CEBS GBA 2 Study Guide and Practice Questions Page 1 2026-04-01
CEBS GBA 2 Study Guide
and Practice Questions
1 of 73 Guidehttps://www.stuvia.com/dashboard!@_)#*)(@$)($@*($@)($@*_ 1 CEBS GBA 2 Study Guide and Practice Questions.pdf
,CEBS GBA 2 Page 2 2026-04-01
Benefits of STD group policies Ensures that experienced professionals are managing claims, gives access
to return-to-work support and fraud-prevention services, and locks in a
fixed amount of monthly financial obligation (premiums) regardless of the
disability benefits being paid.
The law of large numbers states that: As the size of the same increases, the sample mean gets closer to the
population mean.
Indemnification Indemnification of losses means reimbursement to the insured if a loss
occurs. In theory, indemnification restores the individual to their preexisting
state had the loss not occurred.
Adverse Selection Occurs because individuals and businesses that are more likely to have
claims are more inclined to purchase insurance than those that are less
likely to have claims. This exists because individuals know more about their
health status than do insurers.
2 of 73 2 CEBS GBA 2.pdf
,CEBS GBA 2 Page 3 2026-04-01
Moral Hazard Premise that payments are made only for random losses which creates
moral hazard. Moral hazard is faced by insurers because individuals are
more likely to use unneeded health services when they are not paying the
full cost of those services.
Coinsurance A type of insurance in which the insured pays a share of the payment made
against a claim in excess of the deductible.
Third-Party Payers Generic term for any outside party, insurance company or a government
program, which pays for part or all of a patient's health care services.
Health insurers can be categorized into two broad groupings: private
insurers and public programs.
Medicare A federal program of health insurance established by Congress in 1965 to
provide medical benefits to persons 65 years of age and older. Also covers
health care costs associated with selected disabilities and illnesses,
regardless of age.
3 of 73 3 CEBS GBA 2.pdf
, CEBS GBA 2 Page 4 2026-04-01
Medicaid Began in 1966. A federal and state assistance program that pays for health
care services for people who cannot afford them. Mandatory nursing home
benefit added in 1972.
Four Characteristics of Insurance 1. Pooling of losses.
2. Payment only for random losses.
3. Risk transfer.
4. Indemnification
Pooling of losses Is the basis of insurance. Pooling = losses are spread over a large group of
individuals. Pooling involves the grouping of a large number of
homogeneous exposure units. People or things having the same risk
characteristics. Law of large numbers applies.
Payment only for random losses A random loss is one that is unforeseen and unexpected and occurs as a
result of chance. With insurance, payments are made only for random
losses.
4 of 73 4 CEBS GBA 2.pdf
CEBS GBA 2 Study Guide
and Practice Questions
1 of 73 Guidehttps://www.stuvia.com/dashboard!@_)#*)(@$)($@*($@)($@*_ 1 CEBS GBA 2 Study Guide and Practice Questions.pdf
,CEBS GBA 2 Page 2 2026-04-01
Benefits of STD group policies Ensures that experienced professionals are managing claims, gives access
to return-to-work support and fraud-prevention services, and locks in a
fixed amount of monthly financial obligation (premiums) regardless of the
disability benefits being paid.
The law of large numbers states that: As the size of the same increases, the sample mean gets closer to the
population mean.
Indemnification Indemnification of losses means reimbursement to the insured if a loss
occurs. In theory, indemnification restores the individual to their preexisting
state had the loss not occurred.
Adverse Selection Occurs because individuals and businesses that are more likely to have
claims are more inclined to purchase insurance than those that are less
likely to have claims. This exists because individuals know more about their
health status than do insurers.
2 of 73 2 CEBS GBA 2.pdf
,CEBS GBA 2 Page 3 2026-04-01
Moral Hazard Premise that payments are made only for random losses which creates
moral hazard. Moral hazard is faced by insurers because individuals are
more likely to use unneeded health services when they are not paying the
full cost of those services.
Coinsurance A type of insurance in which the insured pays a share of the payment made
against a claim in excess of the deductible.
Third-Party Payers Generic term for any outside party, insurance company or a government
program, which pays for part or all of a patient's health care services.
Health insurers can be categorized into two broad groupings: private
insurers and public programs.
Medicare A federal program of health insurance established by Congress in 1965 to
provide medical benefits to persons 65 years of age and older. Also covers
health care costs associated with selected disabilities and illnesses,
regardless of age.
3 of 73 3 CEBS GBA 2.pdf
, CEBS GBA 2 Page 4 2026-04-01
Medicaid Began in 1966. A federal and state assistance program that pays for health
care services for people who cannot afford them. Mandatory nursing home
benefit added in 1972.
Four Characteristics of Insurance 1. Pooling of losses.
2. Payment only for random losses.
3. Risk transfer.
4. Indemnification
Pooling of losses Is the basis of insurance. Pooling = losses are spread over a large group of
individuals. Pooling involves the grouping of a large number of
homogeneous exposure units. People or things having the same risk
characteristics. Law of large numbers applies.
Payment only for random losses A random loss is one that is unforeseen and unexpected and occurs as a
result of chance. With insurance, payments are made only for random
losses.
4 of 73 4 CEBS GBA 2.pdf
