CEBS GBA 1 Exam 2024 Questions & Answers |
100% Correct | Verified
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? - ✔✔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? - ✔✔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? - ✔✔Long-term disability (LTD)
Which of the following statements correctly describes phases of a group plan marketing? - ✔✔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? - ✔✔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? - ✔✔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? - ✔✔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? -
✔✔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? - ✔✔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? - ✔✔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: - ✔✔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: - ✔✔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? - ✔✔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? - ✔✔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? - ✔✔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).)
Which of the following statements correctly describes a group insurance policy? - ✔✔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? - ✔✔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? - ✔✔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? - ✔✔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? - ✔✔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.)
Under the coordination-¬of-¬benefits (COB) provision, which of the following plans is the first payer in
respect of a claim for a covered dependent child under a single-custody arrangement? - ✔✔Plan of the
parent with custody of the child
100% Correct | Verified
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? - ✔✔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? - ✔✔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? - ✔✔Long-term disability (LTD)
Which of the following statements correctly describes phases of a group plan marketing? - ✔✔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? - ✔✔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? - ✔✔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? - ✔✔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? -
✔✔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? - ✔✔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? - ✔✔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: - ✔✔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: - ✔✔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? - ✔✔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? - ✔✔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? - ✔✔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).)
Which of the following statements correctly describes a group insurance policy? - ✔✔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? - ✔✔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? - ✔✔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? - ✔✔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? - ✔✔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.)
Under the coordination-¬of-¬benefits (COB) provision, which of the following plans is the first payer in
respect of a claim for a covered dependent child under a single-custody arrangement? - ✔✔Plan of the
parent with custody of the child
