Buyer's Guide and Florida free look periods

Florida's life insurance solicitation rule decides two things candidates keep merging: WHAT must be delivered, and WHEN. The delivery deadline actually depends on the refund period the policy carries, which is why the free-look numbers and the disclosure rules belong on the same page. There are three different free-look lengths and the exam uses all of them as each other's distractors.

Questions and answers, explained

All 12 questions above, with the correct answer and why it is correct. Everything here is on buyer's guide and florida free look periods.

1. Under Florida law, an individual life insurance policy delivered in the state must give the policyowner an unconditional refund (free-look) period of at least how many days?

   • A10 days
   • B14 daysCorrect
   • C21 days
   • D30 days

   Why: Section 626.99(4), F.S., requires life insurance policies to provide an unconditional refund period of at least 14 days, during which the owner may return the policy for a full refund. The 21-day period applies to annuity contracts, and 30 days applies to Medicare supplement and long-term care policies — common distractors on this exam.

   Reference FL-II.A; s. 626.99(4), F.S.

2. A Medicare supplement policy delivered in Florida must give the policyholder a free-look period, during which it may be returned for a full premium refund, of:

   • A10 days
   • B14 days
   • C21 days
   • D30 daysCorrect

   Why: Under s. 627.674, F.S., every Medicare supplement policy issued in Florida must provide a 30-day free look: the policyholder may return the policy within 30 days of delivery for a full refund of all premiums. The 14-day period applies to life policies and 21 days to annuities — much shorter than the senior-product standard.

   Reference FL-III.D; s. 627.674, F.S.

3. A group of investors offers to pay all the premiums for a large life insurance policy on a 72-year-old Florida retiree, with the understanding that he will transfer ownership of the policy to them after it is issued. He has no other relationship with the investors. This arrangement is best described as:

   • AA legitimate life settlement, because a senior is free to sell any policy that he already owns
   • BStranger-originated life insurance, prohibited because investors lack insurable interestCorrect
   • CThird-party ownership, which is permitted whenever the owner pays the premiums
   • DA key person arrangement, because the investors have a financial interest in him

   Why: STOLI is an arrangement to initiate a life insurance policy for the benefit of third-party investors who have no insurable interest in the insured at policy origination — it manufactures coverage to circumvent Florida's insurable interest law, and Florida treats it as a prohibited fraudulent practice (s. 626.99275, F.S.). A legitimate life settlement (the closest distractor) involves selling a policy that was originally purchased in good faith for the owner's own insurance needs, not one created for investors from the start. Outline III.B (STOLI/IOLI).

   Reference Outline III.B — STOLI/IOLI; s. 626.99275, F.S.

4. Under Florida's Viatical Settlement Act, a viatical settlement broker who negotiates the sale of a life insurance policy on behalf of the policyowner (the viator) legally represents:

   • AThe viatical settlement provider that is purchasing the policy directly from the viator
   • BThe insurer that issued the life insurance policy being sold by the viator
   • CThe viator and the provider equally, acting as a neutral intermediary
   • DOnly the viator, to whom the broker owes a fiduciary duty to act in his best interestCorrect

   Why: Section 626.9911, F.S., provides that a viatical settlement broker is deemed to represent only the viator and owes the viator a fiduciary duty to act according to the viator's instructions and in the viator's best interest — even though the provider typically pays the broker's compensation. In Florida, only a licensed life agent may perform the functions of a viatical settlement broker, after self-appointing with the department (s. 626.9916, F.S.). Outline IV.B (life settlements).

   Reference Outline IV.B — Life settlements; ss. 626.9911, 626.9916, F.S.

5. Ana receives her newly issued individual life insurance policy in Florida. For how long may she return it for an unconditional refund under the free look?

   • A10 days.
   • B14 days.Correct
   • C21 days.
   • D30 days.

   Why: Florida's life insurance solicitation law requires that life policies provide an unconditional refund period of at least 14 days, during which the owner may return the policy for a full refund (s. 626.99(4), F.S.). Option C is the closest distractor because 21 days is Florida's unconditional refund period for annuity contracts, not life policies. (Outline II.B.)

   Reference s. 626.99(4), F.S.; FL 2-15 Outline II.B (Free look)

6. A Florida resident purchases a fixed deferred annuity. Under s. 626.99, F.S., how long is the unconditional refund period during which she may return the contract for a full refund?

   • A10 days
   • B14 days
   • C21 daysCorrect
   • D45 days

   Why: Florida requires annuity contracts to provide an unconditional refund period of at least 21 days, and the insurer must attach a cover page informing the purchaser of this right (s. 626.99(4), F.S.). Do not confuse this with the 14-day free look that applies to life insurance policies.

   Reference FL-II.A; s. 626.99(4), F.S.

7. Maria applied for a whole life policy on April 1 but did not pay the initial premium with the application. The insurer approved and issued the policy on April 10. On April 18, the agent delivered the policy, collected the first premium, and obtained Maria's signed statement of continued good health. When did Maria's coverage take effect?

   • AApril 1, the date on which the application was signed and dated by Maria at the agent’s office
   • BApril 10, the date on which the insurer approved and formally issued the policy
   • CApril 18, when the policy was delivered, the premium paid, and the health statement signedCorrect
   • DMay 2, when Florida’s 14-day free-look period expired on the policy

   Why: Because no premium accompanied the application, no conditional receipt existed and no coverage could begin until the policy was delivered and the first premium paid; the signed statement of continued good health protects the insurer against changes in insurability since the application. Option D confuses the free look — Florida's 14-day unconditional refund period (s. 626.99, F.S.) is the owner's right to return the policy, and it does not delay when coverage starts. Outline III.C (when coverage begins).

   Reference Outline III.C — Delivering the policy: when coverage begins; s. 626.99, F.S.

8. Which statement correctly distinguishes the free-look (unconditional refund) provision from the grace period?

   • AThe free look lets a new owner return the policy for a refund; the grace period prevents lapse.Correct
   • BBoth provisions let the policyowner recover the full premiums that have already been paid in.
   • CThe grace period applies to the first premium, and the free look applies to every renewal premium.
   • DBoth periods are exactly 30 days long under Florida law for all life policies.

   Why: The two provisions solve different problems at different moments: Florida requires life policies to offer an unconditional refund of at least 14 days after delivery (s. 626.99(4)(a), F.S.) and a grace period of not less than 30 days for premiums after the first (s. 627.453, F.S.). Option B is the closest distractor and is wrong because using the grace period refunds nothing — it simply preserves coverage while the overdue premium is paid. Option D confuses the two very different Florida time limits. (Outline II.B.)

   Reference ss. 626.99(4)(a), 627.453, F.S.; FL 2-15 Outline II.B (Free look and grace period)

9. An agent takes a life insurance application and collects the initial premium, but the insurer did not provide a Buyer's Guide and policy summary before accepting that premium. Under s. 626.99, F.S., this is permissible only if:

   • AThe applicant signs a written waiver giving up the right to receive the documents at all
   • BThe Buyer’s Guide and the policy summary are both mailed within 30 days after the policy is delivered
   • CThe annual premium on the policy is less than $500 in the first year
   • DThe policy gives an unconditional refund period of at least 14 days and documents come with itCorrect

   Why: Section 626.99, F.S., requires delivery of the Buyer's Guide and policy summary before the insurer accepts the initial premium, unless the policy provides an unconditional 14-day refund period, in which case the documents may be delivered with or before the policy. There is no waiver option and no premium-amount exception.

   Reference FL-II.A; s. 626.99, F.S.

10. The Buyer's Guide and policy summary delivery requirements of the Florida Life Insurance Solicitation Law (s. 626.99, F.S.) do NOT apply to which of the following?

    • AAn individual 20-pay whole life policy sold to a Florida resident
    • BAn individual universal life policy sold in the applicant's home
    • CGroup life insurance issued to a Florida employerCorrect
    • DAn individual 10-year level term policy

    Why: Section 626.99(2), F.S., excludes from the solicitation requirements annuities, credit life, group life, life insurance issued in connection with ERISA pension and welfare plans, and variable life whose death benefits and cash values vary with a separate account. Individual fixed life policies (A, B, D) are all covered, regardless of plan type or where the sale occurs. Note the exclusion is only from the Buyer's Guide and policy summary duties — annuities still receive their own 21-day unconditional refund under s. 626.99(4)(b).

    Reference FL-II.A; s. 626.99(2), F.S.

11. A client buys a variable annuity and returns it on day 18. During those 18 days the separate account lost value, so the contract's cash surrender value is now less than the premium paid. Under s. 626.99(4)(b), F.S., the insurer's unconditional refund must equal:

    • AThe cash surrender value provided in the contract, plus any fees or charges deducted from premiums or imposed under the contractCorrect
    • BThe cash surrender value only, with no adjustment for amounts the insurer deducted from the premiums during the 18 days
    • CThe premiums paid, reduced by a pro rata surrender charge for the 18 days the contract was actually in force
    • DNothing, because a variable contract shifts investment risk to the owner and so carries no unconditional refund right

    Why: Section 626.99(4)(b)2., F.S., measures the 21-day unconditional refund on a variable or market-value annuity as the cash surrender value provided in the contract, plus any fees or charges deducted from the premiums or imposed under the contract, or a refund of all premiums paid. Contrast s. 626.99(4)(b)1., under which a FIXED annuity must return the premiums paid including any contract fees or charges. A surrender charge may never be netted out of a free-look refund (C), and the only carve-out from the variable-contract refund right is for a prospective owner who is an accredited investor as defined in SEC Regulation D.

    Reference FL-II.A; s. 626.99(4)(b), F.S.

12. Section 626.99, F.S., requires an insurer issuing an annuity contract in Florida to attach a cover page that, in bold print of at least 12 points, warns the buyer that:

    • APurchasing an annuity contract is a long-term commitment that may restrict access to the buyer's moneyCorrect
    • BThe contract's benefits are guaranteed by the Florida Life and Health Insurance Guaranty Association
    • CThe agent's commission will be refunded if the contract is returned during the free-look period
    • DThe contract may be surrendered at any time with no charge

    Why: Under s. 626.99(4)(c), F.S., the annuity cover page must disclose the unconditional refund period, contact information for the issuing company and the selling agent, and the Department's toll-free helpline, plus bold 12-point warnings that purchasing an annuity is a long-term commitment that may restrict access to your money, that the buyer should understand how any bonus feature works, that the interest rate may change periodically, and that a prospectus and contract summary or buyer's guide must be given. Option B is the closest trap: using guaranty association protection as a sales inducement is a prohibited practice, not a required disclosure.

    Reference FL-II.A; s. 626.99(4)(c), F.S.

Drill the whole domain

• Florida Statutes — Life and Annuity (incl. Variable Products) (10%)
• Florida Statutes — Health Insurance (10%)
• Life Policy Riders, Provisions, Options, and Exclusions (10%)

Other topics

• Free look periods on the Florida 2-15
• Twisting vs churning vs sliding vs rebating
• Annuities on the Florida 2-15
• Medicare and Medicare supplement rules
• Life policy provisions and clauses
• Disability income insurance
• Variable life, VUL and the separate account
• Annuity best interest rules for buyers 65+
• HIV testing and consent in Florida underwriting
• Premium trust funds and fiduciary duty
• Compulsory vs discretionary license discipline
• Florida guaranty association limits
• License, appointment and continuing education

See all topics · Study Guides · Full practice exam