AINS Review Exam Questions with correct
Answers 2025/2026 A+ Graded 100%
Verified
Which one of the following statements is correct regarding insurance as a source of
investment funds?
A. Insurers cannot invest premium income because it must be available to pay claims.
B. Insurance provides a source of investment funds for insurers but not for
policyholders.
C. Insurers' investment income helps keep premiums at a reasonable level.
D. Insurers are prohibited from investing in social projects. - ANS- C
Which one of the following is an opportunity cost of insurance?
Select one:
A. An insured's funds that could be invested elsewhere if purchasing insurance were not
necessary
B. The cost of claims payments that would not have been necessary if insureds'
carelessness had not caused losses
C. An insurer's loss on invested premiums
D. The payment of commissions to agents - ANS- A
Harry has a new sports car that is insured with an Insurance Services Office, Inc. (ISO)
Personal Auto Policy sold through his neighborhood agent. Because this is the first new
car he's ever owned, Harry is interested in making sure he is fully covered and
knowledgeable about his insurance policy. Which one of the following is true for Harry?
Select one:
A. As the policy is a contract of utmost good faith, both his insurer and his agent are the
parties expected to be ethical in their dealings with one another.
B. Harry understands his policy is modular one, combining various coverage forms and
other documents especially tailored to his needs.
C. Harry can rest assured that if his new car is a total loss, he can expect to make a profit
while being restored to his pre-loss financial position.
D. An insurance contract, like the ISO policy Harry purchased, has certain additional
characteristics other than those of typic - ANS- D
,Excella Insurance is a private insurer operating in the state of Arkansas. It primarily sells
personal auto and homeowners policies and complies with all the necessary licensing
and regulations required. Which one of the following is true for Excella in regard to this?
Select one:
A. Excella must fully comply with insurance regulations so that the federal government
does not revoke its license.
B. Excella strives to make sure its revenue is equal to or less than its expenses and claim
payments to remain financially viable.
C. State insurance regulators are only one of many stakeholders that are interested in an
insurer's financial health.
D. Paying expenses and making a reasonable profit is the ultimate measure of the
insurer's success. - ANS- C
A small business owner concerned about something happening and not being able to
work or earn a living for an extended period of time due to an accident should purchase
Select one:
A. Disability insurance.
B. Personal liability insurance.
C. Universal life insurance.
D. Medical insurance. - ANS- A
The state of Maryland operates a residual auto plan (the Maryland Auto Insurance
Fund—MAIF) that provides coverage for drivers who are unable to obtain coverage from
private insurers. Which one of the following is the best rationale for the MAIF program?
Select one:
A. Private insurers overcharge for auto insurance, and the state provides a low-cost
alternative.
B. Private insurers face limited competition, and the state increases competitive
pressures by operating this type of plan.
C. Auto insurance is compulsory, and the program makes it possible for all drivers to
have reasonably priced insurance.
D. Auto insurance for high-risk drivers is profitable, and the program enables the state to
share in the profits. - ANS- C
Which one of the following statements concerning government insurance programs is
true?
Select one:
A. The federal government provides workers compensation insurance to employers who
cannot get it from private insurers.
, B. Fair Access to Insurance Requirements (FAIR) plans make basic property insurance
available to property owners who can't get it otherwise.
C. Various state insurance programs provide crop insurance for perils such as drought,
disease, excessive rain and hail.
D. Businesses seeking flood insurance under the National Flood Insurance Program
(NFIP) must purchase it at local federal government offices.Incorrect. Fair Access to
Insurance Requirements (FAIR) plans make basic property insurance available to
property owners who can't get it otherwise because of their property's location or any
other reason. - ANS- B
Which one of the following is the most common reason premium audits are conducted?
Select one:
A. The amount of the loss exposure is unknown at the start of the policy period.
B. Claim examiners have discovered unacceptable operations during the policy period.
C. Loss control activities during the policy period may reduce the risk of loss.
D. The amount of actual losses are not known at the start of the policy period. - ANS- A
The size of an employer's loss exposure for workers compensation insurance is based
on
Select one:
A. The final premium audit.
B. The amount of its payroll.
C. The extent of its operations.
D. The number of its employees. - ANS- B
Which one of the following statements is true?
Select one:
A. Regulators set coverage standards, but allow insurers to determine policy language.
B. Insurers must be free to create policies that are in their best interest.
C. Insurance regulators review policies to determine if they benefit consumers.
D. Insurance policies are private contracts, the language of which is largely unregulated.
- ANS- C
A flex rating law is
Select one:
A. An insurance rating law in which the rates and supporting rules must be filed with and
approved by the state insurance department before they can be used.
B. An insurance rating law that allows insurers to develop and use rates without having
to file with or get approval from the state insurance department.
Answers 2025/2026 A+ Graded 100%
Verified
Which one of the following statements is correct regarding insurance as a source of
investment funds?
A. Insurers cannot invest premium income because it must be available to pay claims.
B. Insurance provides a source of investment funds for insurers but not for
policyholders.
C. Insurers' investment income helps keep premiums at a reasonable level.
D. Insurers are prohibited from investing in social projects. - ANS- C
Which one of the following is an opportunity cost of insurance?
Select one:
A. An insured's funds that could be invested elsewhere if purchasing insurance were not
necessary
B. The cost of claims payments that would not have been necessary if insureds'
carelessness had not caused losses
C. An insurer's loss on invested premiums
D. The payment of commissions to agents - ANS- A
Harry has a new sports car that is insured with an Insurance Services Office, Inc. (ISO)
Personal Auto Policy sold through his neighborhood agent. Because this is the first new
car he's ever owned, Harry is interested in making sure he is fully covered and
knowledgeable about his insurance policy. Which one of the following is true for Harry?
Select one:
A. As the policy is a contract of utmost good faith, both his insurer and his agent are the
parties expected to be ethical in their dealings with one another.
B. Harry understands his policy is modular one, combining various coverage forms and
other documents especially tailored to his needs.
C. Harry can rest assured that if his new car is a total loss, he can expect to make a profit
while being restored to his pre-loss financial position.
D. An insurance contract, like the ISO policy Harry purchased, has certain additional
characteristics other than those of typic - ANS- D
,Excella Insurance is a private insurer operating in the state of Arkansas. It primarily sells
personal auto and homeowners policies and complies with all the necessary licensing
and regulations required. Which one of the following is true for Excella in regard to this?
Select one:
A. Excella must fully comply with insurance regulations so that the federal government
does not revoke its license.
B. Excella strives to make sure its revenue is equal to or less than its expenses and claim
payments to remain financially viable.
C. State insurance regulators are only one of many stakeholders that are interested in an
insurer's financial health.
D. Paying expenses and making a reasonable profit is the ultimate measure of the
insurer's success. - ANS- C
A small business owner concerned about something happening and not being able to
work or earn a living for an extended period of time due to an accident should purchase
Select one:
A. Disability insurance.
B. Personal liability insurance.
C. Universal life insurance.
D. Medical insurance. - ANS- A
The state of Maryland operates a residual auto plan (the Maryland Auto Insurance
Fund—MAIF) that provides coverage for drivers who are unable to obtain coverage from
private insurers. Which one of the following is the best rationale for the MAIF program?
Select one:
A. Private insurers overcharge for auto insurance, and the state provides a low-cost
alternative.
B. Private insurers face limited competition, and the state increases competitive
pressures by operating this type of plan.
C. Auto insurance is compulsory, and the program makes it possible for all drivers to
have reasonably priced insurance.
D. Auto insurance for high-risk drivers is profitable, and the program enables the state to
share in the profits. - ANS- C
Which one of the following statements concerning government insurance programs is
true?
Select one:
A. The federal government provides workers compensation insurance to employers who
cannot get it from private insurers.
, B. Fair Access to Insurance Requirements (FAIR) plans make basic property insurance
available to property owners who can't get it otherwise.
C. Various state insurance programs provide crop insurance for perils such as drought,
disease, excessive rain and hail.
D. Businesses seeking flood insurance under the National Flood Insurance Program
(NFIP) must purchase it at local federal government offices.Incorrect. Fair Access to
Insurance Requirements (FAIR) plans make basic property insurance available to
property owners who can't get it otherwise because of their property's location or any
other reason. - ANS- B
Which one of the following is the most common reason premium audits are conducted?
Select one:
A. The amount of the loss exposure is unknown at the start of the policy period.
B. Claim examiners have discovered unacceptable operations during the policy period.
C. Loss control activities during the policy period may reduce the risk of loss.
D. The amount of actual losses are not known at the start of the policy period. - ANS- A
The size of an employer's loss exposure for workers compensation insurance is based
on
Select one:
A. The final premium audit.
B. The amount of its payroll.
C. The extent of its operations.
D. The number of its employees. - ANS- B
Which one of the following statements is true?
Select one:
A. Regulators set coverage standards, but allow insurers to determine policy language.
B. Insurers must be free to create policies that are in their best interest.
C. Insurance regulators review policies to determine if they benefit consumers.
D. Insurance policies are private contracts, the language of which is largely unregulated.
- ANS- C
A flex rating law is
Select one:
A. An insurance rating law in which the rates and supporting rules must be filed with and
approved by the state insurance department before they can be used.
B. An insurance rating law that allows insurers to develop and use rates without having
to file with or get approval from the state insurance department.
