Alberta General Insurance Level 1 Practice Exam

The correct answer is A because the insurance model follows a simple structure where funds are collected through premiums from policy holders, which are then used to pay out claims as needed. This ensures that there is enough money available to cover any potential claims and to keep the insurance company financially stable. Option B is incorrect because it suggests that premiums are used to fund claims, which is not the case. Option C is also incorrect because it suggests that premiums are invested, when in fact they are only used for claim payments. Option D is incorrect because it suggests that income from claims is used to fund the insurance premiums, when in reality premiums are collected first and then used for claim payments. Overall, it is important for an insurance model to have a clear and straightforward structure to ensure that funds are managed efficiently and effectively.