CEBS - GBA 1 Test Questions & Answers 100%
Correct!!
Briefly summarize the methods that can be used for handling risk (39-42) - ANSWER1) avoidance :
Avoidance means that you avoid the risk altogether. You can't break your leg skiing if you don't go
skiing 2) Control: Reducing the risk of something.. ex: reducing your risk of a heart attack by giving up
smoking 3) Retention: Retention is the risk is assumed and paid for by the person suffering the loss or
taking responsibility for the loss 4) Transfer: Concept in which one switches the financial risk or
burden to another party 5) Insurance: when the financial burden of a risk is transferred to an
insurance company
Compare the compensation/service orientated philosophy and the needs orientated benefit
philosophy: (16) - ANSWERWith the compensation/service oriented benefit philosophy, employee
benefits are related to compensation, service, or both. The needs orientated benefit philosophy
tends to focus on the needs of employees and their dependents.
Compare the insurance mechanism with gambling. - ANSWERinsurance is a mechanism for handling
risk, whereas gambling creates a risk that didn't previously exist
Define the concept of managed care (227) - ANSWERThe concept of managed care is wherein
insurance carriers have a role in steering health services and care while prepaying some portion of
health care services. The managed care model, in the form of health maintenance organizations
(HMOs) and their spin offs all but replaced traditional indemnity plans
Broad View of Employee Benefits - ANSWERAny from of compensation other than direct wages.
Includes government mandated plans and private plans (Social Security, paid vacation and pension
plans)
Categories that fall under the broad view of employee benefits - ANSWER1) Legally required benefits
(social security etc) 2) Payments for time not worked 3) Employers share of medical and medically
related benefits 4) Employers share of retirement and savings plan payments 5) Misc. benefits
Definition of insurance - ANSWERInsurance is the pooling of fortuitous losses by transfer of such risks
to insurers, who agree to indemnify insureds for such losses, to provide other pecuniary benefits on
their occurrence, or to render services connected with the risk
, Describe the basic features of an indemnity plan (227) - ANSWERThey are traditional fee for service
plans plans where they pay a percentage for a cost of treatment
Describe the characteristics of an ideal insurable risk from the standpoint of an insurance company
(45-50) - ANSWER1) large number of homogeneous risks 2) the loss should be both verifiable and
measurable 3) the loss should not be catastrophic in nature 4) The chance of loss should be subject
to calculation 5) the premium should be reasonable and economically feasible 6) the loss should be
accidental and unintentional from the point of the insured
Describe the characteristics of of the group technique that such coverages as life and health
insurance to be written by employee benefit plans my minimizing the risk of adverse selection -
ANSWER1) only certain people are eligible 2) steady flow of lives through the group 3) Minimum
number of people in the group 4) minimum amount of people need to participate 5) Eligibility
requirements are imposed on the group 6) maximum limits on the amount of benefits may be
imposed 7)
Describe the impact of making a plan contributory on employee participation - ANSWERMaking a
plan contributory will have an impact on how well a plan meets the needs of employees as a whole.
Moreover, if a plan is contributory it may create employee relations problems.
Describe the reasons the functional approach is considered to be an appropriate approach for the
effective planning, designing, and administration of employee benefits - ANSWEREmployee benefits
are a significant element of total employee compensation and are a tax-effective way of
compensating employees, employee benefits are a large portion of labor cost for employees, in the
past employee benefits were on a piecemeal basis and not a coordinated effort, a systematic
approach allows benefit plan to be current, competitive, and in compliance. Finally the functional
approach allows benefits to be integrated properly with each other
Describe the relationship of peril and hazard to risk: - ANSWERRisk is defined as uncertainty
regarding the possibility of a loss.. Peril: the cause of a loss. Such things as fires, floods, thefts, etc.
Hazard: is a condition that increases the probability that a peril will occur or tends to increase the
severity of the loss when a peril occurs
Describe the types of employee needs and exposures to loss that may be covered under employee
benefit plan: - ANSWER1) medical expenses 2) losses due to employee disability (short or long term)
3) Losses resulting from current or formal employee death 4) Retirement needs of employees 5)
Capital accumulation goals 5) Needs arising from unemployment 6) Needs for financial counseling or
coaching 7) Losses resulting from property and liability exposures 8) Needs for dependent care
assistance 9) Needs for educational assistance 10) Needs for custodial care expenses (long-term care)
for employees or their dependents 11) Other employee benefit needs or goals
Correct!!
Briefly summarize the methods that can be used for handling risk (39-42) - ANSWER1) avoidance :
Avoidance means that you avoid the risk altogether. You can't break your leg skiing if you don't go
skiing 2) Control: Reducing the risk of something.. ex: reducing your risk of a heart attack by giving up
smoking 3) Retention: Retention is the risk is assumed and paid for by the person suffering the loss or
taking responsibility for the loss 4) Transfer: Concept in which one switches the financial risk or
burden to another party 5) Insurance: when the financial burden of a risk is transferred to an
insurance company
Compare the compensation/service orientated philosophy and the needs orientated benefit
philosophy: (16) - ANSWERWith the compensation/service oriented benefit philosophy, employee
benefits are related to compensation, service, or both. The needs orientated benefit philosophy
tends to focus on the needs of employees and their dependents.
Compare the insurance mechanism with gambling. - ANSWERinsurance is a mechanism for handling
risk, whereas gambling creates a risk that didn't previously exist
Define the concept of managed care (227) - ANSWERThe concept of managed care is wherein
insurance carriers have a role in steering health services and care while prepaying some portion of
health care services. The managed care model, in the form of health maintenance organizations
(HMOs) and their spin offs all but replaced traditional indemnity plans
Broad View of Employee Benefits - ANSWERAny from of compensation other than direct wages.
Includes government mandated plans and private plans (Social Security, paid vacation and pension
plans)
Categories that fall under the broad view of employee benefits - ANSWER1) Legally required benefits
(social security etc) 2) Payments for time not worked 3) Employers share of medical and medically
related benefits 4) Employers share of retirement and savings plan payments 5) Misc. benefits
Definition of insurance - ANSWERInsurance is the pooling of fortuitous losses by transfer of such risks
to insurers, who agree to indemnify insureds for such losses, to provide other pecuniary benefits on
their occurrence, or to render services connected with the risk
, Describe the basic features of an indemnity plan (227) - ANSWERThey are traditional fee for service
plans plans where they pay a percentage for a cost of treatment
Describe the characteristics of an ideal insurable risk from the standpoint of an insurance company
(45-50) - ANSWER1) large number of homogeneous risks 2) the loss should be both verifiable and
measurable 3) the loss should not be catastrophic in nature 4) The chance of loss should be subject
to calculation 5) the premium should be reasonable and economically feasible 6) the loss should be
accidental and unintentional from the point of the insured
Describe the characteristics of of the group technique that such coverages as life and health
insurance to be written by employee benefit plans my minimizing the risk of adverse selection -
ANSWER1) only certain people are eligible 2) steady flow of lives through the group 3) Minimum
number of people in the group 4) minimum amount of people need to participate 5) Eligibility
requirements are imposed on the group 6) maximum limits on the amount of benefits may be
imposed 7)
Describe the impact of making a plan contributory on employee participation - ANSWERMaking a
plan contributory will have an impact on how well a plan meets the needs of employees as a whole.
Moreover, if a plan is contributory it may create employee relations problems.
Describe the reasons the functional approach is considered to be an appropriate approach for the
effective planning, designing, and administration of employee benefits - ANSWEREmployee benefits
are a significant element of total employee compensation and are a tax-effective way of
compensating employees, employee benefits are a large portion of labor cost for employees, in the
past employee benefits were on a piecemeal basis and not a coordinated effort, a systematic
approach allows benefit plan to be current, competitive, and in compliance. Finally the functional
approach allows benefits to be integrated properly with each other
Describe the relationship of peril and hazard to risk: - ANSWERRisk is defined as uncertainty
regarding the possibility of a loss.. Peril: the cause of a loss. Such things as fires, floods, thefts, etc.
Hazard: is a condition that increases the probability that a peril will occur or tends to increase the
severity of the loss when a peril occurs
Describe the types of employee needs and exposures to loss that may be covered under employee
benefit plan: - ANSWER1) medical expenses 2) losses due to employee disability (short or long term)
3) Losses resulting from current or formal employee death 4) Retirement needs of employees 5)
Capital accumulation goals 5) Needs arising from unemployment 6) Needs for financial counseling or
coaching 7) Losses resulting from property and liability exposures 8) Needs for dependent care
assistance 9) Needs for educational assistance 10) Needs for custodial care expenses (long-term care)
for employees or their dependents 11) Other employee benefit needs or goals
