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Florida Agent Duties, Unfair Trade Practices and the Guaranty Fund: Practice Questions

20 free practice questions with explanations. Pick an answer for each, then check your score.

Exam weight: Part of the 13% on Florida rules common to all lines on the Florida-law portion of the Florida 2-15 Life, Health and Annuities exam. Updated 2026-11-04.

Quick study guide

This section tests how an agent handles other people's money, who may share commissions, how fast an agent must answer the state, what the guaranty association covers, and the unfair trade practices in F.S. 626.9541. Expect short scenarios asking you to name the practice.

Fiduciary duties and compensation

Premiums and other funds an agent receives are trust funds held in a fiduciary capacity (F.S. 626.561). Funds of an insurer the agent is not appointed with (other than surplus lines) go in a separate account, and premium payment records are kept at least 3 years. Misappropriation: $300 or less is a first-degree misdemeanor; over $300 to under $20,000 a third-degree felony; $20,000 to under $100,000 second-degree; $100,000 or more first-degree.

Life commissions may be shared only with a licensed and appointed life agent or an incorporated agency whose sellers all are (F.S. 626.794); renewals may continue after a license ends. Collecting more or less than the filed premium is illegal, except passing on the exact credit card facility fee (F.S. 626.9541(1)(o)). Answer a written request from the DFS Division of Consumer Services about a complaint within 14 days (F.S. 624.307(10)(b)). Life agent applicants must subscribe to the code of ethics (F.S. 626.797).

Florida Life and Health Insurance Guaranty Association

The association (F.S. 631.711–631.738) protects policyowners when a member insurer is impaired or insolvent. Membership is a condition of an insurer's authority, and assessments on members fund it. HMOs, fraternal benefit societies and the non-guaranteed part of variable contracts are excluded. Using the association to sell insurance is prohibited (F.S. 631.735).

Benefit (per life, F.S. 631.717(12))	Limit
Life insurance net cash surrender and withdrawal values	$100,000
Deferred annuity net cash surrender and withdrawal values	$250,000
All other benefits, including long-term care	$300,000
Basic hospital, basic medical-surgical and major medical policies	$500,000

Unfair trade practices

Twisting: misleading or incomplete comparisons to get someone to lapse, surrender or replace a policy. Churning: using an existing policy's values to buy another from the same insurer for extra commission, with no reasonable basis to expect a benefit. Sliding: saying an extra coverage is legally required or free when it is not, or charging for it without informed consent. Also know misrepresentation and false advertising, defamation, coercion, unfair discrimination, unfair claim settlement and fraud (a forged application signature is a felony). Lenders may not tie credit to a particular agent or insurer (F.S. 626.9551). Florida allows rebating under a filed, displayed, uniform schedule (F.S. 626.572), and gifts up to $100 per person per calendar year. A license sought mainly for controlled business will be refused (F.S. 626.784). A misstatement or concealment in an application voids coverage only if fraudulent or material (F.S. 627.409).

Practice questions

Under Florida law, how does an agent hold the premiums collected from policyholders before sending them to the insurer?
1. A.As escrow funds owned by the Department of Financial Services
2. B.As a loan from the policyholder that bears interest
3. C.As trust funds received in a fiduciary capacity
4. D.As the agent's own earned income until the policy is issued
Show answer
Answer: C. F.S. 626.561(1) says premiums, return premiums and other funds received by an agent are trust funds received in a fiduciary capacity, to be accounted for and paid to the insurer, insured or other person entitled to them. They never become the agent's own income, they are not a loan, and the Department does not own them.
Source: Florida content outline I.G.1; Fla. Stat. § 626.561
A Florida agent knowingly uses $5,000 of premium money collected from clients to pay personal bills. Under F.S. 626.561, this misappropriation is:
1. A.A misdemeanor of the first degree
2. B.A felony of the second degree
3. C.A felony of the first degree
4. D.A felony of the third degree
Show answer
Answer: D. F.S. 626.561(3) grades the offense by amount: $300 or less is a first-degree misdemeanor; more than $300 but less than $20,000 is a third-degree felony; $20,000 to under $100,000 is a second-degree felony; and $100,000 or more is a first-degree felony. $5,000 falls in the third-degree felony band.
Source: Florida content outline I.G.1.b; Fla. Stat. § 626.561
A licensed and appointed Florida life agent wants to share a commission on a new life policy. Who may lawfully receive part of it?
1. A.A friend who referred the client, if the client agrees in writing
2. B.A licensed health agent who holds no life license
3. C.Another currently licensed and appointed life agent
4. D.Any person, as long as the insurer approves the split
Show answer
Answer: C. F.S. 626.794 bars paying or sharing commissions for life insurance services with anyone who is not a currently licensed and appointed life agent; the only other permitted recipient is an incorporated agency whose people who sell life insurance are all licensed and appointed. A referral friend or a health-only agent cannot be paid, and insurer approval does not change the rule.
Source: Florida content outline I.G.2; Fla. Stat. § 626.794
A client pays a Florida agent's premium by credit card. Under F.S. 626.9541(1)(o), what may the agent collect in addition to the premium?
1. A.A processing charge of up to 10% of the premium
2. B.Any amount the client agrees to in writing
3. C.The exact amount of the fee charged by the credit card facility
4. D.A flat service fee of up to $25 per policy
Show answer
Answer: C. Collecting more or less than the premium in the policy and the filed rates is an illegal dealing in premiums under F.S. 626.9541(1)(o). The statute expressly allows licensed agents to collect the exact amount of any discount or fee a credit card facility charges. A flat fee, a percentage charge or a negotiated extra amount is not one of the stated exceptions.
Source: Florida content outline I.G.2; Fla. Stat. § 626.9541
The Division of Consumer Services sends a Florida agent a written request for documents about a consumer complaint. How long does the agent have to respond?
1. A.14 days after receipt
2. B.30 days after receipt
3. C.20 days after receipt
4. D.10 days after receipt
Show answer
Answer: A. F.S. 624.307(10)(b) requires any person licensed by the department or office to respond, in writing or electronically, within 14 days after receiving a written request from the Division concerning a consumer complaint. The Division may fine an individual licensee up to $1,000 per violation for failing to comply. Some older study materials give a different number; the current statute says 14 days.
Source: Florida content outline I.G.3; Fla. Stat. § 624.307
Which is true of the code of ethics for Florida life agents under F.S. 626.797?
1. A.It applies only to agents who sell variable products.
2. B.It is voluntary and has no link to license discipline.
3. C.All applicants for a life agent license must subscribe to it.
4. D.It is written by each insurer for its own appointed agents.
Show answer
Answer: C. F.S. 626.797 has the Department adopt a code of ethics for life agents, after consulting the Florida Association of Insurance and Financial Advisors, and requires all applicants for a life agent license to subscribe to it. It is not limited to variable products or written by insurers, and its standards are designed to avoid conduct that is grounds for license discipline under F.S. 626.611 and 626.621.
Source: Florida content outline I.G.4; Fla. Stat. § 626.797
Which statement about the Florida Life and Health Insurance Guaranty Association is correct?
1. A.It is funded by assessments on member insurers, which must belong to it.
2. B.It is funded by state general revenue and pays claims with no dollar limit.
3. C.It covers HMOs and fraternal benefit societies the same as insurers.
4. D.It is a state agency that sells its own policies to the public.
Show answer
Answer: A. Under F.S. 631.715 and 631.718, insurers licensed for the covered lines must remain members as a condition of their authority, and the board assesses those member insurers to fund the association. Its liability is capped by F.S. 631.717(12). HMOs and fraternal benefit societies are excluded by F.S. 631.713(3). The association is a nonprofit legal entity, not a state agency, and under F.S. 631.717(13)(g) it may issue policies only to satisfy an impaired or insolvent insurer's obligations.
Source: Florida content outline I.H; Fla. Stat. § 631.715; Fla. Stat. § 631.713
A Florida resident's life insurer is declared insolvent. What is the most the Florida Life and Health Insurance Guaranty Association will pay for that person's life insurance net cash surrender and withdrawal values?
1. A.$100,000
2. B.$250,000
3. C.$300,000
4. D.$500,000
Show answer
Answer: A. F.S. 631.717(12)(a) caps the association's liability for life insurance net cash surrender and net cash withdrawal values at $100,000 per life. $250,000 is the limit for deferred annuity cash values, $300,000 covers all other benefits including long-term care, and $500,000 applies to basic hospital, basic medical-surgical and major medical health policies.
Source: Florida content outline I.H; Fla. Stat. § 631.717
While presenting an annuity, a Florida agent tells a prospect, "You can't lose; the state guaranty association backs this product." Under F.S. 631.735, this is:
1. A.Allowed if the agent also gives the prospect a buyer's guide
2. B.Prohibited only if the agent says it in a written advertisement
3. C.Allowed, because the statement is accurate
4. D.Prohibited, because the association's existence may not be used to sell insurance
Show answer
Answer: D. F.S. 631.735 forbids any advertisement, announcement or statement, made in any way, that uses the existence of the guaranty association for sales, solicitation or inducement to buy covered insurance. The only carve-out is giving a written summary of the association's limits, in a form prepared by the association, when the policyholder or applicant asks for it. Spoken statements are covered too.
Source: Florida content outline I.H; Fla. Stat. § 631.735
An agent tells an applicant that Florida law requires an accidental death rider to be bought with every life policy. No such law exists, and the rider adds to the premium. This practice is called:
1. A.Sliding
2. B.Rebating
3. C.Twisting
4. D.Churning
Show answer
Answer: A. F.S. 626.9541(1)(z) defines sliding to include telling an applicant that a specific ancillary coverage or product is required by law when it is not, saying it is included at no extra charge when a charge applies, or charging for it without the applicant's informed consent. Twisting and churning involve replacing existing policies, and rebating is giving back part of the premium or commission.
Source: Florida content outline I.I.1.a; Fla. Stat. § 626.9541
A bank tells a borrower the loan will be approved only if the borrower buys the required insurance through the bank's affiliated agency. Under Florida law, the bank has:
1. A.Unlawfully coerced a debtor by tying credit to a particular agent
2. B.Committed twisting by inducing the borrower to replace a policy
3. C.Engaged in sliding by misrepresenting a required ancillary coverage
4. D.Acted lawfully, because a lender may pick the insurer for its collateral
Show answer
Answer: A. F.S. 626.9551(1)(a) bars anyone from requiring, as a condition of lending money or extending credit, that the borrower buy insurance through a particular insurer, agent or broker. A lender may set reasonable, uniformly applied coverage standards but not dictate the source. Sliding concerns misrepresenting ancillary coverage, and twisting concerns misleading replacement comparisons.
Source: Florida content outline I.I.1.b; Fla. Stat. § 626.9551
An insurance agency's advertisement suggests that the State of Florida guarantees the returns on the annuities it sells. Under F.S. 626.9541(1)(a), this is:
1. A.Misrepresentation and false advertising
2. B.Permitted sales puffery
3. C.Defamation of a competing insurer
4. D.Unfair discrimination between insureds
Show answer
Answer: A. F.S. 626.9541(1)(a) lists, as misrepresentation and false advertising of insurance policies, any advertisement that would lead a reasonable person to believe the state or federal government stands behind the seller or guarantees returns on insurance products. Defamation is a false or malicious statement meant to injure a person, and unfair discrimination concerns treating people in the same class differently.
Source: Florida content outline I.I.1.c; Fla. Stat. § 626.9541
A Florida agent spreads a false story, meant to hurt a competing agent's business, that the competitor's license was revoked for fraud. This unfair practice is:
1. A.Sliding
2. B.Coercion
3. C.Defamation
4. D.Twisting
Show answer
Answer: C. F.S. 626.9541(1)(c) defines defamation as knowingly making or circulating any oral or written statement that is false or maliciously critical of, or derogatory to, any person and calculated to injure that person. Twisting uses misleading policy comparisons to replace coverage, coercion involves pressure such as boycott or intimidation, and sliding concerns misrepresenting ancillary coverage.
Source: Florida content outline I.I.1.d; Fla. Stat. § 626.9541
Two applicants are in the same actuarially supportable class with an equal expectation of life, but the insurer knowingly charges one a higher rate for the same life policy. This is:
1. A.Rebating
2. B.Concealment
3. C.Churning
4. D.Unfair discrimination
Show answer
Answer: D. F.S. 626.9541(1)(g) defines unfair discrimination as knowingly treating individuals of the same actuarially supportable class and equal expectation of life differently in rates, dividends, benefits or other terms of a life insurance or annuity contract. Rebating returns premium or commission as an inducement, churning uses existing policy values to buy a new policy from the same insurer, and concealment is hiding material facts.
Source: Florida content outline I.I.1.f; Fla. Stat. § 626.9541
Under Florida's unfair claim settlement practices law, which of these is a violation when an insurer does it so often that it indicates a general business practice?
1. A.Denying claims without conducting reasonable investigations based on available information
2. B.Asking the claimant to complete a proof-of-loss form
3. C.Paying an undisputed claim in full before the deadline
4. D.Requesting medical records needed to evaluate a health claim
Show answer
Answer: A. F.S. 626.9541(1)(i)3. lists practices that are unfair claim settlement practices when committed with such frequency as to indicate a general business practice, including denying claims without reasonable investigations, misrepresenting policy provisions and failing to act promptly on claim communications. Requesting proof of loss or needed records, and paying undisputed amounts, are normal claim handling.
Source: Florida content outline I.I.1.g; Fla. Stat. § 626.9541
A Florida agent willfully submits an application to an insurer bearing a client's forged signature. Under F.S. 626.9521, the agent commits:
1. A.A felony of the first degree
2. B.A misdemeanor of the second degree
3. C.A felony of the third degree
4. D.A noncriminal violation punishable only by an administrative fine
Show answer
Answer: C. Willfully submitting an application or policy-related document with a false or fraudulent signature is an unfair practice under F.S. 626.9541(1)(ee), and F.S. 626.9521(3)(b) makes it a third-degree felony plus an administrative fine of up to $187,500 per violation. A second-degree misdemeanor is the penalty in F.S. 626.9541(1)(u) for knowingly presenting a false claim to an insurer, a different offense.
Source: Florida content outline I.I.1.h; Fla. Stat. § 626.9521; Fla. Stat. § 626.9541
Florida will not grant or continue a life agent license obtained mainly to write "controlled business." Which of these is controlled business?
1. A.Policies sold to the public through a call center
2. B.Policies on clients referred by other licensed agents
3. C.Life insurance on the applicant, family members and employees of the applicant's own business
4. D.Group life policies sold to unrelated employers
Show answer
Answer: C. F.S. 626.784(2) defines controlled business as life insurance or annuity contracts covering the licensee or family members, the officers, directors, stockholders, partners or employees of a business the licensee or a family member is engaged in, or debtors of a firm the licensee is part of. The Department shall not grant, renew or continue a license obtained mainly for that purpose rather than to serve the general public. Sales to the public or to referred clients are ordinary business.
Source: Florida content outline I.I.1.i; Fla. Stat. § 626.784
To get a client to surrender a policy with one insurer and buy a new policy from another, an agent presents a comparison that leaves out the surrender charges and the new contestable period. This is:
1. A.Defamation
2. B.Churning
3. C.Twisting
4. D.Sliding
Show answer
Answer: C. F.S. 626.9541(1)(l) defines twisting as knowingly making misleading representations or incomplete or fraudulent comparisons to induce someone to lapse, forfeit, surrender, convert or otherwise give up a policy, or to take out a policy with another insurer. Under F.S. 626.9521(3)(a) twisting is a first-degree misdemeanor plus administrative fines. Churning involves a new policy from the same insurer funded by the old policy's values.
Source: Florida content outline I.I.1.j; Fla. Stat. § 626.9541; Fla. Stat. § 626.9521
An agent uses the cash value of a client's whole life policy to buy a second policy from the same insurer, mainly to earn a new commission, with no reasonable basis to believe the client benefits. Florida calls this:
1. A.Sliding
2. B.Twisting
3. C.Rebating
4. D.Churning
Show answer
Answer: D. F.S. 626.9541(1)(aa) defines churning as using policy values in an existing life policy or annuity to buy another policy or contract with that same insurer to earn more premiums, fees or commissions, for example without an objectively reasonable basis for believing it will benefit the policyholder. Twisting is the misleading comparison used to induce a replacement, sliding concerns ancillary coverage, and rebating returns part of the commission.
Source: Florida content outline I.I.1.k; Fla. Stat. § 626.9541
Florida lets agents rebate part of a commission if they follow F.S. 626.572. Which practice would break those conditions?
1. A.Offering the rebate only to clients aged 60 or older
2. B.Filing a rebating schedule with the insurer that issues the policy
3. C.Giving the same percentage rebate to everyone who buys the same policy for the same amount
4. D.Displaying the rebate schedule prominently in the agent's office
Show answer
Answer: A. F.S. 626.572 allows a rebate only if it follows a schedule filed with the insurer, is applied uniformly to all insureds buying the same policy for the same amount, is prominently displayed in the agent's place of business, and does not depend on age, sex, residence, race, marital status, occupation or similar factors. Limiting the rebate to clients over 60 uses age, so it breaks the rule; the other three are required steps.
Source: Florida content outline I.I.1.l; Fla. Stat. § 626.572

Where these questions come from: Florida content outline (Pearson VUE, effective 1 Jan 2026), Florida Agent's Health & Life (2-15), Florida statutes, rules and regulations, section I.G–I: Agent responsibilities, insurance guaranty fund and marketing practices. See how we write questions.