AINS 21 practice exam 2026 Questions
and Answers
when selecting a distribution channel, which one of the following is important
consideration with regard to customer needs and characteristics - Correct answer-
Which of the following statements is correct regarding characteristics of ideally
insurable loss exposures - Correct answer-ideally, loss exposures should be spread
across a large number of similar exposure units within the same period
The type of insurance that provides periodic income payments to an insured who is
unable to work because of sickness or injury is - Correct answer-Disability income
insurance
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 -
Correct answer-The potential for financial ruin
A loss exposure is - Correct answer-Any condition that presents the possibility of a
loss
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,Liability coverage for loss exposures arising from a business organizations
premises and operations, its products, or its completed work is typically provided
by - Correct answer-Commercial general liability insurance
Though premiums are an obvious cost of insurance, many insureds believe that are
too high because - Correct answer-Benefits are intangible until loss occurs
Insurance is not the only risk management transfer technique. When circumstances
are appropriate, transfer can be accomplished through - Correct answer-
noninsurance transfer technique
Which one of the following is an example of a fortuitous loss - Correct answer-An
unknown vandal spray-paints graffiti on the insured's garage
Which one of the following statements is correct regarding the benefits that
insurance provides - Correct answer-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 - Correct answer-increased losses
The primary role of insurance is to - Correct answer-indemnify individuals and
organizations for covered losses
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,Coverage for money, securities, and other property from various causes of loss
such as burglary, robbery, theft, and employee dishonesty typically is provided by -
Correct answer-commercial crime insurance
Which of the following is an opportunity cost of insurance - Correct 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 by - Correct answer-inland marine insurance
For insurers to utilize pooling most effectively and prevent catastrophic losses, the
insured exposure units need to be - Correct answer-independent
Some loss exposures are not easy to retain, avoid, or control. What risk
management techniques is frequently used to treat such exposures - Correct
answer-transfer
Sometimes the existence of insurance encourages losses. the result of this
phenomenon is that in - Correct answer-increases the total cost of insurance
Pravalt Construction Company pays less than its competitors for workers
compensation insurance because Pravalt has had substantially fewer employee
©COPYRIGHT 2025, ALL RIGHTS RESERVE 3
, injuries than other firms in its class. this illustrates which one of the following
benefits of insurance - Correct answer-promote risk control
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 - Correct answer-When her car's windshield breaks,
Ciara has to pay only $100 of the $600 cost of replacing it
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 - Correct answer-Disability insurance
Adhering to the characteristics of an ideally insurable loss exposure in selling
insurance help assure that - Correct answer-The insurer is able to charge a premium
that the insured can afford to pay
Which of the following statements is correct with regard to risk and ideally
insurable characteristics of loss exposures - Correct answer-indemnification is the
process of restoring an insured to pre-loss financial condition
Which one of the following statements is correct - Correct answer-insurers
investment income helps keep premiums at reasonable level
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and Answers
when selecting a distribution channel, which one of the following is important
consideration with regard to customer needs and characteristics - Correct answer-
Which of the following statements is correct regarding characteristics of ideally
insurable loss exposures - Correct answer-ideally, loss exposures should be spread
across a large number of similar exposure units within the same period
The type of insurance that provides periodic income payments to an insured who is
unable to work because of sickness or injury is - Correct answer-Disability income
insurance
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 -
Correct answer-The potential for financial ruin
A loss exposure is - Correct answer-Any condition that presents the possibility of a
loss
©COPYRIGHT 2025, ALL RIGHTS RESERVE 1
,Liability coverage for loss exposures arising from a business organizations
premises and operations, its products, or its completed work is typically provided
by - Correct answer-Commercial general liability insurance
Though premiums are an obvious cost of insurance, many insureds believe that are
too high because - Correct answer-Benefits are intangible until loss occurs
Insurance is not the only risk management transfer technique. When circumstances
are appropriate, transfer can be accomplished through - Correct answer-
noninsurance transfer technique
Which one of the following is an example of a fortuitous loss - Correct answer-An
unknown vandal spray-paints graffiti on the insured's garage
Which one of the following statements is correct regarding the benefits that
insurance provides - Correct answer-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 - Correct answer-increased losses
The primary role of insurance is to - Correct answer-indemnify individuals and
organizations for covered losses
©COPYRIGHT 2025, ALL RIGHTS RESERVE 2
,Coverage for money, securities, and other property from various causes of loss
such as burglary, robbery, theft, and employee dishonesty typically is provided by -
Correct answer-commercial crime insurance
Which of the following is an opportunity cost of insurance - Correct 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 by - Correct answer-inland marine insurance
For insurers to utilize pooling most effectively and prevent catastrophic losses, the
insured exposure units need to be - Correct answer-independent
Some loss exposures are not easy to retain, avoid, or control. What risk
management techniques is frequently used to treat such exposures - Correct
answer-transfer
Sometimes the existence of insurance encourages losses. the result of this
phenomenon is that in - Correct answer-increases the total cost of insurance
Pravalt Construction Company pays less than its competitors for workers
compensation insurance because Pravalt has had substantially fewer employee
©COPYRIGHT 2025, ALL RIGHTS RESERVE 3
, injuries than other firms in its class. this illustrates which one of the following
benefits of insurance - Correct answer-promote risk control
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 - Correct answer-When her car's windshield breaks,
Ciara has to pay only $100 of the $600 cost of replacing it
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 - Correct answer-Disability insurance
Adhering to the characteristics of an ideally insurable loss exposure in selling
insurance help assure that - Correct answer-The insurer is able to charge a premium
that the insured can afford to pay
Which of the following statements is correct with regard to risk and ideally
insurable characteristics of loss exposures - Correct answer-indemnification is the
process of restoring an insured to pre-loss financial condition
Which one of the following statements is correct - Correct answer-insurers
investment income helps keep premiums at reasonable level
©COPYRIGHT 2025, ALL RIGHTS RESERVE 4
