AINS 21 | 113 Questions with 100 % correct answers | Verified& Updated 2024 Graded A+

Which one of the following is an opportunity cost of insurance? - 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? - 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? - C. A corporation owned by policyholders that provides insurance to its policyholders. The primary role of insurance is to - D. Indemnify individuals and organizations for covered losses. Sometimes the existence of insurance encourages losses. The result of this phenomenon is that it - 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 circumstancesthe most practical risk management technique for dealing with her auto-related loss exposures is - D. Risk transfer. Insurance is not the only risk management transfer technique. When circumstances are appropriate, transfer can be accomplished through - A. Noninsurance transfer techniques. 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 - A. The potential for financial ruin. From a risk management viewpoint, insurance is used to - B. Transfer the cost of losses