What license do i need to get this to work?
You will need a security plus license to configure failover on the 5505. Keep in mind that stateful failover is not supported on the 5505.
Normally interface to my isp never goes down but some other issues happens further down the lane (DNS, Core router, aso). How does the ASA know when the failover should happen when the interface never goes down?
You will need a dedicated failover link between the ASAs. This can be in the form of a dedicated physical interface or a subinterface (though the dedicated physical interface is Cisco best practice.) The failover link carries hello messages between the ASAs. When the standby ASA stops to recieve hello messages over the failover link, it will send 3 hello packets out the monitored interfaces to make sure that the other ASA is dead and not just the link between the ASAs has failed. If the ASA does not receive a reply from these three packets it will assume that the Active ASA has died and takes over the roll as the Active ASA.
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