AINS 21 - Segment A | 137 Questions with
100 % correct answers | Verified& Updated
2024 | Already Passed
Term life insurance
A. Allows the policyholder to borrow against policy savings.
B. Provides protection for a specified period with no cash value.
C. Accrues a cash value.
D. Provides lifetime protection - ✔✔B. Provides protection for a specified period with no
cash value.
The process of restoring an individual or organization to a pre-loss financial condition is the
process of
A. Subrogation.
B. Indemnification.
C. Loss mitigation.
D. Premium rebating. - ✔✔B. Indemnification.
,Which one of the following statements is correct with respect to characteristics of insurable loss
exposures?
A. Private insurance is suitable for risks where the probability and timing of loss is known.
B. If losses are not fortuitous, premiums could increase for all policyholders.
C. If a loss is fortuitous, the chance of loss could increase as soon as a policy is issued.
D. If the insured has control over whether or when a loss will occur, the risk is attractive to
insure. - ✔✔B. If losses are not fortuitous, premiums could increase for all policyholders.
Adhering to the characteristics of an ideally insurable loss exposure in selling insurance help
assure that
A. The insurer is able to predict the amount and timing of each future loss.
B. The losses associated with it typically involve small amounts.
C. The insurer is able to charge a premium that the insured can afford to pay.
D. The insurer can charge a high premium for the coverage. - ✔✔C. The insurer is able to charge
a premium that the insured can afford to pay.
Private insurers are reluctant to provide windstorm insurance on coastal properties. This is
because the loss exposures fail to meet the criterion that ideally insurable exposures must be
A. Definite and measurable.
B. Independent and not catastrophic.
C. Fortuitous.
D. A large number of similar exposure units. - ✔✔B. Independent and not catastrophic.
,Which one of the following statements is correct with regard to risk and ideally insurable
characteristics of loss exposures?
A. An ideally insurable loss exposure should be associated with speculative risk.
B. Indemnification is the process of restoring an insured to a pre-loss financial condition.
C. One purpose of insurance is to enable the insured to profit from a loss.
D. If a loss exposure includes the possibility of gain, it is a more desirable risk to insure. - ✔✔B.
Indemnification is the process of restoring an insured to a pre-loss financial condition.
For insurers to utilize pooling most effectively and prevent catastrophic losses, the
insured exposure units need to be
A. Correlated.
B. Different.
C. Independent.
D. Adjacent. - ✔✔C. Independent.
Oscar's custom-built vehicle looks like a sausage sandwich on wheels. He plans to drive it to
special events at schools around the country where it will serve as a mobile billboard to
promote his product. Oscar is surprised to learn that insurers are reluctant to insure his vehicle
because it fails to meet one of the ideal characteristics of an insurable risk. Which characteristic
is Oscar's vehicle least likely to meet?
Choose one answer.
A. Definite and measurable
B. Independent and not catastrophic
C. Large number of similar exposure units
, D. Pure risk - ✔✔C. Large number of similar exposure units
Ideally insurable loss exposures are subject to losses that
A. Result from unidentifiable causes.
B. Are definite in time, cause, and location.
C. Occur gradually over long periods of time.
D. Are immeasurable in terms of frequency or severity. - ✔✔B. Are definite in time, cause,
and location.
Commercial general liability insurance policies written on an occurrence basis apply to bodily
injury and property damage that occurs during the policy period. This provision supports the
principle that insurable loss exposures must ideally be
A. Definite.
B. Pure risks.
C. Fortuitous.
D. Independent. - ✔✔A. Definite.
For a loss exposure to be ideally insurable it must be definite in
A. Duration, damage, and cost.
B. Time, cause, and location.
C. Value, extent, and consequences.
D. Scope, origin, and coverage. - ✔✔B. Time, cause, and location.
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