1. My family is all healthy.
1-2. They exercise regularly.
1-3 It exercises regularly.
2. My family are all healthy.
They exercise regularly.
[#2 has no problem. They are correct. What about #1? Which one is correct? Does 'it' refer to my family? Or Does 'they' refer to my family? Is #1 correct?]
1-3 is incorrect.
As Reed said the other day, ‘family’ is a singular noun. It refers to all the people collectively you consider related to you. But it’s still singular, referring to your family unit.
This — 2 would be correct if you wrote, “My family members ... “