Florida 2-15 Insurance
License Exam /
Comprehensive Study Guide
Complete 200+ Questions
and Correct Detailed
Answers
1. Which of the following best defines an insurance contract?
A. A mutual agreement between two parties
B. A legally binding agreement to indemnify against loss
C. A non-binding proposal for coverage
D. A discretionary financial agreement
✅ Correct Answer: B. A legally binding agreement to indemnify against loss
Explanation: An insurance policy is a contract in which the insurer agrees to compensate the
insured for specific potential future losses in exchange for a periodic premium.
2. What is the purpose of the free look provision in a life insurance policy?
A. Allows the insurer to cancel coverage
B. Allows the agent to alter terms of the policy
C. Gives the insured a time to review and cancel the policy
D. Protects the insurer from fraudulent claims
✅ Correct Answer: C. Gives the insured a time to review and cancel the policy
Explanation: The free look provision allows the policyholder a specific number of days
(typically 14) to cancel the policy without penalty.
,3. Which of the following policies builds cash value and allows the
policyholder to adjust the premium and death benefit?
A. Term life insurance
B. Whole life insurance
C. Universal life insurance
D. Accidental death insurance
✅ Correct Answer: C. Universal life insurance
Explanation: Universal life insurance is flexible, offering adjustable premiums and death
benefits, and it accumulates cash value.
4. Under Florida law, how long is the grace period for individual life
insurance policies?
A. 10 days
B. 15 days
C. 30 days
D. 60 days
✅ Correct Answer: C. 30 days
Explanation: Florida law mandates a 30-day grace period during which a policyholder can
make a late premium payment to prevent lapse.
5. What is the primary purpose of the Florida Life and Health Insurance
Guaranty Association?
A. To approve new insurance products
B. To offer group life insurance policies
C. To protect policyholders if their insurer becomes insolvent
D. To handle all insurance claims in Florida
✅ Correct Answer: C. To protect policyholders if their insurer becomes insolvent
Explanation: The Guaranty Association provides protection to policyholders in case of
insurance company failure, up to statutory limits.
6. Which of the following is NOT a required provision in a health insurance
policy in Florida?
A. Grace period
B. Incontestability clause
,C. Waiver of premium
D. Reinstatement clause
✅ Correct Answer: C. Waiver of premium
Explanation: Waiver of premium is a common optional benefit, not a required provision in
health insurance policies in Florida.
7. What does the term “adverse selection” mean in insurance?
A. Offering benefits that are too expensive
B. Selecting only high-risk individuals for coverage
C. Individuals most likely to file a claim are the ones who seek insurance
D. Underwriting all applicants equally
✅ Correct Answer: C. Individuals most likely to file a claim are the ones who seek
insurance
Explanation: Adverse selection refers to the tendency of those who are more likely to use
insurance benefits to purchase insurance.
8. What is a participating life insurance policy?
A. One that has no investment feature
B. A policy that pays dividends to policyholders
C. A policy issued by a government entity
D. A policy with no named beneficiary
✅ Correct Answer: B. A policy that pays dividends to policyholders
Explanation: Participating policies are typically issued by mutual insurers and may pay
dividends to the policyholders.
9. What type of annuity guarantees income payments for the annuitant’s
entire life, regardless of how long they live?
A. Fixed period annuity
B. Joint-life annuity
C. Life annuity
D. Variable annuity
✅ Correct Answer: C. Life annuity
Explanation: A life annuity provides payments for the lifetime of the annuitant, reducing the
risk of outliving one's income.
, 10. Which of the following best describes the concept of insurable interest?
A. A legal requirement that the agent receives commission
B. A policyholder must profit from the insured’s death
C. The policyholder must suffer a financial loss if the insured dies
D. The insurer must profit from the policy
✅ Correct Answer: C. The policyholder must suffer a financial loss if the insured dies
Explanation: Insurable interest exists when the policyholder would face financial loss from the
insured's death or disability.
11. What is the main purpose of underwriting in insurance?
A. To advertise policies
B. To collect premiums
C. To evaluate risk and decide eligibility
D. To handle claims
✅ Correct Answer: C. To evaluate risk and decide eligibility
Explanation: Underwriting assesses the risk of insuring a person and determines the terms or
premiums based on that risk.
12. In a group health plan, who receives the master contract?
A. Each employee
B. The insurer
C. The group sponsor/employer
D. The state insurance department
✅ Correct Answer: C. The group sponsor/employer
Explanation: The employer or organization is issued the master contract, and employees
receive certificates of insurance.
13. What does a reinstatement clause allow a policyholder to do?
A. Change beneficiaries
B. Reapply for lapsed coverage under certain conditions
C. Cancel the policy without penalty
D. Adjust the interest rate on cash value
✅ Correct Answer: B. Reapply for lapsed coverage under certain conditions
Explanation: The reinstatement clause allows a policyholder to reactivate a lapsed policy by
fulfilling certain conditions like back payment.
License Exam /
Comprehensive Study Guide
Complete 200+ Questions
and Correct Detailed
Answers
1. Which of the following best defines an insurance contract?
A. A mutual agreement between two parties
B. A legally binding agreement to indemnify against loss
C. A non-binding proposal for coverage
D. A discretionary financial agreement
✅ Correct Answer: B. A legally binding agreement to indemnify against loss
Explanation: An insurance policy is a contract in which the insurer agrees to compensate the
insured for specific potential future losses in exchange for a periodic premium.
2. What is the purpose of the free look provision in a life insurance policy?
A. Allows the insurer to cancel coverage
B. Allows the agent to alter terms of the policy
C. Gives the insured a time to review and cancel the policy
D. Protects the insurer from fraudulent claims
✅ Correct Answer: C. Gives the insured a time to review and cancel the policy
Explanation: The free look provision allows the policyholder a specific number of days
(typically 14) to cancel the policy without penalty.
,3. Which of the following policies builds cash value and allows the
policyholder to adjust the premium and death benefit?
A. Term life insurance
B. Whole life insurance
C. Universal life insurance
D. Accidental death insurance
✅ Correct Answer: C. Universal life insurance
Explanation: Universal life insurance is flexible, offering adjustable premiums and death
benefits, and it accumulates cash value.
4. Under Florida law, how long is the grace period for individual life
insurance policies?
A. 10 days
B. 15 days
C. 30 days
D. 60 days
✅ Correct Answer: C. 30 days
Explanation: Florida law mandates a 30-day grace period during which a policyholder can
make a late premium payment to prevent lapse.
5. What is the primary purpose of the Florida Life and Health Insurance
Guaranty Association?
A. To approve new insurance products
B. To offer group life insurance policies
C. To protect policyholders if their insurer becomes insolvent
D. To handle all insurance claims in Florida
✅ Correct Answer: C. To protect policyholders if their insurer becomes insolvent
Explanation: The Guaranty Association provides protection to policyholders in case of
insurance company failure, up to statutory limits.
6. Which of the following is NOT a required provision in a health insurance
policy in Florida?
A. Grace period
B. Incontestability clause
,C. Waiver of premium
D. Reinstatement clause
✅ Correct Answer: C. Waiver of premium
Explanation: Waiver of premium is a common optional benefit, not a required provision in
health insurance policies in Florida.
7. What does the term “adverse selection” mean in insurance?
A. Offering benefits that are too expensive
B. Selecting only high-risk individuals for coverage
C. Individuals most likely to file a claim are the ones who seek insurance
D. Underwriting all applicants equally
✅ Correct Answer: C. Individuals most likely to file a claim are the ones who seek
insurance
Explanation: Adverse selection refers to the tendency of those who are more likely to use
insurance benefits to purchase insurance.
8. What is a participating life insurance policy?
A. One that has no investment feature
B. A policy that pays dividends to policyholders
C. A policy issued by a government entity
D. A policy with no named beneficiary
✅ Correct Answer: B. A policy that pays dividends to policyholders
Explanation: Participating policies are typically issued by mutual insurers and may pay
dividends to the policyholders.
9. What type of annuity guarantees income payments for the annuitant’s
entire life, regardless of how long they live?
A. Fixed period annuity
B. Joint-life annuity
C. Life annuity
D. Variable annuity
✅ Correct Answer: C. Life annuity
Explanation: A life annuity provides payments for the lifetime of the annuitant, reducing the
risk of outliving one's income.
, 10. Which of the following best describes the concept of insurable interest?
A. A legal requirement that the agent receives commission
B. A policyholder must profit from the insured’s death
C. The policyholder must suffer a financial loss if the insured dies
D. The insurer must profit from the policy
✅ Correct Answer: C. The policyholder must suffer a financial loss if the insured dies
Explanation: Insurable interest exists when the policyholder would face financial loss from the
insured's death or disability.
11. What is the main purpose of underwriting in insurance?
A. To advertise policies
B. To collect premiums
C. To evaluate risk and decide eligibility
D. To handle claims
✅ Correct Answer: C. To evaluate risk and decide eligibility
Explanation: Underwriting assesses the risk of insuring a person and determines the terms or
premiums based on that risk.
12. In a group health plan, who receives the master contract?
A. Each employee
B. The insurer
C. The group sponsor/employer
D. The state insurance department
✅ Correct Answer: C. The group sponsor/employer
Explanation: The employer or organization is issued the master contract, and employees
receive certificates of insurance.
13. What does a reinstatement clause allow a policyholder to do?
A. Change beneficiaries
B. Reapply for lapsed coverage under certain conditions
C. Cancel the policy without penalty
D. Adjust the interest rate on cash value
✅ Correct Answer: B. Reapply for lapsed coverage under certain conditions
Explanation: The reinstatement clause allows a policyholder to reactivate a lapsed policy by
fulfilling certain conditions like back payment.
