AINS 21 - Segment A Exam 2026
Questions and Answers
From a risk management viewpoint, insurance is used to A. Prevent the cost of
losses
B. Reduce the cost of losses
C. Transfer the cost of losses
D. Isolate the cost of losses. - Correct answer-C. Transfer the cost of losses.
A loss exposure is:
A. Any condition that presents the possibility of a loss.
B. Any condition that precludes the chance of loss.
C. The same thing as a peril.
D. The same thing as a hazard. - Correct answer-A. Any condition that present the
possibility of a loss.
Some loss exposures are not easy to retain, avoid, or control. What risk
management technique is frequently used to treat such exposures?
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,A. Reinsurance
B. Prevention
C. Transfer
D. Reunderwriting - Correct answer-C. Transfer
Insurance is not the only risk management transfer technique. When circumstances
are appropriate, transfer can be accomplished through
A. Retention
B. Noninsurance transfer techniques
C. Avoidance
D. Loss prevention - Correct answer-B. Noninsurance transfer techniques
Another name for liability insurance is
A. First-party insurance
B. Second-party insurance
C. Third-party insurance
D. Multiple-party insurance - Correct answer-C. Third party insurance
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,Sally is a recent college graduate who lives in the suburbs and drives to work daily
in the city. She recognizes that owning a car creates both property damage and
liability exposures for her and at the same time she has the burden of student loans.
For someone in Sally's circumstances the most practical risk management
technique for dealing with her auto-related loss exposures is
A. Risk transfer
B. Retention
C. Loss control
D. Avoidance - Correct answer-A. Risk transfer
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
A. The record keeping associated with the retained losses.
B. Availability of insurer loss settlement services.
C. The potential for financial ruin.
D. The unavailability of insurer loss control services. - Correct answer-C. The
potential for financial ruin.
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, Life insurance that provides coverage for a specified period with no cash value is
called
A. Universal life
B. Long-term care insurance
C. Term life insurance
D. Whole life - Correct answer-C. Term life insurance
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
A. Disability insurance
B. Personal liability of insurance
C. Universal life insurance
D. Medical insurance - Correct answer-A. Disability insurance
A policy that combines property, crime and liability coverage into one policy is
referred to as:
A. Commercial umbrella policy
B. Commercial package policy
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Questions and Answers
From a risk management viewpoint, insurance is used to A. Prevent the cost of
losses
B. Reduce the cost of losses
C. Transfer the cost of losses
D. Isolate the cost of losses. - Correct answer-C. Transfer the cost of losses.
A loss exposure is:
A. Any condition that presents the possibility of a loss.
B. Any condition that precludes the chance of loss.
C. The same thing as a peril.
D. The same thing as a hazard. - Correct answer-A. Any condition that present the
possibility of a loss.
Some loss exposures are not easy to retain, avoid, or control. What risk
management technique is frequently used to treat such exposures?
©COPYRIGHT 2025, ALL RIGHTS RESERVE 1
,A. Reinsurance
B. Prevention
C. Transfer
D. Reunderwriting - Correct answer-C. Transfer
Insurance is not the only risk management transfer technique. When circumstances
are appropriate, transfer can be accomplished through
A. Retention
B. Noninsurance transfer techniques
C. Avoidance
D. Loss prevention - Correct answer-B. Noninsurance transfer techniques
Another name for liability insurance is
A. First-party insurance
B. Second-party insurance
C. Third-party insurance
D. Multiple-party insurance - Correct answer-C. Third party insurance
©COPYRIGHT 2025, ALL RIGHTS RESERVE 2
,Sally is a recent college graduate who lives in the suburbs and drives to work daily
in the city. She recognizes that owning a car creates both property damage and
liability exposures for her and at the same time she has the burden of student loans.
For someone in Sally's circumstances the most practical risk management
technique for dealing with her auto-related loss exposures is
A. Risk transfer
B. Retention
C. Loss control
D. Avoidance - Correct answer-A. Risk transfer
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
A. The record keeping associated with the retained losses.
B. Availability of insurer loss settlement services.
C. The potential for financial ruin.
D. The unavailability of insurer loss control services. - Correct answer-C. The
potential for financial ruin.
©COPYRIGHT 2025, ALL RIGHTS RESERVE 3
, Life insurance that provides coverage for a specified period with no cash value is
called
A. Universal life
B. Long-term care insurance
C. Term life insurance
D. Whole life - Correct answer-C. Term life insurance
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
A. Disability insurance
B. Personal liability of insurance
C. Universal life insurance
D. Medical insurance - Correct answer-A. Disability insurance
A policy that combines property, crime and liability coverage into one policy is
referred to as:
A. Commercial umbrella policy
B. Commercial package policy
©COPYRIGHT 2025, ALL RIGHTS RESERVE 4
