AINS 101 | Updated Questions and
Answers | Most Recent 2026 Edition
• Benefits of Insurance . CORRECT ANSWER: - Pay for losses
- Manage cash flow uncertainty
- Comply with legal requirements
- Promote risk control activity
- Efficient use of insured's resources
- Support for insured's credit
- Source of investment funds
- Reduce social burden
• Transfer . CORRECT ANSWER: Transfer financial consequences of unanticipated
events to an insurer
• Types of personal insurance . CORRECT ANSWER: Personal Auto
Personal Umbrella
Homeowners
P&C-Property and Casualty aka Property and Liability
• Commercial insurance . CORRECT ANSWER: Businesses get packages, packages
have crime, property, umbrella, auto etc...
Used to have to buy them all separately
• Proprietary Insurers . CORRECT ANSWER: Earn a profit for owners, insurers
• Cooperative Insurers . CORRECT ANSWER: Provide insurance at a minimum cost to
their owners who are the policy holders
• Stock Insurers . CORRECT ANSWER: Objective is to earn profit
attract stockholders with expectation of returns
• Mutual Insurers . CORRECT ANSWER: Large national/regional insurers
mutual insurers pay dividends to policy holders as a return of portion of premiums paid
• Surplus Lines . CORRECT ANSWER: Provides coverages unavailable in standard
insurers market.
Can go beyond state set values
, • Reciprocal Insurance Exchanges . CORRECT ANSWER: Each member is both an
insured and an insuree
• Lloyds . CORRECT ANSWER: Insurance-Reinsurance Exchange
• Captive Insurer/Reinsurer . CORRECT ANSWER: Covers losses of specific
organizations
• Government Insurance . CORRECT ANSWER: Fill unmet insurance
Facilitate required insurance purchases
Provide efficiency and convenience
Achieve social goals
• Pure Risk . CORRECT ANSWER: No chance of gain
• Speculative Risk . CORRECT ANSWER: Can be positive or negative
• 3 reasons for regulation . CORRECT ANSWER: Protect consumers-verify policy
benefits, make sure insurers are honest and accessible
Maintain insurer solvency- have to have enough cash on hand to fulfil obligations.
insurers who cant pay for the losses they've insured are insolvent
Prevent destructive competition- maintain financial health and prevent policies from
being set too low.
Not charging enough premium could leave insurer without enough cash to pay covered
claims
Charging low rates can be an attempt to put competitors out of business
• Income statements . CORRECT ANSWER: Revenues/expenses/NET Gain
• Earned premiums . CORRECT ANSWER: portion of premium applied to time of policy
that has already occured.
120,000 for the full year, 6 months in, 60,000 worth of coverage has been dispersed
• Unearned premium . CORRECT ANSWER: portion of premium coverage that has yet
to be dispersed.
The time left.
Answers | Most Recent 2026 Edition
• Benefits of Insurance . CORRECT ANSWER: - Pay for losses
- Manage cash flow uncertainty
- Comply with legal requirements
- Promote risk control activity
- Efficient use of insured's resources
- Support for insured's credit
- Source of investment funds
- Reduce social burden
• Transfer . CORRECT ANSWER: Transfer financial consequences of unanticipated
events to an insurer
• Types of personal insurance . CORRECT ANSWER: Personal Auto
Personal Umbrella
Homeowners
P&C-Property and Casualty aka Property and Liability
• Commercial insurance . CORRECT ANSWER: Businesses get packages, packages
have crime, property, umbrella, auto etc...
Used to have to buy them all separately
• Proprietary Insurers . CORRECT ANSWER: Earn a profit for owners, insurers
• Cooperative Insurers . CORRECT ANSWER: Provide insurance at a minimum cost to
their owners who are the policy holders
• Stock Insurers . CORRECT ANSWER: Objective is to earn profit
attract stockholders with expectation of returns
• Mutual Insurers . CORRECT ANSWER: Large national/regional insurers
mutual insurers pay dividends to policy holders as a return of portion of premiums paid
• Surplus Lines . CORRECT ANSWER: Provides coverages unavailable in standard
insurers market.
Can go beyond state set values
, • Reciprocal Insurance Exchanges . CORRECT ANSWER: Each member is both an
insured and an insuree
• Lloyds . CORRECT ANSWER: Insurance-Reinsurance Exchange
• Captive Insurer/Reinsurer . CORRECT ANSWER: Covers losses of specific
organizations
• Government Insurance . CORRECT ANSWER: Fill unmet insurance
Facilitate required insurance purchases
Provide efficiency and convenience
Achieve social goals
• Pure Risk . CORRECT ANSWER: No chance of gain
• Speculative Risk . CORRECT ANSWER: Can be positive or negative
• 3 reasons for regulation . CORRECT ANSWER: Protect consumers-verify policy
benefits, make sure insurers are honest and accessible
Maintain insurer solvency- have to have enough cash on hand to fulfil obligations.
insurers who cant pay for the losses they've insured are insolvent
Prevent destructive competition- maintain financial health and prevent policies from
being set too low.
Not charging enough premium could leave insurer without enough cash to pay covered
claims
Charging low rates can be an attempt to put competitors out of business
• Income statements . CORRECT ANSWER: Revenues/expenses/NET Gain
• Earned premiums . CORRECT ANSWER: portion of premium applied to time of policy
that has already occured.
120,000 for the full year, 6 months in, 60,000 worth of coverage has been dispersed
• Unearned premium . CORRECT ANSWER: portion of premium coverage that has yet
to be dispersed.
The time left.
