AINS 101: PRACTICE QUESTIONS WITH
100% CORRECT ANSWERS { GRADED
A+}
Which one of the following best describes the concept of pooling? - ✔✔The
concept of pooling is that insureds share the cost of each other's losses
As a single mother on a very tight budget, Ciara is tempted to skimp on her
insurance. However, her friend Mehmet tells her not to skimp on insurance,
because it will help manage her cash flows. Which one of the following examples
best illustrates Mehmet's point? - ✔✔When her car's windshield breaks, Ciara has
to pay only $100 of the $600 cost of replacing it
Shelton Industries experienced a fire in its manufacturing plant. Several employees
suffered burns and smoke inhalation injuries as they tried to escape the building.
Which one of Shelton Industries' commercial property-casualty policies would pay
for the employees' injuries and illnesses? - ✔✔Workers compensation insurance
,Coverage for money and other business property from various causes of loss such
as burglary, robbery, theft, and employee dishonesty typically is provided by -
✔✔Commercial crime insurance
All of the following are types of private insurers, EXCEPT: - ✔✔State workers
compensation funds
The state of Maryland operates a residual auto plan (the Maryland Auto Insurance
Fund—MAIF) that provides coverage for drivers who are unable to obtain
coverage from private insurers. Which one of the following is the best rationale for
the MAIF program? - ✔✔Auto insurance is compulsory, and the program makes
it possible for all drivers to have reasonably priced insurance
ABC Company experienced a dramatic ideological shift in corporate policies after
a national election. This is an example of which one of the following quadrants of
risk? - ✔✔Strategic risk
Jimmy decided to buy a house in his neighborhood that had been foreclosed on by
the bank that held the mortgage. He is hoping to do some renovation and repair
work on the house, and then sell it for a quick profit. Which one of the following
types of risk is this for Jimmy? - ✔✔Speculative risk
, Carlos is new to the insurance business and is learning about insurance regulation
and what he, now working with Grady Insurance, will need to be aware of
regarding the subject of compliance. Which one of the following will Carlos find is
accurate as he better understands why insurance is regulated? - ✔✔Insurance
regulation protects customers by guaranteeing insurance is available and accessible
to everyone who needs it.
What term refers to the ability of an insurer to meet its obligations as they become
due? - ✔✔Solvency
One of the reasons for insurance regulation is to prevent destructive competition.
In which one of the following scenarios would destructive competition be
exhibited? - ✔✔East Insurance comes up with a new rate structure allowing
"preferred customers" discounted policies when they continually renew year after
year; East eventually loses needed revenue but is rewarded by its competitors
leaving the market
All of the following are categories of liabilities found on an insurer's balance sheet,
EXCEPT: - ✔✔Policyholders' surplus
Which one of the following is part of written premiums? - ✔✔Unearned
premiums
100% CORRECT ANSWERS { GRADED
A+}
Which one of the following best describes the concept of pooling? - ✔✔The
concept of pooling is that insureds share the cost of each other's losses
As a single mother on a very tight budget, Ciara is tempted to skimp on her
insurance. However, her friend Mehmet tells her not to skimp on insurance,
because it will help manage her cash flows. Which one of the following examples
best illustrates Mehmet's point? - ✔✔When her car's windshield breaks, Ciara has
to pay only $100 of the $600 cost of replacing it
Shelton Industries experienced a fire in its manufacturing plant. Several employees
suffered burns and smoke inhalation injuries as they tried to escape the building.
Which one of Shelton Industries' commercial property-casualty policies would pay
for the employees' injuries and illnesses? - ✔✔Workers compensation insurance
,Coverage for money and other business property from various causes of loss such
as burglary, robbery, theft, and employee dishonesty typically is provided by -
✔✔Commercial crime insurance
All of the following are types of private insurers, EXCEPT: - ✔✔State workers
compensation funds
The state of Maryland operates a residual auto plan (the Maryland Auto Insurance
Fund—MAIF) that provides coverage for drivers who are unable to obtain
coverage from private insurers. Which one of the following is the best rationale for
the MAIF program? - ✔✔Auto insurance is compulsory, and the program makes
it possible for all drivers to have reasonably priced insurance
ABC Company experienced a dramatic ideological shift in corporate policies after
a national election. This is an example of which one of the following quadrants of
risk? - ✔✔Strategic risk
Jimmy decided to buy a house in his neighborhood that had been foreclosed on by
the bank that held the mortgage. He is hoping to do some renovation and repair
work on the house, and then sell it for a quick profit. Which one of the following
types of risk is this for Jimmy? - ✔✔Speculative risk
, Carlos is new to the insurance business and is learning about insurance regulation
and what he, now working with Grady Insurance, will need to be aware of
regarding the subject of compliance. Which one of the following will Carlos find is
accurate as he better understands why insurance is regulated? - ✔✔Insurance
regulation protects customers by guaranteeing insurance is available and accessible
to everyone who needs it.
What term refers to the ability of an insurer to meet its obligations as they become
due? - ✔✔Solvency
One of the reasons for insurance regulation is to prevent destructive competition.
In which one of the following scenarios would destructive competition be
exhibited? - ✔✔East Insurance comes up with a new rate structure allowing
"preferred customers" discounted policies when they continually renew year after
year; East eventually loses needed revenue but is rewarded by its competitors
leaving the market
All of the following are categories of liabilities found on an insurer's balance sheet,
EXCEPT: - ✔✔Policyholders' surplus
Which one of the following is part of written premiums? - ✔✔Unearned
premiums
