Free look periods on the Florida 2-15

Four different free-look periods appear on this exam and they are not the same length. Candidates lose points here constantly, because national study guides quote the ten days used in other states rather than Florida's numbers.

Questions and answers, explained

All 7 questions above, with the correct answer and why it is correct. Everything here is on free look periods on the florida 2-15.

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. 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)

4. 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.

5. 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)

6. 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.

7. 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

• 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
• Buyer's Guide and Florida free look periods
• Florida guaranty association limits
• License, appointment and continuing education

See all topics · Study Guides · Full practice exam