CEBS - GBA 1 - Practice Exam UPDATED ACTUAL Questions and CORRECT Answers
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CEBS - GBA
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CEBS - GBA
CEBS - GBA 1 - Practice Exam UPDATED
ACTUAL Questions and CORRECT
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? -
CORRECT ANSWER- The more unpredictable ...
CEBS - GBA 1 - Practice Exam UPDATED
ACTUAL Questions and CORRECT
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? -
CORRECT 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? - CORRECT 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? - CORRECT ANSWER✔✔- Long-term disability (LTD)
Which of the following statements correctly describes phases of a group plan marketing? -
CORRECT 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? -
CORRECT 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.)
With respect to marketing a group insurance plan, which of the following statements best
describes insurer representatives known as account executives? - CORRECT 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? - CORRECT 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? - CORRECT 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? -
CORRECT 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? - CORRECT 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: - CORRECT 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: - CORRECT 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 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? - CORRECT 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? - CORRECT 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? - CORRECT 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
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).)
Which of the following statements correctly describes a group insurance policy? - CORRECT
ANSWER✔✔- It is issued on a group of individuals for protection against financial hazards,
such as death, accident and sickness
Last year, a small town reported that 20 people under the age of 50 died. If the population of
people under the age of 50 in the town is 10,000, what is the probability of a resident under
the age of 50 dying? - CORRECT ANSWER✔✔- 0.2% (Probability of a resident under the
age of 50 dying is 20/10,000 = 0.002 = 0.2%.)
Which of the following statements correctly describes the predictability of an event and the
cost of insurance under a group benefits plan? - CORRECT ANSWER✔✔- An out-of-
country emergency is an unforeseen event with a potentially high cost (Disability is an
unforeseen event with a potentially high cost. Option C: Basic dental services are a
predictable event with a low cost. Option D: Paramedical services are an unforeseen event
with a low cost.)
Which of the following statements best describes individual large amount pooling? -
CORRECT ANSWER✔✔- It protects the plan sponsor from claims payments with respect to
any one insured individual in excess of the pooling limit or pool ceiling.
Nevaeh works full¬time as a business manager on her family's dairy farm. She has an allergy
to grain that is triggered by direct contact. If she becomes sick and is unable to work, she
loses her only source of income and her lifestyle will change significantly. Which of the
following risk management approaches would BEST address Nevaeh's need to protect her
income? - CORRECT ANSWER✔✔- Transfer the risk of becoming sick (Assuming Nevaeh
wants to stay in farming, avoidance is not an option. Nevaeh can do everything she can to
take measures to reduce her exposure, but if becoming sick jeopardizes her only source of
income, Option C, purchasing insurance, is the best option.)
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