AINS 101 SIMULATED EXAM FINAL STUDY PAPER
2026 COMPLETE QUESTIONS AND ANSWERS
◉ Balance sheet. Answer: the financial statement that reports the
assets, liabilities, and owner's equity of an organization as of a
specific date
◉ Policyholder's surplus. Answer: an insurer's assets minus its
liabilities, which represents its net worth
◉ Loss adjustment expenses. Answer: the expense that an insurer
incurs to investigate, defend, and settle claims according to the
terms specified in the insurance policy
◉ Assets. Answer: types of property, both tangible and intangible,
owned by an entity
◉ Liabilities. Answer: financial obligations, or debts, owned by a
company to another entity usually the policyholder in the case of an
insurer
◉ Investment income. Answer: interest, dividends, and net capital
gains received by an insurer from the insurer's financial assets,
minus its investment expenses
,◉ Loss reserve. Answer: an estimate of the amount of money the
insurer expects to pay in the future for losses that have occurred
◉ Unearned premium reserve. Answer: an insurer liability
representing the amount of premiums received from policyholders
that are not yet earned
◉ Loss ratio. Answer: a ratio that measures losses and loss
adjustment expenses against earned premiums and that reflects the
percentage of premiums being consumed by losses
◉ Expense ratio. Answer: an insurer's incurred underwriting
expenses for a given period divided by its written premiums for the
same period
◉ Combined ratio. Answer: a profitability ratio that indicates
whether an insurer has made an underwriting loss or gain
◉ Independent agency. Answer: a business, operated for the benefit
of its owner that sells insurance, usually as a representative of
several unrelated insurers
, ◉ Exclusive agency marketing system. Answer: an insurance
marketing system under which agents contract to sell insurance
exclusively for one insurer
◉ Direct writer marketing system. Answer: an insurance marketing
system that uses sales agents who are direct employees of the
insurer
◉ Distribution channel. Answer: the necessary people and physical
facilities to support the sale of insurance products and services
◉ Agent. Answer: in the agency relationship, the party that is
authorized by the principal to act on the principal's behalf
◉ Agency. Answer: a legal, consensual relationship that exists when
one party, the agent, acts on behalf of another party, the principal
◉ Principal. Answer: the party in an agency relationship that
authorizes the agent to act on that party's behalf
◉ Agency expiration list. Answer: the record of an insurance
agency's present policyholders and the dates their policies expire
2026 COMPLETE QUESTIONS AND ANSWERS
◉ Balance sheet. Answer: the financial statement that reports the
assets, liabilities, and owner's equity of an organization as of a
specific date
◉ Policyholder's surplus. Answer: an insurer's assets minus its
liabilities, which represents its net worth
◉ Loss adjustment expenses. Answer: the expense that an insurer
incurs to investigate, defend, and settle claims according to the
terms specified in the insurance policy
◉ Assets. Answer: types of property, both tangible and intangible,
owned by an entity
◉ Liabilities. Answer: financial obligations, or debts, owned by a
company to another entity usually the policyholder in the case of an
insurer
◉ Investment income. Answer: interest, dividends, and net capital
gains received by an insurer from the insurer's financial assets,
minus its investment expenses
,◉ Loss reserve. Answer: an estimate of the amount of money the
insurer expects to pay in the future for losses that have occurred
◉ Unearned premium reserve. Answer: an insurer liability
representing the amount of premiums received from policyholders
that are not yet earned
◉ Loss ratio. Answer: a ratio that measures losses and loss
adjustment expenses against earned premiums and that reflects the
percentage of premiums being consumed by losses
◉ Expense ratio. Answer: an insurer's incurred underwriting
expenses for a given period divided by its written premiums for the
same period
◉ Combined ratio. Answer: a profitability ratio that indicates
whether an insurer has made an underwriting loss or gain
◉ Independent agency. Answer: a business, operated for the benefit
of its owner that sells insurance, usually as a representative of
several unrelated insurers
, ◉ Exclusive agency marketing system. Answer: an insurance
marketing system under which agents contract to sell insurance
exclusively for one insurer
◉ Direct writer marketing system. Answer: an insurance marketing
system that uses sales agents who are direct employees of the
insurer
◉ Distribution channel. Answer: the necessary people and physical
facilities to support the sale of insurance products and services
◉ Agent. Answer: in the agency relationship, the party that is
authorized by the principal to act on the principal's behalf
◉ Agency. Answer: a legal, consensual relationship that exists when
one party, the agent, acts on behalf of another party, the principal
◉ Principal. Answer: the party in an agency relationship that
authorizes the agent to act on that party's behalf
◉ Agency expiration list. Answer: the record of an insurance
agency's present policyholders and the dates their policies expire
