Insurance Level 1 Test Alberta
Questions With 100% Accurate
Answers 2025-2026 Updated.
Insurance - Answer A contract in which one party, the insurer, for monetary consideration
agrees to reimburse another, the insured for loss or liability for a loss on a defined subject
caused by specific hazards or perils
Indemnify - Answer To provide compensation for loss or expenses incurred
Insurance Model - Answer Fund Income (Premiums)-Insurance Fund (Insurance)-Fund Outgo
(claim payments)
Premium - Answer The price of insurance protection for a specified risk for a specified period
of time
risk - Answer The chance of loss. Specifically, the possible loss or destruction of a property or
the possible incurring of a liability. Sometimes referred to as the subject of an insurance
contract.
contract - Answer An agreement or promise between two or more persons that is intended to
be legally enforceable and is constituted by the acceptance by one party of the offer made to
him by another party, to do or abstain from doing a specific act. The offer and acceptance may
be either expressed or be inferred through the conduct of both parties.
Agent - Answer A person who is employed or authorized to act on behalf of another. Agents
can be independent or direct writers.
Independent Agent - Answer is one who contracts with at least two or more insurance
companies to sell their insurance policies to the public and is paid a commission based on the
percentage of each premium paid. This includes a fee for each policy serviced.
Direct agent - Answer Represents only one company and sells for only one company.
broker - Answer A licensed independent person or firm who acts on behalf of the insured in
,staff adjuster - Answer Works for the insurance company and works directly with the insured
to settle the claim
independent adjuster - Answer qualified independent businessperson is appointed by the
insurer to settle a claim
public adjuster - Answer independent businessperson who may be engaged by the insured to
help in the settlement of a claim. Infrequently used they are typically hired in cases where the
claim is large and the amount is in dispute.
Primary function of insurance - Answer To spread risk-losses of few are shared by many
How insurers spread risk? - Answer 1) Volume-insuring large numbers of risks
2) Diversity of types of risks insured
3) diversity of location-Avoid too many risks in one location.
Secondary functions of Insurance - Answer 1) Aid to Security- Insurance gives people peace of
mind and allows for some degree of certainty in the future.
2) Aid to Credit- Cannot take out a house or car loan without insurance
3) Loss-Prevention Activities- Fire Prevention, safe driving
4) Source of Capital- Large amounts of investments in economy including bonds, stocks,
buildings, land etc.
5) Source of employment-Insurance industry has a wide variety of jobs.
earned premium - Answer 1) That portion of a premium earned or charged for the period of
time a policy remains effective. 2) An amount calculated by taking the earned premium reserve
at the beginning of the period plus the premium written during the period, less the unearned
premium at the end of the period. 3) Premium actually exposed to loss.
unearned premium - Answer The part of a premium that has not been used or earned.
premium representing the unearned portion of a policy.
unearned premium reserve - Answer A reserve fund of an insurance company or reinsurance
company, representing the unearned premiums.
, Key Characteristics of Insurance Agents - Answer 1) generally sell the insurance policies
offered by a single insurer. Either employed by the company or work independently.
2) Receive more training and education support than brokers from the insurance companies.
3) Direct writers work for the insurance companies and are paid salary plus commission.
4) The business written belongs to the insurer
5) Independent agents are called agencies. Typically hirer commission to encourage growth.
Business list still generally belongs to the insurer still.
Key Characteristics of Insurance Brokers - Answer 1) Independent business that own their
client list and is paid a commission for all policies sold.
2) Individual brokers work for the brokerage and compensation is varied because of this.
3) Brokers can cancel a contract and move an insured business to another insurance company.
4) Provide consumers with a choice of products and insurers
Roles of insurance intermediaries - Answer 1) Prospect for potential clients
2) Qualify the client
3) Advise the client
4) Facilitate the insurance application
5) Obtain instructions from the client
6) Negotiate insurance
7) Facilitate the claims process.
Ways to prospect for new clients - Answer 1) target marketing
2) Market segmentation
3) Advertising
4) Cold-calling
5) Referrals
Advising a client includes risk analysis. What is risk analysis? - Answer It is the process of
identifying and quantifying exposures to loss.
4 Key steps to facilitating the claims process - Answer 1) Avoid making any comments about
the validity of claim unless it is obvious they are not covered and then just tactfully suggest that
Questions With 100% Accurate
Answers 2025-2026 Updated.
Insurance - Answer A contract in which one party, the insurer, for monetary consideration
agrees to reimburse another, the insured for loss or liability for a loss on a defined subject
caused by specific hazards or perils
Indemnify - Answer To provide compensation for loss or expenses incurred
Insurance Model - Answer Fund Income (Premiums)-Insurance Fund (Insurance)-Fund Outgo
(claim payments)
Premium - Answer The price of insurance protection for a specified risk for a specified period
of time
risk - Answer The chance of loss. Specifically, the possible loss or destruction of a property or
the possible incurring of a liability. Sometimes referred to as the subject of an insurance
contract.
contract - Answer An agreement or promise between two or more persons that is intended to
be legally enforceable and is constituted by the acceptance by one party of the offer made to
him by another party, to do or abstain from doing a specific act. The offer and acceptance may
be either expressed or be inferred through the conduct of both parties.
Agent - Answer A person who is employed or authorized to act on behalf of another. Agents
can be independent or direct writers.
Independent Agent - Answer is one who contracts with at least two or more insurance
companies to sell their insurance policies to the public and is paid a commission based on the
percentage of each premium paid. This includes a fee for each policy serviced.
Direct agent - Answer Represents only one company and sells for only one company.
broker - Answer A licensed independent person or firm who acts on behalf of the insured in
,staff adjuster - Answer Works for the insurance company and works directly with the insured
to settle the claim
independent adjuster - Answer qualified independent businessperson is appointed by the
insurer to settle a claim
public adjuster - Answer independent businessperson who may be engaged by the insured to
help in the settlement of a claim. Infrequently used they are typically hired in cases where the
claim is large and the amount is in dispute.
Primary function of insurance - Answer To spread risk-losses of few are shared by many
How insurers spread risk? - Answer 1) Volume-insuring large numbers of risks
2) Diversity of types of risks insured
3) diversity of location-Avoid too many risks in one location.
Secondary functions of Insurance - Answer 1) Aid to Security- Insurance gives people peace of
mind and allows for some degree of certainty in the future.
2) Aid to Credit- Cannot take out a house or car loan without insurance
3) Loss-Prevention Activities- Fire Prevention, safe driving
4) Source of Capital- Large amounts of investments in economy including bonds, stocks,
buildings, land etc.
5) Source of employment-Insurance industry has a wide variety of jobs.
earned premium - Answer 1) That portion of a premium earned or charged for the period of
time a policy remains effective. 2) An amount calculated by taking the earned premium reserve
at the beginning of the period plus the premium written during the period, less the unearned
premium at the end of the period. 3) Premium actually exposed to loss.
unearned premium - Answer The part of a premium that has not been used or earned.
premium representing the unearned portion of a policy.
unearned premium reserve - Answer A reserve fund of an insurance company or reinsurance
company, representing the unearned premiums.
, Key Characteristics of Insurance Agents - Answer 1) generally sell the insurance policies
offered by a single insurer. Either employed by the company or work independently.
2) Receive more training and education support than brokers from the insurance companies.
3) Direct writers work for the insurance companies and are paid salary plus commission.
4) The business written belongs to the insurer
5) Independent agents are called agencies. Typically hirer commission to encourage growth.
Business list still generally belongs to the insurer still.
Key Characteristics of Insurance Brokers - Answer 1) Independent business that own their
client list and is paid a commission for all policies sold.
2) Individual brokers work for the brokerage and compensation is varied because of this.
3) Brokers can cancel a contract and move an insured business to another insurance company.
4) Provide consumers with a choice of products and insurers
Roles of insurance intermediaries - Answer 1) Prospect for potential clients
2) Qualify the client
3) Advise the client
4) Facilitate the insurance application
5) Obtain instructions from the client
6) Negotiate insurance
7) Facilitate the claims process.
Ways to prospect for new clients - Answer 1) target marketing
2) Market segmentation
3) Advertising
4) Cold-calling
5) Referrals
Advising a client includes risk analysis. What is risk analysis? - Answer It is the process of
identifying and quantifying exposures to loss.
4 Key steps to facilitating the claims process - Answer 1) Avoid making any comments about
the validity of claim unless it is obvious they are not covered and then just tactfully suggest that
