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AINS 101 Simulated Exam Practice Questions and Answers

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AINS 101 Simulated Exam Practice Questions and Answers 1: What does AINS stand for in the context of insurance education? - correct answer - AINS stands for Associate in General Insurance. 2: What is the primary purpose of insurance? - correct answer - The primary purpose of insurance is to ...

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  • September 12, 2024
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  • Questions & answers
  • AINS 101 Simulated
  • AINS 101 Simulated
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PASSINGMASTER01
AINS 101 Simulated Exam Practice Questions
and Answers

1: What does AINS stand for in the context of insurance education? - correct
answer - AINS stands for Associate in General Insurance.



2: What is the primary purpose of insurance? - correct answer -

The primary purpose of insurance is to transfer risk from an individual or
entity to an insurance company.



3: What are the four elements of a legally binding insurance contract? -
correct answer - The four elements are offer and acceptance, consideration,
competent parties, and legal purpose.



4: Define risk in the context of insurance.

Risk is the uncertainty regarding financial loss.



5: What is an insurable interest? - correct answer -

Insurable interest is the financial stake an insured has in the subject of
insurance, which would cause them to suffer a financial loss if the insured
event occurs.



6: What is the principle of indemnity? - correct answer -

The principle of indemnity states that insurance should restore the insured
to the same financial position they were in before the loss, without allowing
them to profit from the insurance.



7: What is a premium in insurance terms? - correct answer -

, A premium is the amount of money an insured pays to an insurance
company for coverage.



8: What is underwriting? - correct answer -

Underwriting is the process of evaluating the risk and exposures of
potential clients and deciding whether to accept or reject them for
insurance coverage.




9: What is a claim in insurance? - correct answer -

A claim is a request made by the insured to the insurance company for
payment of benefits under a policy.



10: What is the difference between a hazard and a peril? - correct answer -

A peril is a cause of loss, such as fire or theft, while a hazard is a condition
that increases the likelihood or severity of a loss from a peril.



11: What is reinsurance? - correct answer -

Reinsurance is insurance that an insurance company purchases from
another insurer to manage risk.



12: What is the concept of moral hazard? - correct answer -

Moral hazard refers to the tendency of individuals to take more risks
because they are protected from the consequences, typically due to having
insurance.



13: What does loss ratio measure? - correct answer -

Loss ratio measures the ratio of claims paid to premiums earned, indicating
the profitability of an insurance company.

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