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AINS 21 A PRACTICE QUESTIONS AND ANSWERS
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AINS 21 A PRACTICE QUESTIONS AND ANSWERS
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AINS 21 A PRACTICE QUESTIONS AND ANSWERSAs a single mother on a very tight budget, Ciara is tempted to skimp on her insurance.
However, her friend Mehmet tells her not to skimp on insurance, because it will help
manage her cash flows. Which one of the following examples best illustrates Mehmet's
point? - Answers-B. When her car's windshield breaks, Ciara has to pay only $100 of
the $600 cost of replacing it.
Though premiums are an obvious cost of insurance, many insureds believe they are too
high because - Answers-B. Benefits are intangible until a loss occurs.
Which one of the following statements is correct regarding the benefits of insurance? -
Answers-D. Contractors must usually provide evidence of liability insurance before a
construction contract is granted.
Pravalt Construction Company pays less than its competitors for workers compensation
insurance because Pravalt has had substantially fewer employee injuries than other
firms in its class. This illustrates which one of the following benefits of insurance? -
Answers-A. Promote risk control
Which one of the following describes the characteristics of a mutual insurance
company? - Answers-D. A corporation owned by policyholders that provides insurance
to its policyholders.
From a risk management viewpoint, insurance is used to - Answers-B. Transfer the cost
of losses.
Excella Insurance is a private insurer operating in the state of Arkansas. It primarily sells
personal auto and homeowners policies and complies with all the necessary licensing
and regulations required. Which one of the following is true for Excella in regard to this?
- Answers-D. State insurance regulators are only one of many stakeholders that are
interested in an insurer's financial health.
Some loss exposures are not easy to retain, avoid, or control. Which one of the
following risk management techniques is frequently used to treat such exposures? -
Answers-D. Transfer
Retention is often used in combination with insurance as a way of treating loss
exposures. One of the major downsides of individuals using retention alone is -
Answers-C. The potential for financial ruin.
Insurance is not the only risk management transfer technique. When circumstances are
appropriate, transfer can be accomplished through - Answers-B. Noninsurance transfer
techniques.
, Coverage for miscellaneous types of property such as movable property, goods in
domestic transit, and property used in transportation and communication, typically is
provided by - Answers-C. Inland marine insurance.
The two primary types of health insurance coverage are - Answers-B. Medical and
Disability Income.
A small business owner concerned about something happening and not being able to
work or earn a living for an extended period of time due to an accident should purchase
- Answers-B. Disability insurance.
A policy that combines property, crime, and liability coverages into one policy is referred
to as a(n) - Answers-C. Commercial package policy (CPP).
The type of insurance that provides periodic income payments to an insured who is
unable to work because of sickness or injury is - Answers-D. Disability income
insurance.
Insurance Company wrote a commercial liability policy for a manufacturer of off-road
motorcycles. The potential costs of the insured's loss exposure exceed Insurance
Company's capacity. Insurance Company could consider which one of the following
types of contractual transferring agreement to meet its needs? - Answers-B.
Reinsurance
A mutual insurance company is owned by - Answers-D. Policyholders.
A reciprocal insurance exchange - Answers-D. Is an unincorporated association
providing insurance coverage to its subscribers.
Properties of Insurtech Companies include all of the following, EXCEPT: - Answers-A.
Elimination for the need of underwriters given the technological advances in this space.
A reinsurance company - Answers-C. Assumes loss exposures from a primary insurer.
Which one of the following statements is correct regarding government involvement in
insurance? - Answers-A. Federal and state government are involved in insurance to
facilitate compulsory insurance purchases.
Which one of the following statements concerning government insurance programs is
true? - Answers-D. Fair Access to Insurance Requirements (FAIR) plans make basic
property insurance available to property owners who can't get it otherwise.
Harry has a new sports car that is insured with an Insurance Services Office, Inc. (ISO)
Personal Auto Policy sold through his neighborhood agent. Because this is the first new
car he's ever owned, Harry is interested in making sure he is fully covered and
knowledgeable about his insurance policy. Which one of the following is true for Harry? -
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