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AINS 21 EXAM QUESTIONS AND ANSWERS
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AINS 21 EXAM QUESTIONS AND ANSWERS
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AINS 21 EXAM QUESTIONS AND ANSWERSWhich one of the following is an opportunity cost of insurance? - Answers-An insured's
funds that could be invested elsewhere if purchasing insurance were not necessary is
an example of an opportunity cost of insurance.
Which one of the following statements is correct regarding the benefits of insurance? -
Answers-Contractors must usually provide evidence of liability insurance before a
construction contract is granted.
Investment income helps keep insurance premiums at a reasonable level.
Which one of the following describes the characteristics of a mutual insurance
company? - Answers-C. A corporation owned by policyholders that provides insurance
to its policyholders.
The primary role of insurance is to - Answers-D. Indemnify individuals and organizations
for covered losses.
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-Correct. Coverage for miscellaneous types of property, such
movable property, goods in domestic transit, and property used in transportation and
communication, typically is provided by inland marine insurance.
Which one of the following is true regarding a homeowners policy? - Answers-Correct. A
homeowners policy provides both property and liability coverage. This includes
coverage for theft of personal property as well as perils such as wind and lightning.
Insurance customers' loss exposures arise out of their activities, as well as - Answers-
Correct. Insurance customers' loss exposures arise out of their activities as well as their
ownership of various property.
Life insurance that provides coverage for a specified period with no cash value is called
- Answers-Correct. Life insurance that provides coverage for a specified period with no
cash value is called term insurance.
A mutual insurance company is owned by - Answers-Policyholders
A stock insurer differs from a reciprocal insurance exchange in which one of the
following ways? - Answers-A. Stockholders own a stock insurer. Subscribers own a
reciprocal insurance exchange.
A company interested in improving cash flow should consider meeting its insurance
needs through which one of the following types of insurance organizations? - Answers-
, Correct. With a captive, instead of paying premiums to an unrelated insurer, a company
can invest its funds until they are needed for claims.
All of the following are types of private insurers, EXCEPT: - Answers-Correct. A state
workers compensation fund is not a private (nongovernmental) insurer.
A reinsurance company - Answers-Correct. The reinsurer assumes some or all of the
potential costs of insured loss exposures of the primary insurer.
Which one of the following statements is correct regarding government involvement in
insurance? - Answers-Correct. Federal and state government are involved in insurance
to facilitate compulsory insurance purchases.
State governments can be involved in insurance at various levels. Some states provide
which one of the following types of insurance in competition with private insurers? -
Answers-C. Workers compensation
Which one of the following statements concerning government insurance programs is
true? - Answers-Correct. Fair Access to Insurance Requirements (FAIR) plans make
basic property insurance available to property owners who can't get it otherwise
because of their property's location or any other reason.
The state of Maryland operates a residual auto plan (the Maryland Auto Insurance
Fund—MAIF) that provides coverage for drivers who are unable to obtain coverage
from private insurers. Which one of the following is the best rationale for the MAIF
program? - Answers-D. Auto insurance is compulsory, and the program makes it
possible for all drivers to have reasonably priced insurance.
Which one of the following correctly describes a reason for government involvement in
property-casualty insurance? - Answers-B. Government programs can meet legitimate
public demands unmet by private insurers.
Which one of the following is a typical adjuster activity during the claim handling
process? - Answers-C. Contacting the insured.
Risk control is intended to prevent or reduce losses. When practicing sound risk control,
an organization - Answers-D. Is likely to use insurance to treat those loss exposures.
Sometimes the existence of insurance encourages losses. The result of this
phenomenon is that it - Answers-D. Increases the total cost of insurance.
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 practical risk management technique for
dealing with her auto-related loss exposures is - Answers-D. Risk transfer.
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