Certified Employee Benefit Specialist Group Benefits
Associate 1 Practice Exam (CEBS GBA 1) 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.)
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 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).)
Which of the following statements correctly describes a group insurance policy? -
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? - ANSWER>>0.2% (Probability
of a resident under the age of 50 dying is 20/10,000 = 0.002 = 0.2%.)
Associate 1 Practice Exam (CEBS GBA 1) 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.)
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 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).)
Which of the following statements correctly describes a group insurance policy? -
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? - ANSWER>>0.2% (Probability
of a resident under the age of 50 dying is 20/10,000 = 0.002 = 0.2%.)
