AINS 21 practice exam Questions with Correct Answers

AINS 21 practice exam Questions with Correct Answers


Question 1:
when selecting a distribution channel, which one of the following is important consideration
with regard to customer needs and characteristicsWhich of the following statements is correct
regarding characteristics of ideally insurable loss exposures
Answer:
ideally, loss exposures should be spread across a large number of similar exposure units within
the same period


Question 2:
The type of insurance that provides periodic income payments to an insured who is unable to
work because of sickness or injury is
Answer:
Disability income insurance


Question 3:
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
Answer:
The potential for financial ruin


Question 4:
A loss exposure is
Answer:
Any condition that presents the possibility of a loss


Question 5:
Liability coverage for loss exposures arising from a business organizations premises and
operations, its products, or its completed work is typically provided by
Answer:
Commercial general liability insurance

,Question 6:
Though premiums are an obvious cost of insurance, many insureds believe that are too high
because
Answer:
Benefits are intangible until loss occurs


Question 7:
when selecting a distribution channel, which one of the following is important consideration
with regard to customer needs and characteristics
Which of the following statements is correct regarding characteristics of ideally insurable loss
exposures
Answer:
ideally, loss exposures should be spread across a large number of similar exposure units within
the same period


Question 8:
Insurance is not the only risk management transfer technique. When circumstances are
appropriate, transfer can be accomplished through
Answer:
noninsurance transfer technique


Question 9:
Which one of the following statements is correct regarding the benefits that insurance provides
Investment income helps keep insurance premiums at a reasonable levelClaim buildup is
considered to be among which one of the following costs of insurance increased lossesThe
primary role of insurance is to
Answer:
indemnify individuals and organizations for covered losses


Question 10:
Coverage for money, securities, and other property from various causes of loss such as
burglary, robbery, theft, and employee dishonesty typically is provided by
Answer:
commercial crime insurance

,Question 11:
Which of the following is an opportunity cost of insurance
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 byinland
marine insurance


Question 12:
For insurers to utilize pooling most effectively and prevent catastrophic losses, the insured
exposure units need to be
Answer:
independent


Question 13:
Which one of the following statements is correct regarding the benefits that insurance provides
Investment income helps keep insurance premiums at a reasonable level
Claim buildup is considered to be among which one of the following costs of insurance
increased losses
The primary role of insurance is to
Answer:
indemnify individuals and organizations for covered losses


Question 14:
Some loss exposures are not easy to retain, avoid, or control. What risk management
techniques is frequently used to treat such exposures
Answer:
transfer


Question 15:
Sometimes the existence of insurance encourages losses. the result of this phenomenon is that
in
Answer:
increases the total cost of insurance

, Question 16:
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
Answer:
promote risk control


Question 17:
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
Answer:
When her car's windshield breaks, Ciara has to pay only $100 of the $600 cost of replacing it


Question 18:
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
Answer:
Disability insurance


Question 19:
Adhering to the characteristics of an ideally insurable loss exposure in selling insurance help
assure that
Answer:
The insurer is able to charge a premium that the insured can afford to pay


Question 20:
Which of the following statements is correct with regard to risk and ideally insurable
characteristics of loss exposures
Answer:
indemnification is the process of restoring an insured to pre-loss financial condition


Question 21:
Which one of the following statements is correct
Answer:
insurers investment income helps keep premiums at reasonable level