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CEBS - GBA 1 - Practice Exam Questions and Answers Which of the following statements correctly describes minimum requirements that group benefit plans typically must meet in order to be prospectively rated on contract renewal? - ANSWER-The more unpredictable the event that will trigger a claim,...

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  • November 10, 2024
  • 24
  • 2024/2025
  • Exam (elaborations)
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CEBS - GBA 1 - Practice Exam Questions

and Answers


Which of the following statements correctly describes minimum requirements that group benefit plans

typically must meet in order to be prospectively rated on contract renewal? - ANSWER✔✔-The more

unpredictable the event that will trigger a claim, the larger the minimum group size and premium

requirements


Which of the following statements correctly describes the term graduation as it applies to mortality

tables? - ANSWER✔✔-It is a mathematical process that removes anomalies that should not appear in the

mortality data


If the plan sponsor pays the premium, which of the following group insured benefits is taxable to the

plan member? - ANSWER✔✔-Long-term disability (LTD)


Which of the following statements correctly describes phases of a group plan marketing? - ANSWER✔✔-

Plan features of both contributory and noncontributory benefit plans must be communicated to plan

members during the enrollment process


Which of the following statements correctly describes a characteristic of an insurable risk? -

ANSWER✔✔-The loss must have financial significance to the insured (The loss must not be catastrophic

to the insurer. Option C: The loss must occur by chance. Option D: The loss must be predictable for the

insurer.)




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With respect to marketing a group insurance plan, which of the following statements best describes

insurer representatives known as account executives? - ANSWER✔✔-They are involved in enrolling

group members and installing new plans


Which of the following statements correctly describes the statistical concept known as the law of large

numbers? - ANSWER✔✔-Future probabilities of loss are not valid unless a large number of incidents

exist to ensure the outcomes are less likely to deviate


Which of the following statements correctly describes an insured plan that is insurer-administered? -

ANSWER✔✔-For self-insured plans with an administrative services only (ASO) arrangement, the insurer

bills the plan sponsor monthly for administration fees


If the probability that an individual will live one year is 0.95 and the probability of dying in the following

year is 0.10, what is the probability that an individual will survive both years? - ANSWER✔✔-0.855 (P

(Survive both years) = (0.95) x (1 - 0.1) = 0.95 x 0.90 = 0.855.)


Which of the following statements correctly describes the group benefits enrollment process for new

employees? - ANSWER✔✔-An employee can enroll in the plan any time between his or her date of hire

and the end of a waiting period


A type of service offered under a third-party administrators (TPAs) claims settlement only arrangement

is: - ANSWER✔✔-Adjudicating and paying claims


Unless otherwise specified in the group insurance contract, a plan member's status under a group

benefits plan terminates the earliest at which: - ANSWER✔✔-The plan member retires (Unless otherwise

specified in the group insurance contract, the order in which coverage terminates is effective the earliest

date the plan member retires, the plan member's service with the plan sponsor is terminated, the plan



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member ceases active work, and the plan member is no longer a member of an eligible class and

premium payments stop.)


Which of the following statements correctly describes eligibility requirements under most group

insurance plans? - ANSWER✔✔-Unmarried children under a specified age and dependent on the plan

member for support are eligible for coverage


Which of the following statements correctly describes the negotiated placement method of marketing a

group benefits plan? - ANSWER✔✔-Once potential insurers are identified, each company submits a brief

report that highlights its general strategy, philosophy and proposed group benefits plan


True North Insurance has established a waiver-of-premium reserve of $100,000 and will have to pay out

an optional life insurance benefit of $200,000. With an interest rate of 6% compounded annually, how

many years will it take for the reserve of $100,000 to accumulate to $200,000? - ANSWER✔✔-12 years

(Use the relationship between future value and present value to solve for the number of time periods.


FVt = PV x (1 + r)^t


$200,000 = $100,000 x (1 + 6%)^t


$200,000/$100,000 = (1.06)^t


2.00 = (1.06)^t




The number of time periods can be approximated using the future value table. With an interest rate of

6%, it will take 12 years to accumulate to a sum of $200,000 (or 2.01220).)




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