AINS 101 Exam Prep Question and
answers verified to pass
Loss exposure - correct answer ✔any condition or situation that presents a
possibility of loss, whether or not an actual loss occurs
Premium - correct answer ✔the price of the insurance coverage provided for
a specified period
Indemnify - correct answer ✔to restore a party who has sustained a loss to
the same financial position that party held before the loss occurred
Insured - correct answer ✔any person or organization who is insured under
an insurance policy
Property-casualty insurance - correct answer ✔one of the two main sectors
of the insurance industry encompassing numerous types of insurance, most of
which cover the financial consequences of damage to one's own property or
legal liability to others
Life-health insurance - correct answer ✔one of the two main sectors of the
insurance industry encompassing numerous types of insurance that cover the
financial
Stock insurer - correct answer ✔an insurer that is owned by its stockholders
and formed as a corporation for the purpose of earning a profit for the
stockholders
,Mutual insurer - correct answer ✔an insurer that is owned by its
policyholders and formed as a corporation for the purpose of providing
insurance to them
Surplus-lines insurer - correct answer ✔a non-admitted insurer that is eligible
to insure risks that have been exported by a surplus lines licensee in
accordance with a surplus lines law
Reinsurance - correct answer ✔the transfer of insurance risk from one
insurer to another through a contractual agreement under which one insurer
(the reinsurer) agrees, in return for a reinsurance premium, to indemnify
another insurer (the primary insurer) for some or all of the financial
consequences of certain loss exposures covered by the primary's insurance
policies
Pure risk - correct answer ✔a chance of loss or no loss, but no chance of
gain
Speculative risk - correct answer ✔a chance of loss, no loss, or gain
Solvency - correct answer ✔the ability of an insurer to meet its financial
obligations as they become due, even those resulting from insured losses that
may be claimed several years in the future
Income statement - correct answer ✔the financial statement that reports an
organization's profit or loss for a specific period by comparing the revenues
generated with the expenses incurred to produce those revenues
Earned premiums - correct answer ✔the portion of the written premiums that
apply to the part of the policy period that has already occurred
, Underwriting income - correct answer ✔income an insurer earns from
premiums paid by policyholders minus incurred losses and underwriting
expenses
Balance sheet - correct answer ✔the financial statement that reports the
assets, liabilities, and owner's equity of an organization as of a specific date
Policyholder's surplus - correct answer ✔an insurer's assets minus its
liabilities, which represents its net worth
Loss adjustment expenses - correct answer ✔the expense that an insurer
incurs to investigate, defend, and settle claims according to the terms
specified in the insurance policy
Assets - correct answer ✔types of property, both tangible and intangible,
owned by an entity
Liabilities - correct answer ✔financial obligations, or debts, owned by a
company to another entity usually the policyholder in the case of an insurer
Investment income - correct answer ✔interest, dividends, and net capital
gains received by an insurer from the insurer's financial assets, minus its
investment expenses
Loss reserve - correct answer ✔an estimate of the amount of money the
insurer expects to pay in the future for losses that have occurred
Unearned premium reserve - correct answer ✔an insurer liability
representing the amount of premiums received from policyholders that are not
yet earned
answers verified to pass
Loss exposure - correct answer ✔any condition or situation that presents a
possibility of loss, whether or not an actual loss occurs
Premium - correct answer ✔the price of the insurance coverage provided for
a specified period
Indemnify - correct answer ✔to restore a party who has sustained a loss to
the same financial position that party held before the loss occurred
Insured - correct answer ✔any person or organization who is insured under
an insurance policy
Property-casualty insurance - correct answer ✔one of the two main sectors
of the insurance industry encompassing numerous types of insurance, most of
which cover the financial consequences of damage to one's own property or
legal liability to others
Life-health insurance - correct answer ✔one of the two main sectors of the
insurance industry encompassing numerous types of insurance that cover the
financial
Stock insurer - correct answer ✔an insurer that is owned by its stockholders
and formed as a corporation for the purpose of earning a profit for the
stockholders
,Mutual insurer - correct answer ✔an insurer that is owned by its
policyholders and formed as a corporation for the purpose of providing
insurance to them
Surplus-lines insurer - correct answer ✔a non-admitted insurer that is eligible
to insure risks that have been exported by a surplus lines licensee in
accordance with a surplus lines law
Reinsurance - correct answer ✔the transfer of insurance risk from one
insurer to another through a contractual agreement under which one insurer
(the reinsurer) agrees, in return for a reinsurance premium, to indemnify
another insurer (the primary insurer) for some or all of the financial
consequences of certain loss exposures covered by the primary's insurance
policies
Pure risk - correct answer ✔a chance of loss or no loss, but no chance of
gain
Speculative risk - correct answer ✔a chance of loss, no loss, or gain
Solvency - correct answer ✔the ability of an insurer to meet its financial
obligations as they become due, even those resulting from insured losses that
may be claimed several years in the future
Income statement - correct answer ✔the financial statement that reports an
organization's profit or loss for a specific period by comparing the revenues
generated with the expenses incurred to produce those revenues
Earned premiums - correct answer ✔the portion of the written premiums that
apply to the part of the policy period that has already occurred
, Underwriting income - correct answer ✔income an insurer earns from
premiums paid by policyholders minus incurred losses and underwriting
expenses
Balance sheet - correct answer ✔the financial statement that reports the
assets, liabilities, and owner's equity of an organization as of a specific date
Policyholder's surplus - correct answer ✔an insurer's assets minus its
liabilities, which represents its net worth
Loss adjustment expenses - correct answer ✔the expense that an insurer
incurs to investigate, defend, and settle claims according to the terms
specified in the insurance policy
Assets - correct answer ✔types of property, both tangible and intangible,
owned by an entity
Liabilities - correct answer ✔financial obligations, or debts, owned by a
company to another entity usually the policyholder in the case of an insurer
Investment income - correct answer ✔interest, dividends, and net capital
gains received by an insurer from the insurer's financial assets, minus its
investment expenses
Loss reserve - correct answer ✔an estimate of the amount of money the
insurer expects to pay in the future for losses that have occurred
Unearned premium reserve - correct answer ✔an insurer liability
representing the amount of premiums received from policyholders that are not
yet earned
