AINS 101 EXAM QUESTIONS WITH
CORRECT ANSWERS 2025/2026 A+
GRADED 100% VERIFIED
Loss exposure - ANS- Any condition or situation that presents a possibility of loss,
whether or not an actual loss occurs.
Premium - ANS- The price of the insurance provided for a specific period.
Indemnify - ANS- To restore a party who has sustained a loss to the same financial
position that party held before the loss occurred.
Insured - ANS- Any person or organization who is insured under an insurance policy.
Property-casualty insurance - ANS- One of the two main sectors of the insurance
industry, encompassing numerous types of insurance, most of which cover the financial
consequences of damage to one's own property or legal liability to others.
Life-health insurance - ANS- One of the two main sectors of the insurance industry,
encompassing numerous types of insurance that cover the financial consequences of
death, injury or sickness.
Stock insurer - ANS- An insurer that is owned by its stockholders and formed as a
corporation for the purpose of earning a profit for the stockholders.
Mutual insurer - ANS- An insurer that is owned by its policyholders and formed as a
corporation for the purpose of providing insurance to them.
Surplus lines insurer - ANS- A nonadmitted insurer that is eligible to insure risks that
have been exported by a surplus lines licensee in accordance with a surplus lines law.
Reinsurance - ANS- The transfer of insurance risk from one insurer to another through a
contractual agreement under which one insurer (the reinsurer) agrees, in return for a
reinsurance premium, to indemnify another insurer (the primary insurer) for some or all
of the financial consequences of certain loss exposures covered by the primary's
insurance policies.
, Pure risk - ANS- A chance of loss or no loss, but no chance of gain.
Speculative risk - ANS- A chance of loss, no loss or gain.
Solvency - ANS- The agility of an insurer to meet its financial obligations as they become
due, even those resulting from insured losses that may be claimed several years in the
future.
Income statement - ANS- The financial statement that reports an organization's profit or
loss for a specific period by comparing the revenues generated with the expenses
incurred to produce those revenues.
Earned premiums - ANS- The portion of the written premiums that apply to the part of
the policy period that has already occurred.
Underwriting income - ANS- Income an insurer earns from premiums paid by
policyholders minus incurred losses and underwriting expenses.
Balance sheet - ANS- The financial statement that reports the assets, liabilities and
owners' equity of an organization as of a specific date.
Policyholders surplus - ANS- An insurer's assets minus its liabilities, which represents
its net worth.
Loss adjustment expenses - ANS- The expense that an insurer incurs to investigate,
defend and settle claims according to the terms specified in the insurance policy.
Assets - ANS- Types of property, both tangible and intangible, owned by an entity.
Liabilities - ANS- Financial obligations, or debts, owed by a company to another entity,
usually the policyholder in the case of an insurer.
Investment income - ANS- Interest, dividends and net capital gains received by an
insurer from the insurer's financial assets, minus its investment expenses.
Loss reserve - ANS- An estimate of the amount of money the insurer expects to pay in
the future for losses that have occurred.
Unearned premium reserve - ANS- An insurer liability representing the amount of
premiums received from policyholders that are not yet earned.
Loss ratio - ANS- A ratio that measures losses and loss adjustment expenses against
earned premiums and that reflects the percentage of premiums being consumed by
losses.
CORRECT ANSWERS 2025/2026 A+
GRADED 100% VERIFIED
Loss exposure - ANS- Any condition or situation that presents a possibility of loss,
whether or not an actual loss occurs.
Premium - ANS- The price of the insurance provided for a specific period.
Indemnify - ANS- To restore a party who has sustained a loss to the same financial
position that party held before the loss occurred.
Insured - ANS- Any person or organization who is insured under an insurance policy.
Property-casualty insurance - ANS- One of the two main sectors of the insurance
industry, encompassing numerous types of insurance, most of which cover the financial
consequences of damage to one's own property or legal liability to others.
Life-health insurance - ANS- One of the two main sectors of the insurance industry,
encompassing numerous types of insurance that cover the financial consequences of
death, injury or sickness.
Stock insurer - ANS- An insurer that is owned by its stockholders and formed as a
corporation for the purpose of earning a profit for the stockholders.
Mutual insurer - ANS- An insurer that is owned by its policyholders and formed as a
corporation for the purpose of providing insurance to them.
Surplus lines insurer - ANS- A nonadmitted insurer that is eligible to insure risks that
have been exported by a surplus lines licensee in accordance with a surplus lines law.
Reinsurance - ANS- The transfer of insurance risk from one insurer to another through a
contractual agreement under which one insurer (the reinsurer) agrees, in return for a
reinsurance premium, to indemnify another insurer (the primary insurer) for some or all
of the financial consequences of certain loss exposures covered by the primary's
insurance policies.
, Pure risk - ANS- A chance of loss or no loss, but no chance of gain.
Speculative risk - ANS- A chance of loss, no loss or gain.
Solvency - ANS- The agility of an insurer to meet its financial obligations as they become
due, even those resulting from insured losses that may be claimed several years in the
future.
Income statement - ANS- The financial statement that reports an organization's profit or
loss for a specific period by comparing the revenues generated with the expenses
incurred to produce those revenues.
Earned premiums - ANS- The portion of the written premiums that apply to the part of
the policy period that has already occurred.
Underwriting income - ANS- Income an insurer earns from premiums paid by
policyholders minus incurred losses and underwriting expenses.
Balance sheet - ANS- The financial statement that reports the assets, liabilities and
owners' equity of an organization as of a specific date.
Policyholders surplus - ANS- An insurer's assets minus its liabilities, which represents
its net worth.
Loss adjustment expenses - ANS- The expense that an insurer incurs to investigate,
defend and settle claims according to the terms specified in the insurance policy.
Assets - ANS- Types of property, both tangible and intangible, owned by an entity.
Liabilities - ANS- Financial obligations, or debts, owed by a company to another entity,
usually the policyholder in the case of an insurer.
Investment income - ANS- Interest, dividends and net capital gains received by an
insurer from the insurer's financial assets, minus its investment expenses.
Loss reserve - ANS- An estimate of the amount of money the insurer expects to pay in
the future for losses that have occurred.
Unearned premium reserve - ANS- An insurer liability representing the amount of
premiums received from policyholders that are not yet earned.
Loss ratio - ANS- A ratio that measures losses and loss adjustment expenses against
earned premiums and that reflects the percentage of premiums being consumed by
losses.
