AINS 21 Practice Exam UPDATED Study
ACTUAL QUESTIONS AND CORRECT
ANSWERS
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?
A. Enable efficient use of resources
B. Meet legal requirements
C. Reduce social burden
D. Promote risk control - CORRECT ANSWER D. Promote risk control
The primary role of insurance is to
A. Make a profit for the insurance company's shareholders
B. Sell insurance policies to individuals and organizations
C. Indemnify individuals and organizations for covered losses
D. Educate individuals and organizations for coverage losses - CORRECT
ANSWER C. Indemnify individuals and organizations for covered losses
Insurance is not the only risk management transfer technique. When circumstances are
appropriate, transfer can be accomplished through
A. loss prevention
B. noninsurance transfer techniques
C. retention
D. avoidance - CORRECT ANSWER B. noninsurance transfer techniques
From a risk management viewpoint, insurance is used to
,A. Reduce the cost of losses
B. Prevent the cost of losses
C. Transfer the cost of losses
D. Isolate the cost of losses - CORRECT ANSWER C. transfer the cost of losses
Life insurance that provides coverage for a specified period with no cash value is called
A. whole life
B. long-term care insurance
C. term life insurance
D. universal life - CORRECT ANSWER C. term life insurance
Which one of the following is true regarding a homeowners policy?
A. it only provides property coverage
B. it only provides liability coverage
C. most include coverage for theft of contents within the home
D. it excludes losses caused by wind and lightening - CORRECT ANSWER C. most
include coverage for theft of contents within the home
Which one of the following describes the characteristics of a mutual insurance company?
A. An unincorporated association that provides reciprocal coverage to subscribers
B. a corporation owned by policyholders that provides insurance to its policyholders
C. a corporation owned by stockholders that earns profits for the stockholders
D. an unincorporated association that earns profits for its individual investors - CORRECT
ANSWER B. a corporation owned by policyholders that provides insurance to its
policyholders
, 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?
A. General Liability
B. Flood
C. Crop
D. Work Comp - CORRECT ANSWER D. Work Comp
Prompt and professional loss adjustment services are a responsibility of what part of an
insurer's organization?
A. the premium audit function
B. the loss control function
C. the claims function
D. the underwriting function - CORRECT ANSWER C. the claims function
Which one of the following is a key focus of states' insurance regulation?
A. producer concentration
B. insurer licensing
C. product branding
D. premium taxation - CORRECT ANSWER B. Insurer licensing
A stock insurer is distinguished from a mutual insurer by the fact that
A. owners have voting rights
B. it seeks to generate a profit
C. owners are not necessarily insureds
D. it is governed by a board of directors - CORRECT ANSWER C. owners are not
necessarily insureds
ACTUAL QUESTIONS AND CORRECT
ANSWERS
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?
A. Enable efficient use of resources
B. Meet legal requirements
C. Reduce social burden
D. Promote risk control - CORRECT ANSWER D. Promote risk control
The primary role of insurance is to
A. Make a profit for the insurance company's shareholders
B. Sell insurance policies to individuals and organizations
C. Indemnify individuals and organizations for covered losses
D. Educate individuals and organizations for coverage losses - CORRECT
ANSWER C. Indemnify individuals and organizations for covered losses
Insurance is not the only risk management transfer technique. When circumstances are
appropriate, transfer can be accomplished through
A. loss prevention
B. noninsurance transfer techniques
C. retention
D. avoidance - CORRECT ANSWER B. noninsurance transfer techniques
From a risk management viewpoint, insurance is used to
,A. Reduce the cost of losses
B. Prevent the cost of losses
C. Transfer the cost of losses
D. Isolate the cost of losses - CORRECT ANSWER C. transfer the cost of losses
Life insurance that provides coverage for a specified period with no cash value is called
A. whole life
B. long-term care insurance
C. term life insurance
D. universal life - CORRECT ANSWER C. term life insurance
Which one of the following is true regarding a homeowners policy?
A. it only provides property coverage
B. it only provides liability coverage
C. most include coverage for theft of contents within the home
D. it excludes losses caused by wind and lightening - CORRECT ANSWER C. most
include coverage for theft of contents within the home
Which one of the following describes the characteristics of a mutual insurance company?
A. An unincorporated association that provides reciprocal coverage to subscribers
B. a corporation owned by policyholders that provides insurance to its policyholders
C. a corporation owned by stockholders that earns profits for the stockholders
D. an unincorporated association that earns profits for its individual investors - CORRECT
ANSWER B. a corporation owned by policyholders that provides insurance to its
policyholders
, 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?
A. General Liability
B. Flood
C. Crop
D. Work Comp - CORRECT ANSWER D. Work Comp
Prompt and professional loss adjustment services are a responsibility of what part of an
insurer's organization?
A. the premium audit function
B. the loss control function
C. the claims function
D. the underwriting function - CORRECT ANSWER C. the claims function
Which one of the following is a key focus of states' insurance regulation?
A. producer concentration
B. insurer licensing
C. product branding
D. premium taxation - CORRECT ANSWER B. Insurer licensing
A stock insurer is distinguished from a mutual insurer by the fact that
A. owners have voting rights
B. it seeks to generate a profit
C. owners are not necessarily insureds
D. it is governed by a board of directors - CORRECT ANSWER C. owners are not
necessarily insureds
