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when selecting a distribution channel, which one of the following is important consideration with regard to customer needs and characteristics - correct answer Which of the following statements is correct regarding characteristics of ideally insurable loss exposures - correct answer ideally, lo...

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  • November 23, 2024
  • 36
  • 2024/2025
  • Exam (elaborations)
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  • ains 21 practice exam questions and answers

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AINS 21 Practice Exam


when selecting a distribution channel, which one of the following is important consideration with regard
to customer needs and characteristics - correct answer



Which of the following statements is correct regarding characteristics of ideally insurable loss exposures -
correct answer ideally, loss exposures should be spread across a large number of similar exposure units
within the same period



The type of insurance that provides periodic income payments to an insured who is unable to work
because of sickness or injury is - correct answer Disability income insurance



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 - correct answer The potential for financial ruin



A loss exposure is - correct answer Any condition that presents the possibility of a loss



Liability coverage for loss exposures arising from a business organizations premises and operations, its
products, or its completed work is typically provided by - correct answer Commercial general liability
insurance



Though premiums are an obvious cost of insurance, many insureds believe that are too high because -
correct answer Benefits are intangible until loss occurs



Insurance is not the only risk management transfer technique. When circumstances are appropriate,
transfer can be accomplished through - correct answer noninsurance transfer technique



Which one of the following is an example of a fortuitous loss - correct answer An unknown vandal spray-
paints graffiti on the insured's garage



Which one of the following statements is correct regarding the benefits that insurance provides - correct
answer Investment income helps keep insurance premiums at a reasonable level

,AINS 21 Practice Exam
Claim buildup is considered to be among which one of the following costs of insurance - correct answer
increased losses



The primary role of insurance is to - correct answer indemnify individuals and organizations for covered
losses



Coverage for money, securities, and other property from various causes of loss such as burglary, robbery,
theft, and employee dishonesty typically is provided by - correct answer commercial crime insurance



Which of the following is an opportunity cost of insurance - correct answer An insureds funds that could
be invested elsewhere if purchasing insurance were not necessary



Coverage for miscellaneous types of property such as movable property, goods in domestic transit, and
property use in transportation and communication, typically is provided by - correct answer inland
marine insurance



For insurers to utilize pooling most effectively and prevent catastrophic losses, the insured exposure
units need to be - correct answer independent



Some loss exposures are not easy to retain, avoid, or control. What risk management techniques is
frequently used to treat such exposures - correct answer transfer



Sometimes the existence of insurance encourages losses. the result of this phenomenon is that in -
correct answer increases the total cost of insurance



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 - correct answer promote risk control



As 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 - correct answer When her car's
windshield breaks, Ciara has to pay only $100 of the $600 cost of replacing it

,AINS 21 Practice Exam
A small business owner concerned about something happening and not being able to work or earn a
living for extended period of time due to an accident should purchase - correct answer Disability
insurance



Adhering to the characteristics of an ideally insurable loss exposure in selling insurance help assure that -
correct answer The insurer is able to charge a premium that the insured can afford to pay



Which of the following statements is correct with regard to risk and ideally insurable characteristics of
loss exposures - correct answer indemnification is the process of restoring an insured to pre-loss
financial condition



Which one of the following statements is correct - correct answer insurers investment income helps keep
premiums at reasonable level



Which one of the following statements is correct regarding characteristics of ideally insurable los
exposures - correct answer Ideally, loss exposures should be spread across a large number of similar
exposure units within the same period



Which one of the following is an operating cost of insurers - correct answer Producers commissions



One of the costs of insurance is said to be opportunity costs. this means that if capital and labor were
not being used in the insurance business, they could be used elsewhere and making other productive
contributions to - correct answer Society



Private insurers are reluctant to provide windstorm insurance on coastal properties. This is because the
loss exposures fail to meet the criteria that ideally insurable exposures must be - correct answer
Independent and not catastrophic



Sally is a recent college graduate who lives in the suburbs and drives to work daily in the city. she
recognizes that owning a car creates both property damage and liability exposures for her and at the
same time she has the burden of student loans. For someone in Sally's circumstances the most particular
risk management technique for dealing with her auto related loss exposures is - correct answer Risk
transfer

, AINS 21 Practice Exam
Another name for liability insurance is - correct answer third party insurance



A homeowners insurance policy typically includes - correct answer both property and liability coverage



which one of the following statements is true - correct answer Mutual insurance include some large
national insurers



An insurer that was formed for the purpose of earning a profit for its stockholders is a - correct answer
Stock insurer



which of the following is generally exempt from state insurance regulations pertaining to policy forms
and rates - correct answer Surplus line insurers



Market conduct regulation focuses on insurers treatment of applicants for insurance insureds and others
who present claims for coverage. Market conduct regulation affects which one of the following areas of
operations? - correct answer Sales



Insurance company wrote a commercial liability policy for a manufacturer of off-road motorcycles. The
potential cost of the insureds loss exposure exceed insurance co capacity. Insurance co could consider
which type of contractual transferring agreement to meet its need - correct answer reinsurance



adhering to the characteristics of an ideally insurable loss exposure in selling insurance help assure that -
correct answer The insurer is able to change a premium that the insured can afford to pay



What is an opportunity cost of insurance - correct answer an insurers funds that could be invested
elsewhere if purchasing insurance were not necessary



Claim buildup is considered to be among which of the following costs of insurance - correct answer
increased losses



Insurance is not the only risk management transfer technique. when circumstances are appropriate,
transfer can be accomplished through - correct answer non insurance transfer technique

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