AINS 21 Practice exam
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1. Pravalt Construction Company pays less than its competitors for workers'
compensation insurance because Pravalt has had substantially fewer employ-
ee injuries than other firms in its class. This illustrates which one of the follow-
ing benefits of insurance?
A. Enable efficient use of resources
B. Meet legal requirements
C. Reduce social burden
D. Promote risk control: D. Promote risk control
2. The primary role of insurance is to
A. Make a profit for the insurance company's shareholders
B. Sell insurance policies to individuals and organizations
C. Indemnify individuals and organizations for covered losses
D. Educate individuals and organizations for coverage losses: C. Indemnify individuals
and organizations for covered losses
3. Insurance is not the only risk management transfer technique. When circum-
stances are appropriate, transfer can be accomplished through
A. loss prevention
B. noninsurance transfer techniques
C. retention
D. avoidance: B. noninsurance transfer techniques
4. From a risk management viewpoint, insurance is used to
A. Reduce the cost of losses
B. Prevent the cost of losses
C. Transfer the cost of losses
D. Isolate the cost of losses: C. transfer the cost of losses
5. Life insurance that provides coverage for a specified period with no cash value
is called
A. whole life
, AINS 21 Practice exam
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B. long-term care insurance
C. term life insurance
D. universal life: C. term life insurance
6. Which one of the following is true regarding a homeowners policy?
A. it only provides property coverage
B. it only provides liability coverage
C. most include coverage for theft of contents within the home
D. it excludes losses caused by wind and lightening: C. most include coverage for theft of
contents within the home
7. Which one of the following describes the characteristics of a mutual insurance
company?
A. An unincorporated association that provides reciprocal coverage to sub-
scribers
B. a corporation owned by policyholders that provides insurance to its policy-
holders
C. a corporation owned by stockholders that earns profits for the stockholders
D. an unincorporated association that earns profits for its individual investors-
: B. a corporation owned by policyholders that provides insurance to its policyholders
8. State governments can be involved in insurance at various levels. Some states
provide which one of the following types of insurance in competition with
private insurers?
A. General Liability
B. Flood
C. Crop
D. Work Comp: D. Work Comp
9. Prompt and professional loss adjustment services are a responsibility of what
part of an insurer's organization?
A. the premium audit function
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B. the loss control function
C. the claims function
D. the underwriting function: C. the claims function
10. Which one of the following is a key focus of states' insurance regulation?
A. producer concentration
B. insurer licensing
C. product branding
D. premium taxation: B. Insurer licensing
11. A stock insurer is distinguished from a mutual insurer by the fact that
A. owners have voting rights
B. it seeks to generate a profit
C. owners are not necessarily insureds
D. it is governed by a board of directors: C. owners are not necessarily insureds
12. When deciding to approve or disapprove an insurer's request for a rate,
a state insurance commissioner must determine if the rates are adequate.
Adequate means that the rates should be
A. able to generate a fair return for the insurer but not too excessive or
unrealistic
B. Sufficient to pay all claims and the expenses related to those claims
C. similar for insureds with similar loss exposures
D. similar to the rates charged by other insurers operating in the state: B. sufficient
to pay all claims and the expenses related to those claims
13. Don is an agent trying to find appropriate coverage for his customer, Wayne
Industrial Supplies, which has large, unique, and hard-to-place commercial
loss exposures. Fortunately, Wayne is in a state that has deregulated some
insurance coverages, which will make Don's job a little easier. Based on this
information, which one of the following statements is true?
A. for wc, Don knows most states will exempt this type of commercial coverage
Study online at https://quizlet.com/_hrxa2d
1. Pravalt Construction Company pays less than its competitors for workers'
compensation insurance because Pravalt has had substantially fewer employ-
ee injuries than other firms in its class. This illustrates which one of the follow-
ing benefits of insurance?
A. Enable efficient use of resources
B. Meet legal requirements
C. Reduce social burden
D. Promote risk control: D. Promote risk control
2. The primary role of insurance is to
A. Make a profit for the insurance company's shareholders
B. Sell insurance policies to individuals and organizations
C. Indemnify individuals and organizations for covered losses
D. Educate individuals and organizations for coverage losses: C. Indemnify individuals
and organizations for covered losses
3. Insurance is not the only risk management transfer technique. When circum-
stances are appropriate, transfer can be accomplished through
A. loss prevention
B. noninsurance transfer techniques
C. retention
D. avoidance: B. noninsurance transfer techniques
4. From a risk management viewpoint, insurance is used to
A. Reduce the cost of losses
B. Prevent the cost of losses
C. Transfer the cost of losses
D. Isolate the cost of losses: C. transfer the cost of losses
5. Life insurance that provides coverage for a specified period with no cash value
is called
A. whole life
, AINS 21 Practice exam
Study online at https://quizlet.com/_hrxa2d
B. long-term care insurance
C. term life insurance
D. universal life: C. term life insurance
6. Which one of the following is true regarding a homeowners policy?
A. it only provides property coverage
B. it only provides liability coverage
C. most include coverage for theft of contents within the home
D. it excludes losses caused by wind and lightening: C. most include coverage for theft of
contents within the home
7. Which one of the following describes the characteristics of a mutual insurance
company?
A. An unincorporated association that provides reciprocal coverage to sub-
scribers
B. a corporation owned by policyholders that provides insurance to its policy-
holders
C. a corporation owned by stockholders that earns profits for the stockholders
D. an unincorporated association that earns profits for its individual investors-
: B. a corporation owned by policyholders that provides insurance to its policyholders
8. State governments can be involved in insurance at various levels. Some states
provide which one of the following types of insurance in competition with
private insurers?
A. General Liability
B. Flood
C. Crop
D. Work Comp: D. Work Comp
9. Prompt and professional loss adjustment services are a responsibility of what
part of an insurer's organization?
A. the premium audit function
, AINS 21 Practice exam
Study online at https://quizlet.com/_hrxa2d
B. the loss control function
C. the claims function
D. the underwriting function: C. the claims function
10. Which one of the following is a key focus of states' insurance regulation?
A. producer concentration
B. insurer licensing
C. product branding
D. premium taxation: B. Insurer licensing
11. A stock insurer is distinguished from a mutual insurer by the fact that
A. owners have voting rights
B. it seeks to generate a profit
C. owners are not necessarily insureds
D. it is governed by a board of directors: C. owners are not necessarily insureds
12. When deciding to approve or disapprove an insurer's request for a rate,
a state insurance commissioner must determine if the rates are adequate.
Adequate means that the rates should be
A. able to generate a fair return for the insurer but not too excessive or
unrealistic
B. Sufficient to pay all claims and the expenses related to those claims
C. similar for insureds with similar loss exposures
D. similar to the rates charged by other insurers operating in the state: B. sufficient
to pay all claims and the expenses related to those claims
13. Don is an agent trying to find appropriate coverage for his customer, Wayne
Industrial Supplies, which has large, unique, and hard-to-place commercial
loss exposures. Fortunately, Wayne is in a state that has deregulated some
insurance coverages, which will make Don's job a little easier. Based on this
information, which one of the following statements is true?
A. for wc, Don knows most states will exempt this type of commercial coverage
