CEBS - GBA 1 & 2 Practice Exam with complete solution 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 submit

CEBS - GBA 1 & 2 Practice Exam with complete solution 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 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 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