AINS 101 Exam Prep | UPDATED Questions with 100% Verified
Answers
Question:
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?
A. Ciara needs her car to get to her job, and she needs her job
to make car payments and pay for her car insurance.
B. When her car's windshield breaks, Ciara has to pay only
$100 of the $600 cost of replacing it.
C. When her car's transmission goes out a month after the
warranty expires, Ciara is faced with a $1,100 repair bill.
D. Ciara finds it difficult to come up with a $787 auto insurance
premium every six months.
Answer:
When her car's windshield breaks, Ciara has to pay only $100 of the $600 cost of
replacing it.
Question:
Which one of the following statements is correct regarding
the benefits provided by insurance?
A. Insurance reduces the financial consequences of loss
exposures but not the related uncertainty.
B. The primary role of insurance is to meet mandatory
insurance requirements.
C. The reduction in losses paid by insurers due to risk control
measures benefits individual insureds but not society as a
whole.
D. Insurance helps reduce the financial burden to society by
compensating accident victims.
Answer:
,Insurance helps reduce the financial burden to society by compensating accident victims.
Question:
Shelton Industries experienced a fire in its manufacturing
plant. Several employees suffered burns and smoke inhalation
injuries as they tried to escape the building. Which one of
Shelton Industries' commercial property-casualty policies
would pay for the employees' injuries and illnesses?
Answer:
Workers compensation insurance
Question:
A homeowners policy is a type of
Answer:
Personal property-casualty insurance policy.
Question:
Which one of the following correctly describes a reason for
government involvement in property-casualty insurance?
A. Selling insurance provides the government with a non-tax
source of revenues and profits.
B. Government programs can meet legitimate public demands
unmet by private insurers.
C. Competition from government plans keeps private insurer's
premiums competitive.
D. Preventing high-risk individuals or activities from being
insured is in the public interest.
Answer:
Government programs can meet legitimate public demands unmet by private insurers.
Question:
Insurance Company wrote a commercial liability policy for a
manufacturer of off-road motorcycles. The potential costs of
the insured's loss exposure exceed Insurance Company's
,capacity. Insurance Company could consider which one of the
following types of contractual transferring agreement to meet
its needs?
Answer:
Reinsurance
Question:
In an effort to reduce expenses, increase profitability, and
reduce human errors; ABC Insurance Company decided to
automate most of its personal lines underwriting function. The
company now uses standardized application forms that are
submitted electronically to one of the company's regional
offices. At each regional office, a computer with a scanner
reads the applications. The computer has been programmed
with acceptable answers to the questions. If the answers on
the application are all acceptable, the policy is automatically
issued. Rejected applications are automatically forwarded to a
human underwriter who reviews them. The use of this
technology has reduced the company's expense ratio by two
and a half percent, and reduced the time it takes to issue a
policy. ABC Insurance Company's use of computers to
evaluate applications electronically is an application of
A. Radiant sensors.
B. Artificial intelligence.
C. Risk management information systems.
D. Actuator technology.
Answer:
Artificial intelligence.
Question:
Jimmy decided to buy a house in his neighborhood that had
been foreclosed on by the bank that held the mortgage. He is
hoping to do some renovation and repair work on the house,
, and then sell it for a quick profit. What type of risk is this?
Answer:
Speculative Risk
Question:
Which one of the following best describes the concept of
pooling?
A. The financial consequences of unanticipated losses are
transferred to an insurer.
B. Risk management is concerned with positive and negative
risks.
C. Insureds share the cost of each other's losses.
D. Insurance benefits society as a whole.
Answer:
Insureds share the cost of each other's losses.
Question:
Which one of the following represents uncertainty about
outcomes that can be negative or positive?
A. Loss exposure
B. Transfer
C. Risk
D. Pooling
Answer:
Risk
Question:
Coverage for money and other business property from various
causes of loss such as burglary, robbery, theft, and employee
dishonesty typically is provided by
Answer:
Commercial crime insurance.
Answers
Question:
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?
A. Ciara needs her car to get to her job, and she needs her job
to make car payments and pay for her car insurance.
B. When her car's windshield breaks, Ciara has to pay only
$100 of the $600 cost of replacing it.
C. When her car's transmission goes out a month after the
warranty expires, Ciara is faced with a $1,100 repair bill.
D. Ciara finds it difficult to come up with a $787 auto insurance
premium every six months.
Answer:
When her car's windshield breaks, Ciara has to pay only $100 of the $600 cost of
replacing it.
Question:
Which one of the following statements is correct regarding
the benefits provided by insurance?
A. Insurance reduces the financial consequences of loss
exposures but not the related uncertainty.
B. The primary role of insurance is to meet mandatory
insurance requirements.
C. The reduction in losses paid by insurers due to risk control
measures benefits individual insureds but not society as a
whole.
D. Insurance helps reduce the financial burden to society by
compensating accident victims.
Answer:
,Insurance helps reduce the financial burden to society by compensating accident victims.
Question:
Shelton Industries experienced a fire in its manufacturing
plant. Several employees suffered burns and smoke inhalation
injuries as they tried to escape the building. Which one of
Shelton Industries' commercial property-casualty policies
would pay for the employees' injuries and illnesses?
Answer:
Workers compensation insurance
Question:
A homeowners policy is a type of
Answer:
Personal property-casualty insurance policy.
Question:
Which one of the following correctly describes a reason for
government involvement in property-casualty insurance?
A. Selling insurance provides the government with a non-tax
source of revenues and profits.
B. Government programs can meet legitimate public demands
unmet by private insurers.
C. Competition from government plans keeps private insurer's
premiums competitive.
D. Preventing high-risk individuals or activities from being
insured is in the public interest.
Answer:
Government programs can meet legitimate public demands unmet by private insurers.
Question:
Insurance Company wrote a commercial liability policy for a
manufacturer of off-road motorcycles. The potential costs of
the insured's loss exposure exceed Insurance Company's
,capacity. Insurance Company could consider which one of the
following types of contractual transferring agreement to meet
its needs?
Answer:
Reinsurance
Question:
In an effort to reduce expenses, increase profitability, and
reduce human errors; ABC Insurance Company decided to
automate most of its personal lines underwriting function. The
company now uses standardized application forms that are
submitted electronically to one of the company's regional
offices. At each regional office, a computer with a scanner
reads the applications. The computer has been programmed
with acceptable answers to the questions. If the answers on
the application are all acceptable, the policy is automatically
issued. Rejected applications are automatically forwarded to a
human underwriter who reviews them. The use of this
technology has reduced the company's expense ratio by two
and a half percent, and reduced the time it takes to issue a
policy. ABC Insurance Company's use of computers to
evaluate applications electronically is an application of
A. Radiant sensors.
B. Artificial intelligence.
C. Risk management information systems.
D. Actuator technology.
Answer:
Artificial intelligence.
Question:
Jimmy decided to buy a house in his neighborhood that had
been foreclosed on by the bank that held the mortgage. He is
hoping to do some renovation and repair work on the house,
, and then sell it for a quick profit. What type of risk is this?
Answer:
Speculative Risk
Question:
Which one of the following best describes the concept of
pooling?
A. The financial consequences of unanticipated losses are
transferred to an insurer.
B. Risk management is concerned with positive and negative
risks.
C. Insureds share the cost of each other's losses.
D. Insurance benefits society as a whole.
Answer:
Insureds share the cost of each other's losses.
Question:
Which one of the following represents uncertainty about
outcomes that can be negative or positive?
A. Loss exposure
B. Transfer
C. Risk
D. Pooling
Answer:
Risk
Question:
Coverage for money and other business property from various
causes of loss such as burglary, robbery, theft, and employee
dishonesty typically is provided by
Answer:
Commercial crime insurance.
