paid on commission or fee basis, not through salary.
• Regulating the business of insurance -✓✓ Legislation
The Court System
State Insurance Departments
• Paul v. Virginia -✓✓ - State tried to control insurance domiciled from another state.
- U.S. Supreme Court sided against insurance company
- Upholding the right of sate to regulate insurance
- States WIN
• United States v. Southeastern Underwriters Association (SEUA) -✓✓ - Ruling is a form
of interstate commerce
- Should be regulated by the federal government
- Fed Gov. WINS
• The McCarran-Ferguson Act -✓✓ - Gave back some regulatory authority to the states
- Did not provide the states to regulate individually
- Insurance regulated by state law "is in the publics best interest"
• Intervention by the FTC -✓✓ - FTC tried to control the advertising and sales literature
used by the health insurance industry
- Thus, supreme court held that the McCarran-Ferguson Act disallowed this
- FTC tried even harder to force more federal control
• Intervention by SEC -✓✓ - Dealing with variable annuities
- Securities and Exchange Commission (SEC) should regulate the variable annuities
(since they're used for investments) & variable life insurance.
- Therefore, agents must obey the rules to both SEC and state regulation.
• Fair Credit Reporting Act -✓✓ - Fair and accurate report of information about
consumers
- Insurers must inform them about any investigations being made
- Then insurers must let the applicants know the name of the reporting agency
• Financial Services Modernization Act -✓✓ - Revoking the Glass-Steagall Act
, - This changed the industry so commercial banks, investment banks, retail brokerages,
and insurance companies can now enter each other's lines of business
• Admitted insurance company -✓✓ - Office of Insurance Regulation has licensed them
to carry out business in Florida
• Nonadmitted Insurance Company -✓✓ - Have not been licensed by the the Florida
Office of Insurance Regulation
• HMO -✓✓ Health Maintenance Organization
- Health care management stressing preventive health care, early diagnosis and
treatment on an outpatient basis
• Policy Replacement -✓✓ - An action which eliminates the original policy or diminishes
its benefits or values
• Bad policy remplacement issues -✓✓ - Most the first year's premium is consumed by
the commission
- The premium is higher due to the insured's advanced age
- Waiting periods begin anew
• Misuse of Premiums -✓✓ - Improper use of premiums collected by an insurance
producer
- Depositing a client's premium in own personal account
• Rebating -✓✓ - Florida and California are the only two states that allow rebating
- When any part of commission or anything else of value is given to the insured as a
incentive to buy a policy
- Agent must keep copies of rebating schedules for five years
• NAIC -✓✓ - National Association of Insurance Commissioners
- No legal power of its own
- Encourages uniformity in state insurance laws and regulations
• Florida Insurance Guaranty Association -✓✓ - Funded by insurance companies
through assessments
-FIGA is part of a non-profit,
- Guaranty associations protect policyholders and claimants.
- Holds three separate accounts:
- Health Insurance
- Life Insurance
- Annuity Accounts
• NAIFA -✓✓ - National Association of Insurance and Financial Advisors (NAIFA)
- Designed to protect agents
ULTIMATE REVIEW WITH DETAILED SOLUTIONS
• Insurance -✓✓ Financial protection against loss or harm - An arrangement by which
company gives customers financial protection against loss or harm such as theft or
illness in return for premium payments.
• Life Insurance -✓✓ Is based on actuarial or mathematical principles and guarantees a
specified sum of money upon the death of the person who is insured.
• Health Insurance -✓✓ Evolved from scientific principles to provide funds for medical
expensed due to sickness or injury and to cover loss of income during disability
• Annuities -✓✓ Provide a stream of income by making a series of payments to the
annuitant for the annuitant's lifetime or for a specifically designated period of time.
• Risk -✓✓ Uncertainty regarding loss; the probability of loss occurring for an insured or
prospect
• Speculative Risks -✓✓ Involve the possibility of loss and gain. (Not 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
• Physical Hazard -✓✓ A hazard being of physical nature.
A person being treated of cancer, the disease is the physical endangerment. (Blindness
& deafness)
• Risk Avoidance -✓✓ Occurs when individuals evade risk entirely. "If you don't drive,
then you avoid getting in an auto accident."
• Risk Reduction -✓✓ Takes place when the chances of loss are lessened. Changing a
lifestyle to minimize a known risk.
• Risk Retention -✓✓ Being aware of the risks involved and taking precautions for
financial protection. Auto policy's deductible is an illustration of risk retention
• Risk Transference -✓✓ The act of shifting the responsibility of risk to another in the
form of an insurance contract.
,• Adverse Selection -✓✓ Refers to the tendency for those individuals who present less
favorable insurance risk to seek or continue insurance to a great extent than other risks.
• Insuring Pure Risk -✓✓ Loss must be due to chance
Loss must be definite and measurable
Risk must be predictable
Loss must NOT be catastrophic
Exposure to loss must be large
Loss exposures must be randomly selected
• Mutual Insurers -✓✓ Participating policies
Owned by policyholders
Vote for directors and trustees
Directors and management have control
Typically higher rates
• Assessment Mutual Insurers -✓✓ Prohibited in Florida
• Pure Assessment Mutual Company -✓✓ Don't pay premium and total loss is divided
among members
• Lloyds of London -✓✓ NOT considered an insurance company
- An association of individuals and companies that individually underwriter insurance.
• Fraternal Benefit Societies -✓✓ Must be nonprofit, have a lodge system, and offer
insurance to its members only
• Service Providers -✓✓ Contract for and sell medical and hospital care services.
Participants are known as subscribers.
• Home Service Insurer -✓✓ Insurer that offers relatively small policies with premiums
payable on a weekly basis.
• Captive Agents -✓✓ A.k.a. Career agents
Works for only one insurer and sells only that insurers products
• Independent Agents -✓✓ Is self-governing and actually works for himself. This affords
him the versatility to represent several insurers and their different insurance products.
• Special Agents -✓✓ Usually not license and don't sell insurance. Assist insurance
companies field representatives.
,• Career Agency System -✓✓ (GA) - Build sales staffs and agents are treated as
employees. They are recruited and trained. A principal of the company supervises
agents.
• Personal Producing General Agency System -✓✓ (PPGA) - The agent supplies his
own working environment. Agents hired by a PPGA are considered employees of the
PPGA, not the insurance company, and are supervised by the regional salary.
• Independent Agency System -✓✓ Agents represent several insurers through signed
contracts and are paid on commission or fee basis, not through salary.
• Regulating the business of insurance -✓✓ Legislation
The Court System
State Insurance Departments
• Paul v. Virginia -✓✓ - State tried to control insurance domiciled from another state.
- U.S. Supreme Court sided against insurance company
- Upholding the right of sate to regulate insurance
- States WIN
• United States v. Southeastern Underwriters Association (SEUA) -✓✓ - Ruling is a form
of interstate commerce
- Should be regulated by the federal government
- Fed Gov. WINS
• The McCarran-Ferguson Act -✓✓ - Gave back some regulatory authority to the states
- Did not provide the states to regulate individually
- Insurance regulated by state law "is in the publics best interest"
• Intervention by the FTC -✓✓ - FTC tried to control the advertising and sales literature
used by the health insurance industry
- Thus, supreme court held that the McCarran-Ferguson Act disallowed this
- FTC tried even harder to force more federal control
• Intervention by SEC -✓✓ - Dealing with variable annuities
- Securities and Exchange Commission (SEC) should regulate the variable annuities
(since they're used for investments) & variable life insurance.
- Therefore, agents must obey the rules to both SEC and state regulation.
• Fair Credit Reporting Act -✓✓ - Fair and accurate report of information about
consumers
- Insurers must inform them about any investigations being made
- Then insurers must let the applicants know the name of the reporting agency
• Financial Services Modernization Act -✓✓ - Revoking the Glass-Steagall Act
, - This changed the industry so commercial banks, investment banks, retail brokerages,
and insurance companies can now enter each other's lines of business
• Admitted insurance company -✓✓ - Office of Insurance Regulation has licensed them
to carry out business in Florida
• Nonadmitted Insurance Company -✓✓ - Have not been licensed by the the Florida
Office of Insurance Regulation
• HMO -✓✓ Health Maintenance Organization
- Health care management stressing preventive health care, early diagnosis and
treatment on an outpatient basis
• Policy Replacement -✓✓ - An action which eliminates the original policy or diminishes
its benefits or values
• Bad policy remplacement issues -✓✓ - Most the first year's premium is consumed by
the commission
- The premium is higher due to the insured's advanced age
- Waiting periods begin anew
• Misuse of Premiums -✓✓ - Improper use of premiums collected by an insurance
producer
- Depositing a client's premium in own personal account
• Rebating -✓✓ - Florida and California are the only two states that allow rebating
- When any part of commission or anything else of value is given to the insured as a
incentive to buy a policy
- Agent must keep copies of rebating schedules for five years
• NAIC -✓✓ - National Association of Insurance Commissioners
- No legal power of its own
- Encourages uniformity in state insurance laws and regulations
• Florida Insurance Guaranty Association -✓✓ - Funded by insurance companies
through assessments
-FIGA is part of a non-profit,
- Guaranty associations protect policyholders and claimants.
- Holds three separate accounts:
- Health Insurance
- Life Insurance
- Annuity Accounts
• NAIFA -✓✓ - National Association of Insurance and Financial Advisors (NAIFA)
- Designed to protect agents
