CEBS GBA 1 FINAL EXAM | COMPLETE QUESTIONS WITH EXPERT
SOLUTIONS| 2026 LATEST UPDATED| A+
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%.)
Which of the following statements correctly describes the predictability of an event and the cost
of insurance under a group benefits plan? - (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? - (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? -
(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.)
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? -
(answer)Plan of the parent with custody of the child
In terms of designing a group benefits plan, which of the following statements correctly
describes a benefit/needs-oriented philosophy? - (answer)An example of a needs-oriented benefit
is health care
Which of the following statements correctly describes static tables and tables with projection? -
(answer)In "mortality tables with projection," it is assumed that the mortality rate at a particular
age will improve in the future by a certain percentage per year (Static tables include mortality
rates that are not adjusted for expected future mortality improvements. Option B: Instead of
replacing tables, actuaries typically make adjustments for unexpected improvements in mortality.
Option C: Setbacks method uses the same mortality rate but assumes that it applies to a lower
age.)
Which of the following statements correctly describes participation ratios in a benefits plan? -
(answer)A noncontributory life insurance plan with liberal eligibility requirements should have a
reasonably high participation ratio (The level of benefits under a mandatory, noncontributory life
insurance plan does not affect participation ratios. Option C: An optional life insurance plan
should have a lower participation ratio if eligibility requirements are tight. Option D: The level
of plan member contributions under a voluntary, contributory plan has an impact on participation
ratios.)
Vivienne's health care plan pays a maximum of $5,000 if she is hospitalized. She was recently
hospitalized and her actual expenses were $4,000. Vivienne's insurer will pay the actual amount
of expenses and not the $5,000 maximum stipulated in the plan. This is an example of: -
(answer)A contract of indemnity (A valued contract specifies in advance the amount payable
SOLUTIONS| 2026 LATEST UPDATED| A+
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%.)
Which of the following statements correctly describes the predictability of an event and the cost
of insurance under a group benefits plan? - (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? - (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? -
(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.)
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? -
(answer)Plan of the parent with custody of the child
In terms of designing a group benefits plan, which of the following statements correctly
describes a benefit/needs-oriented philosophy? - (answer)An example of a needs-oriented benefit
is health care
Which of the following statements correctly describes static tables and tables with projection? -
(answer)In "mortality tables with projection," it is assumed that the mortality rate at a particular
age will improve in the future by a certain percentage per year (Static tables include mortality
rates that are not adjusted for expected future mortality improvements. Option B: Instead of
replacing tables, actuaries typically make adjustments for unexpected improvements in mortality.
Option C: Setbacks method uses the same mortality rate but assumes that it applies to a lower
age.)
Which of the following statements correctly describes participation ratios in a benefits plan? -
(answer)A noncontributory life insurance plan with liberal eligibility requirements should have a
reasonably high participation ratio (The level of benefits under a mandatory, noncontributory life
insurance plan does not affect participation ratios. Option C: An optional life insurance plan
should have a lower participation ratio if eligibility requirements are tight. Option D: The level
of plan member contributions under a voluntary, contributory plan has an impact on participation
ratios.)
Vivienne's health care plan pays a maximum of $5,000 if she is hospitalized. She was recently
hospitalized and her actual expenses were $4,000. Vivienne's insurer will pay the actual amount
of expenses and not the $5,000 maximum stipulated in the plan. This is an example of: -
(answer)A contract of indemnity (A valued contract specifies in advance the amount payable
