AINS 101 FINAL EXAM STUDY GUIDE
2026/2027 ACCURATE QUESTIONS
WITH CORRECT DETAILED ANSWERS
|| 100% GUARANTEED PASS
<NEWEST VERSION>
1. What is pure risk? - ANSWER ✔ Risk where there is no gain or loss
2. What is speculative risk? - ANSWER ✔ Risk where there could be a gain or
loss
3. What is an example of a pure risk? - ANSWER ✔ Fire
4. What is an example of a speculative risk? - ANSWER ✔ Renovations of a
house, investing
5. What is the benefit of artificial intelligence in insurance? - ANSWER ✔
Work with humans to make quicker decisions
6. What is the benefit of sensors in insurance? - ANSWER ✔ Warn of issues
earlier on and reduce loss
7. What is the benefit of computer vision in insurance? - ANSWER ✔ Helps
machines respond to things sooner to reduce risk
,8. What are the three main reasons insurance is regulated? - ANSWER ✔
Protect consumers, maintain insurer solvency, and prevent destructive
competition
9. What is solvency? - ANSWER ✔ An insurer's ability to meet its financial
obligations of policy owners, insureds, and beneficiaries. (Makes sure there
is enough cash on hand to pay for future claims)
10.What are revenues? - ANSWER ✔ Part of an Insurer's income statement that
comes primarily from premiums paid by policy holders
11.What are incurred losses? - ANSWER ✔ Losses that happened over the year
12.What are expenses? - ANSWER ✔ Part of an insurer's income statement that
include losses from claims, cost associated with paying claims, and
underwriting
13.What is net income? - ANSWER ✔ Part of an insurer's income statement
that is the Net Underwriting (Gain) + Net Investment Income
14.What is the biggest source of revenue for insurance companies? - ANSWER
✔ Earned premiums
15.What are unearned premiums? - ANSWER ✔ Premiums that have not yet
happened or been paid
,16.What is a policy term? - ANSWER ✔ The date the policy is issued to when
the policy expires
17.What is an insurer's balance sheet? - ANSWER ✔ This gives a snapshot of
insurers financial position at a specific point in time (Includes assets and
liabilities)
18.What are admitted assets? - ANSWER ✔ Assets that are liquid and can
easily be turned into cash (Stocks, bonds, real estate)
19.What are non-admitted assets? - ANSWER ✔ Assets that cannot be easily
turned into cash (overdue premiums)
20.Adhering to the characteristics of an ideally insurable loss exposure in
selling insurance help assure that
A. The losses associated with it typically involve small amounts.
B. The insurer is able to predict the amount and timing of each future
loss.
C. The insurer can charge a high premium for the coverage.
D. The insurer is able to charge a premium that the insured can afford to
pay. - ANSWER ✔ The insurer is able to charge a premium that the
insured can afford to pay. (Adhering to the characteristics of an
ideally insurable loss exposure in selling insurance help assure that the
insurer is able to charge a premium that the insured can afford to pay.)
21.Ling has noticed that her neighbor has recovered money for two
homeowners property claims and an auto damage claim he has filed in
recent years. Ling has been paying insurance premiums for many years and
has never suffered a loss or made a claim. She feels that her insurance
, contracts over the years have been worthless to her. What Ling does not
understand is that she has been paying premiums for a contract
A. That is nontransferable.
B. Of unequal amounts.
C. Of adhesion.
D. Of utmost good faith. - ANSWER ✔ Of unequal amounts.
22.An insurer has decided to take an extremely narrow interpretation of a
property insurance policy provision to limit the number of loss payments it
will need to make. It realizes that its interpretation is probably wrong, but it
knows that individual insured's loss amounts will be small, such that most
insureds will not take the trouble to file lawsuits against it. The insurer may
be violating the principle that an insurance policy is
A. A conditional contract.
B. A contract of utmost good faith.
C. A contract of adhesion.
D. A contract of indemnity. - ANSWER ✔ A contract of utmost good
faith.
(An insurance policy is a contract of utmost good faith and both parties to it,
the insurer and the insured, are expected to be ethical in their dealings with
each other.)
23.New homeowner and small business owner Sallie learns that an insurance
policy may contain other documents than its insurance forms. Accordingly,
which one of the following will Sallie find is true regarding her new
insurance purchases?
A. As Sallie's policy coverages are relatively common, she will simply
require a manuscript policy.
2026/2027 ACCURATE QUESTIONS
WITH CORRECT DETAILED ANSWERS
|| 100% GUARANTEED PASS
<NEWEST VERSION>
1. What is pure risk? - ANSWER ✔ Risk where there is no gain or loss
2. What is speculative risk? - ANSWER ✔ Risk where there could be a gain or
loss
3. What is an example of a pure risk? - ANSWER ✔ Fire
4. What is an example of a speculative risk? - ANSWER ✔ Renovations of a
house, investing
5. What is the benefit of artificial intelligence in insurance? - ANSWER ✔
Work with humans to make quicker decisions
6. What is the benefit of sensors in insurance? - ANSWER ✔ Warn of issues
earlier on and reduce loss
7. What is the benefit of computer vision in insurance? - ANSWER ✔ Helps
machines respond to things sooner to reduce risk
,8. What are the three main reasons insurance is regulated? - ANSWER ✔
Protect consumers, maintain insurer solvency, and prevent destructive
competition
9. What is solvency? - ANSWER ✔ An insurer's ability to meet its financial
obligations of policy owners, insureds, and beneficiaries. (Makes sure there
is enough cash on hand to pay for future claims)
10.What are revenues? - ANSWER ✔ Part of an Insurer's income statement that
comes primarily from premiums paid by policy holders
11.What are incurred losses? - ANSWER ✔ Losses that happened over the year
12.What are expenses? - ANSWER ✔ Part of an insurer's income statement that
include losses from claims, cost associated with paying claims, and
underwriting
13.What is net income? - ANSWER ✔ Part of an insurer's income statement
that is the Net Underwriting (Gain) + Net Investment Income
14.What is the biggest source of revenue for insurance companies? - ANSWER
✔ Earned premiums
15.What are unearned premiums? - ANSWER ✔ Premiums that have not yet
happened or been paid
,16.What is a policy term? - ANSWER ✔ The date the policy is issued to when
the policy expires
17.What is an insurer's balance sheet? - ANSWER ✔ This gives a snapshot of
insurers financial position at a specific point in time (Includes assets and
liabilities)
18.What are admitted assets? - ANSWER ✔ Assets that are liquid and can
easily be turned into cash (Stocks, bonds, real estate)
19.What are non-admitted assets? - ANSWER ✔ Assets that cannot be easily
turned into cash (overdue premiums)
20.Adhering to the characteristics of an ideally insurable loss exposure in
selling insurance help assure that
A. The losses associated with it typically involve small amounts.
B. The insurer is able to predict the amount and timing of each future
loss.
C. The insurer can charge a high premium for the coverage.
D. The insurer is able to charge a premium that the insured can afford to
pay. - ANSWER ✔ The insurer is able to charge a premium that the
insured can afford to pay. (Adhering to the characteristics of an
ideally insurable loss exposure in selling insurance help assure that the
insurer is able to charge a premium that the insured can afford to pay.)
21.Ling has noticed that her neighbor has recovered money for two
homeowners property claims and an auto damage claim he has filed in
recent years. Ling has been paying insurance premiums for many years and
has never suffered a loss or made a claim. She feels that her insurance
, contracts over the years have been worthless to her. What Ling does not
understand is that she has been paying premiums for a contract
A. That is nontransferable.
B. Of unequal amounts.
C. Of adhesion.
D. Of utmost good faith. - ANSWER ✔ Of unequal amounts.
22.An insurer has decided to take an extremely narrow interpretation of a
property insurance policy provision to limit the number of loss payments it
will need to make. It realizes that its interpretation is probably wrong, but it
knows that individual insured's loss amounts will be small, such that most
insureds will not take the trouble to file lawsuits against it. The insurer may
be violating the principle that an insurance policy is
A. A conditional contract.
B. A contract of utmost good faith.
C. A contract of adhesion.
D. A contract of indemnity. - ANSWER ✔ A contract of utmost good
faith.
(An insurance policy is a contract of utmost good faith and both parties to it,
the insurer and the insured, are expected to be ethical in their dealings with
each other.)
23.New homeowner and small business owner Sallie learns that an insurance
policy may contain other documents than its insurance forms. Accordingly,
which one of the following will Sallie find is true regarding her new
insurance purchases?
A. As Sallie's policy coverages are relatively common, she will simply
require a manuscript policy.
