CEBS - GBA 1 - Practice Exam
With respect to marketing a group insurance plan, which of the following statements
best describes insurer representatives known as account executives? - CORRECT
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? - CORRECT 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? - CORRECT 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? - CORRECT 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? - CORRECT 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: - CORRECT 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: - CORRECT 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? - CORRECT 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? - CORRECT 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? - CORRECT 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? -
CORRECT ANSWER-It is issued on a group of individuals for protection against
financial hazards, such as death, accident and sickness
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?
- CORRECT 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? - CORRECT 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? - CORRECT ANSWER-Long-term disability (LTD)
Which of the following statements correctly describes phases of a group plan
marketing? - CORRECT 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? - CORRECT 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? - CORRECT
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? - CORRECT 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? - CORRECT 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? - CORRECT 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? - CORRECT 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: - CORRECT 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: - CORRECT 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? - CORRECT 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? - CORRECT 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? - CORRECT 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? -
CORRECT ANSWER-It is issued on a group of individuals for protection against
financial hazards, such as death, accident and sickness
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?
- CORRECT 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? - CORRECT 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? - CORRECT ANSWER-Long-term disability (LTD)
Which of the following statements correctly describes phases of a group plan
marketing? - CORRECT 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? - CORRECT 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.)
