Alberta General Insurance Level 1 Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Ace your Alberta General Insurance Level 1 Exam with our comprehensive practice quiz. Tailored to mimic the real test, our quiz offers detailed explanations, expert tips, and all you need to succeed. Start your path to becoming a licensed professional today!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

How is the insurance model structured?

Fund Income (Premiums) - Insurance - Fund Outgo (claim payments)
Premiums - Claim Funds (Insurance) - Income
Fund Insurance (Premiums) - Insurance Fund - Outgo (investments)
Income (Claims) - Insurance Fund (Premiums) - Outgo (payments)

The correct answer is: Fund Income (Premiums) - Insurance - Fund Outgo (claim payments)

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.