Alberta General Insurance Level 1 Practice Exam

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What is investment income in the context of insurance?

  1. Income from the insurer's sales and services

  2. Income earned from investing premiums and reserves

  3. Income from selling insurance policies

  4. Fixed income from government bonds

The correct answer is: Income earned from investing premiums and reserves

Investment income in the context of insurance refers to the money earned by an insurance company from investing the premiums they receive from policyholders and the reserves they hold for potential claims. Options A and C are incorrect because they refer to income from sales and services, rather than investments. Option D may be confusing because government bonds are often considered a type of investment, but the key difference is that they are fixed income and do not involve premiums or reserves.

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