214 FLORIDA INSURANCE 2026 NEWEST EXAM - ACTUAL
EXAM QUESTIONS WITH DETAILED VERIFIED ANSWERS
AND RATIONALES (100% CORRECT) || GRADED A+
1. Which type of insurance protects an agent and even pays claims if a lawsuit is brought against
the agent as a result of failing to provide a service to a client?
Correct Answer: Errors and Omissions Insurance (E&O). ✓
Rationale: Errors and Omissions insurance covers professionals (including insurance agents)
against claims of negligence, failure to perform, or inadequate work that causes financial harm
to a client. It is essential for agents to protect against lawsuits.
2. Which of the following terms is known as the voluntary relinquishment of a given right or
privilege?
Correct Answer: Waiver. ✓
Rationale: A waiver is the intentional and voluntary surrender of a known right. In insurance,
an insurer may waive a policy provision (such as a late payment) by their actions, which can
then be legally binding.
3. This Supreme Court case placed the regulation of insurance within the authority of the federal
government by defining insurance as a form of interstate commerce.
Correct Answer: United States v. Southeastern Underwriters Association (1944). ✓
Rationale: This landmark 1944 Supreme Court decision ruled that insurance was interstate
commerce when conducted across state lines, making it subject to federal regulation under the
Commerce Clause. Congress responded with the McCarran-Ferguson Act (1945), which
returned primary regulation to the states.
4. Tim was just hired today by MAB Inc. and wants to join the company's group insurance
policy. What period of time is he currently in and when can he join the plan?
Correct Answer: Probationary period; he can sign up after 90 days. ✓
Rationale: Most group insurance plans have a probationary period (typically 30-90 days) for
new employees before they become eligible to enroll. During this time, the employee is not yet
covered under the group plan.
pg. 1
,5. If Justin submitted an initial premium with his life insurance application, was provided a
conditional receipt by the insurance company, and was ultimately issued a policy as applied for,
when would his insurance policy be considered in force?
Correct Answer: The date of his application or the day he completed any required medical
exam. ✓
Rationale: A conditional receipt provides coverage from the date of application or medical exam
(whichever is later), provided the applicant is found to be insurable as applied for. If issued as
applied for, coverage is retroactive to that date.
6. When dividends are issued, the policyowner has the following dividend options in utilizing a
return EXCEPT:
Correct Answer: Life Income Option. ✓
Rationale: Standard dividend options include: cash payment, premium reduction, accumulation
at interest, paid-up additions, one-year term insurance, and extended term. Life Income Option is
not a standard dividend option; it is a settlement option for death benefits.
7. Which two life insurance riders can Bill purchase to guarantee that his policy will continue
without further commitment from him and that income will be paid to him if he becomes totally
and permanently disabled?
Correct Answer: Waiver of Premium and Disability Income Riders. ✓
Rationale: Waiver of premium rider waives future premiums if the insured becomes totally
disabled. Disability Income rider provides monthly income during disability. Together, they
ensure the policy continues and provides income.
8. In a contributory group plan, what percentage of eligible employees must be covered?
Correct Answer: 75%. ✓
Rationale: In contributory group plans (where employees pay part of the premium), typically
75% of eligible employees must participate to prevent adverse selection (where only high-risk
individuals enroll). Non-contributory plans require 100% participation.
9. Which statement regarding annuities is CORRECT?
Correct Answer: Variable annuity units are fixed, but the annuity payment will vary according
to the value of the annuity unit. ✓
Rationale: In a variable annuity, the number of accumulation units is fixed, but the value per
pg. 2
,unit fluctuates with the performance of the underlying investments (sub-accounts). Therefore, the
payment amount varies.
10. In order to be considered currently insured and thus eligible for limited survivor benefits
from Social Security, a worker must have earned credits during the 13-quarter period ending with
the quarter in which the worker died.
Correct Answer: 6 credits. ✓
Rationale: To be "currently insured" for Social Security survivor benefits, a worker needs 6
credits (1.5 years of work) in the 13-quarter period before death. Fully insured status requires 40
credits (10 years).
11. Social Security is also known as:
Correct Answer: Old Age Survivors and Disability Insurance (OASDI). ✓
Rationale: OASDI is the official name for Social Security. It provides retirement (Old Age),
survivor (Survivors), and disability (Disability Insurance) benefits to eligible workers and their
families.
12. Insurance is not intended to protect against:
Correct Answer: Speculative Risk. ✓
Rationale: Insurance protects against pure risk (loss or no loss, no gain). Speculative risk
involves the possibility of gain (e.g., gambling, investing) and is not insurable because the risk of
loss is voluntarily assumed.
13. Under a family plan life insurance policy, coverage on the breadwinner is often provided by
which of the following insurance types?
Correct Answer: Whole Life. ✓
Rationale: Family plan policies typically provide whole life insurance on the primary
breadwinner (parents) and term insurance on the spouse and children. This provides permanent
coverage for the main income earner.
14. Which of the following statements regarding annuity settlement or payout options is NOT
true?
Correct Answer: If the annuitant dies before the principal sum is depleted, the Refund Life
Annuity Option will pay the entire annuity amount to the beneficiary in a lump sum payment or
pg. 3
, over scheduled installments. ✓
Rationale: A Refund Life Annuity returns the remaining principal to the beneficiary (either as a
lump sum or installments) only if the annuitant dies before receiving total payments equal to the
purchase price. It does not pay "the entire annuity amount" beyond the remaining principal.
15. The following statements regarding 401(k) retirement plans are correct EXCEPT:
Correct Answer: Plans rarely have a matching contribution component by an employer. ✓
Rationale: Many employers do offer matching contributions (e.g., 50% of employee
contributions up to a certain percentage) as an incentive for employees to participate. The
statement "rarely have a matching component" is incorrect.
16. All of the statements below pertaining to group life insurance are correct EXCEPT:
Correct Answer: If the insurance coverage is less than $75,000, employees do not have to report
the employer-paid premiums as income. ✓
Rationale: The correct threshold for employer-paid group life premiums not being taxable as
income is $50,000 of coverage, not $75,000. Coverage over $50,000 results in taxable income
(imputed income) for the employee.
17. According to Florida Statutes, entering into any agreement to commit any act of intimidation
resulting in the business of insurance is known as:
Correct Answer: Coercion. ✓
Rationale: Coercion in insurance involves using threats, intimidation, or force to influence
insurance business transactions. It is an unfair trade practice prohibited by state insurance
codes.
18. William, age 67, has owned his life insurance policy for the past 15 years and has mailed his
monthly premiums to his life insurance company. Last month he failed to mail the monthly
payment on his premium due date as well as during his policy's grace period. As a result, which
scenario will MOST likely occur?
Correct Answer: The insurer will provide notification of impending lapse in coverage and allow
at least 21 additional days beyond the grace period to make a payment to prevent the policy from
lapsing. ✓
Rationale: Many states require insurers to provide a lapse notice and an additional grace period
(often 21-30 days) after the standard grace period before terminating the policy, especially for
policies with cash value.
pg. 4
EXAM QUESTIONS WITH DETAILED VERIFIED ANSWERS
AND RATIONALES (100% CORRECT) || GRADED A+
1. Which type of insurance protects an agent and even pays claims if a lawsuit is brought against
the agent as a result of failing to provide a service to a client?
Correct Answer: Errors and Omissions Insurance (E&O). ✓
Rationale: Errors and Omissions insurance covers professionals (including insurance agents)
against claims of negligence, failure to perform, or inadequate work that causes financial harm
to a client. It is essential for agents to protect against lawsuits.
2. Which of the following terms is known as the voluntary relinquishment of a given right or
privilege?
Correct Answer: Waiver. ✓
Rationale: A waiver is the intentional and voluntary surrender of a known right. In insurance,
an insurer may waive a policy provision (such as a late payment) by their actions, which can
then be legally binding.
3. This Supreme Court case placed the regulation of insurance within the authority of the federal
government by defining insurance as a form of interstate commerce.
Correct Answer: United States v. Southeastern Underwriters Association (1944). ✓
Rationale: This landmark 1944 Supreme Court decision ruled that insurance was interstate
commerce when conducted across state lines, making it subject to federal regulation under the
Commerce Clause. Congress responded with the McCarran-Ferguson Act (1945), which
returned primary regulation to the states.
4. Tim was just hired today by MAB Inc. and wants to join the company's group insurance
policy. What period of time is he currently in and when can he join the plan?
Correct Answer: Probationary period; he can sign up after 90 days. ✓
Rationale: Most group insurance plans have a probationary period (typically 30-90 days) for
new employees before they become eligible to enroll. During this time, the employee is not yet
covered under the group plan.
pg. 1
,5. If Justin submitted an initial premium with his life insurance application, was provided a
conditional receipt by the insurance company, and was ultimately issued a policy as applied for,
when would his insurance policy be considered in force?
Correct Answer: The date of his application or the day he completed any required medical
exam. ✓
Rationale: A conditional receipt provides coverage from the date of application or medical exam
(whichever is later), provided the applicant is found to be insurable as applied for. If issued as
applied for, coverage is retroactive to that date.
6. When dividends are issued, the policyowner has the following dividend options in utilizing a
return EXCEPT:
Correct Answer: Life Income Option. ✓
Rationale: Standard dividend options include: cash payment, premium reduction, accumulation
at interest, paid-up additions, one-year term insurance, and extended term. Life Income Option is
not a standard dividend option; it is a settlement option for death benefits.
7. Which two life insurance riders can Bill purchase to guarantee that his policy will continue
without further commitment from him and that income will be paid to him if he becomes totally
and permanently disabled?
Correct Answer: Waiver of Premium and Disability Income Riders. ✓
Rationale: Waiver of premium rider waives future premiums if the insured becomes totally
disabled. Disability Income rider provides monthly income during disability. Together, they
ensure the policy continues and provides income.
8. In a contributory group plan, what percentage of eligible employees must be covered?
Correct Answer: 75%. ✓
Rationale: In contributory group plans (where employees pay part of the premium), typically
75% of eligible employees must participate to prevent adverse selection (where only high-risk
individuals enroll). Non-contributory plans require 100% participation.
9. Which statement regarding annuities is CORRECT?
Correct Answer: Variable annuity units are fixed, but the annuity payment will vary according
to the value of the annuity unit. ✓
Rationale: In a variable annuity, the number of accumulation units is fixed, but the value per
pg. 2
,unit fluctuates with the performance of the underlying investments (sub-accounts). Therefore, the
payment amount varies.
10. In order to be considered currently insured and thus eligible for limited survivor benefits
from Social Security, a worker must have earned credits during the 13-quarter period ending with
the quarter in which the worker died.
Correct Answer: 6 credits. ✓
Rationale: To be "currently insured" for Social Security survivor benefits, a worker needs 6
credits (1.5 years of work) in the 13-quarter period before death. Fully insured status requires 40
credits (10 years).
11. Social Security is also known as:
Correct Answer: Old Age Survivors and Disability Insurance (OASDI). ✓
Rationale: OASDI is the official name for Social Security. It provides retirement (Old Age),
survivor (Survivors), and disability (Disability Insurance) benefits to eligible workers and their
families.
12. Insurance is not intended to protect against:
Correct Answer: Speculative Risk. ✓
Rationale: Insurance protects against pure risk (loss or no loss, no gain). Speculative risk
involves the possibility of gain (e.g., gambling, investing) and is not insurable because the risk of
loss is voluntarily assumed.
13. Under a family plan life insurance policy, coverage on the breadwinner is often provided by
which of the following insurance types?
Correct Answer: Whole Life. ✓
Rationale: Family plan policies typically provide whole life insurance on the primary
breadwinner (parents) and term insurance on the spouse and children. This provides permanent
coverage for the main income earner.
14. Which of the following statements regarding annuity settlement or payout options is NOT
true?
Correct Answer: If the annuitant dies before the principal sum is depleted, the Refund Life
Annuity Option will pay the entire annuity amount to the beneficiary in a lump sum payment or
pg. 3
, over scheduled installments. ✓
Rationale: A Refund Life Annuity returns the remaining principal to the beneficiary (either as a
lump sum or installments) only if the annuitant dies before receiving total payments equal to the
purchase price. It does not pay "the entire annuity amount" beyond the remaining principal.
15. The following statements regarding 401(k) retirement plans are correct EXCEPT:
Correct Answer: Plans rarely have a matching contribution component by an employer. ✓
Rationale: Many employers do offer matching contributions (e.g., 50% of employee
contributions up to a certain percentage) as an incentive for employees to participate. The
statement "rarely have a matching component" is incorrect.
16. All of the statements below pertaining to group life insurance are correct EXCEPT:
Correct Answer: If the insurance coverage is less than $75,000, employees do not have to report
the employer-paid premiums as income. ✓
Rationale: The correct threshold for employer-paid group life premiums not being taxable as
income is $50,000 of coverage, not $75,000. Coverage over $50,000 results in taxable income
(imputed income) for the employee.
17. According to Florida Statutes, entering into any agreement to commit any act of intimidation
resulting in the business of insurance is known as:
Correct Answer: Coercion. ✓
Rationale: Coercion in insurance involves using threats, intimidation, or force to influence
insurance business transactions. It is an unfair trade practice prohibited by state insurance
codes.
18. William, age 67, has owned his life insurance policy for the past 15 years and has mailed his
monthly premiums to his life insurance company. Last month he failed to mail the monthly
payment on his premium due date as well as during his policy's grace period. As a result, which
scenario will MOST likely occur?
Correct Answer: The insurer will provide notification of impending lapse in coverage and allow
at least 21 additional days beyond the grace period to make a payment to prevent the policy from
lapsing. ✓
Rationale: Many states require insurers to provide a lapse notice and an additional grace period
(often 21-30 days) after the standard grace period before terminating the policy, especially for
policies with cash value.
pg. 4
