Alberta General Insurance Level 1 Practice Exam

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What function does the finance company serve in relation to the insured?

  1. Acts as an insurer

  2. Provides loans to the insured for premium payments

  3. Consults on financial investments

  4. Negotiates insurance claims

The correct answer is: Provides loans to the insured for premium payments

The finance company typically serves as a lender for the insured, providing them with loans to cover their premium payments. This allows the insured to secure the necessary funds for their insurance coverage and spread out their payments over time. A. While both the finance company and insurer may handle financial transactions, the finance company's primary role is lending money for premium payments, rather than assuming the risk of covering losses like an insurer does. C. While some finance companies may offer financial investment services, this is not their primary function in relation to the insured. D. The negotiation of insurance claims is typically handled by the insurer and the insured, not the finance company.

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