Alberta General Insurance Level 1 Practice Exam

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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.

Why is insurance considered an aid to credit?

It increases loan interest rates
It decreases the need for loans
It is necessary for obtaining loans for large purchases
It substitutes for collateral

The correct answer is: It is necessary for obtaining loans for large purchases

Insurance is considered an aid to credit because it is necessary for obtaining loans for large purchases. Option A is incorrect because insurance does not increase loan interest rates, it actually helps mitigate the risk for lenders and can potentially result in lower interest rates. Option B is incorrect because insurance does not decrease the need for loans, it simply provides added security for lenders. Option D is incorrect because while insurance can provide some level of collateral, it is not a substitute for collateral. Insurance primarily helps protect lenders in case the borrower is unable to repay the loan.