AINS 101 Exam Prep Questions with Correct Answers
Question 1:
Loss exposure
Answer:
any condition or situation that presents a possibility of loss, whether or not an actual loss
occurs
Question 2:
Premium
Answer:
the price of the insurance coverage provided for a specified period
Question 3:
Indemnify
Answer:
to restore a party who has sustained a loss to the same financial position that party held before
the loss occurred
Question 4:
Insured
Answer:
any person or organization who is insured under an insurance policy
Question 5:
Property-casualty insurance
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
Question 6:
Life-health insurance
Answer:
one of the two main sectors of the insurance industry encompassing numerous types of
insurance that cover the financial
,Question 7:
Stock insurer
Answer:
an insurer that is owned by its stockholders and formed as a corporation for the purpose of
earning a profit for the stockholders
Question 8:
Mutual insurer
Answer:
an insurer that is owned by its policyholders and formed as a corporation for the purpose of
providing insurance to them
Question 9:
Surplus-lines insurer
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
Question 10:
Reinsurance
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
Question 11:
Pure risk
Answer:
a chance of loss or no loss, but no chance of gain
Question 12:
Speculative risk
Answer:
a chance of loss, no loss, or gain
, Question 13:
Solvency
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
Question 14:
Income statement
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
Question 15:
Earned premiums
Answer:
the portion of the written premiums that apply to the part of the policy period that has already
occurred
Question 16:
Underwriting income
Answer:
income an insurer earns from premiums paid by policyholders minus incurred losses and
underwriting expenses
Question 17:
Balance sheet
Answer:
the financial statement that reports the assets, liabilities, and owner's equity of an organization
as of a specific date
Question 18:
Policyholder's surplus
Answer:
an insurer's assets minus its liabilities, which represents its net worth
Question 1:
Loss exposure
Answer:
any condition or situation that presents a possibility of loss, whether or not an actual loss
occurs
Question 2:
Premium
Answer:
the price of the insurance coverage provided for a specified period
Question 3:
Indemnify
Answer:
to restore a party who has sustained a loss to the same financial position that party held before
the loss occurred
Question 4:
Insured
Answer:
any person or organization who is insured under an insurance policy
Question 5:
Property-casualty insurance
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
Question 6:
Life-health insurance
Answer:
one of the two main sectors of the insurance industry encompassing numerous types of
insurance that cover the financial
,Question 7:
Stock insurer
Answer:
an insurer that is owned by its stockholders and formed as a corporation for the purpose of
earning a profit for the stockholders
Question 8:
Mutual insurer
Answer:
an insurer that is owned by its policyholders and formed as a corporation for the purpose of
providing insurance to them
Question 9:
Surplus-lines insurer
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
Question 10:
Reinsurance
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
Question 11:
Pure risk
Answer:
a chance of loss or no loss, but no chance of gain
Question 12:
Speculative risk
Answer:
a chance of loss, no loss, or gain
, Question 13:
Solvency
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
Question 14:
Income statement
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
Question 15:
Earned premiums
Answer:
the portion of the written premiums that apply to the part of the policy period that has already
occurred
Question 16:
Underwriting income
Answer:
income an insurer earns from premiums paid by policyholders minus incurred losses and
underwriting expenses
Question 17:
Balance sheet
Answer:
the financial statement that reports the assets, liabilities, and owner's equity of an organization
as of a specific date
Question 18:
Policyholder's surplus
Answer:
an insurer's assets minus its liabilities, which represents its net worth
