CEBS - GBA 1 - Practice Exam Test Questions and
Answers Rated A
Which of the following statements correctly installing new plans
describes minimum requirements that group
benefit plans typically must meet in order to be
prospectively rated on contract renewal? - Which of the following statements correctly
ANSWER -The more unpredictable the describes the statistical concept known as the
event that will trigger a claim, the larger the law of large numbers? - ANSWER -Future
minimum group size and premium requirements 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 the term graduation as it applies to
mortality tables? - ANSWER -It is a Which of the following statements correctly
mathematical process that removes anomalies describes an insured plan that is insurer-
that should not appear in the mortality data administered? - ANSWER -For self-insured
plans with an administrative services only (ASO)
arrangement, the insurer bills the plan sponsor
If the plan sponsor pays the premium, which of monthly for administration fees
the following group insured benefits is taxable to
the plan member? - ANSWER -Long-term
disability (LTD) 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
Which of the following statements correctly an individual will survive both years? -
describes phases of a group plan marketing? - ANSWER -0.855 (P (Survive both years) =
ANSWER -Plan features of both (0.95) x (1 - 0.1) = 0.95 x 0.90 = 0.855.)
contributory and noncontributory benefit plans
must be communicated to plan members during
the enrollment process Which of the following statements correctly
describes the group benefits enrollment process
for new employees? - ANSWER -An
Which of the following statements correctly employee can enroll in the plan any time between
describes a characteristic of an insurable risk? - his or her date of hire and the end of a waiting
ANSWER -The loss must have financial period
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 A type of service offered under a third-party
be predictable for the insurer.) administrators (TPAs) claims settlement only
arrangement is: - ANSWER -Adjudicating
and paying claims
With respect to marketing a group insurance
plan, which of the following statements best
describes insurer representatives known as Unless otherwise specified in the group
account executives? - ANSWER -They are insurance contract, a plan member's status under
involved in enrolling group members and a group benefits plan terminates the earliest at
, CEBS - GBA 1 - Practice Exam Test Questions and
Answers Rated A
which: - ANSWER -The plan member of 6%, it will take 12 years to accumulate to a
retires (Unless otherwise specified in the group sum of $200,000 (or 2.01220).)
insurance contract, the order in which coverage
terminates is effective the earliest date the plan
member retires, the plan member's service with Which of the following statements correctly
the plan sponsor is terminated, the plan member describes a group insurance policy? -
ceases active work, and the plan member is no ANSWER -It is issued on a group of
longer a member of an eligible class and individuals for protection against financial
premium payments stop.) hazards, such as death, accident and sickness
Which of the following statements correctly Last year, a small town reported that 20 people
describes eligibility requirements under most under the age of 50 died. If the population of
group insurance plans? - ANSWER - people under the age of 50 in the town is 10,000,
Unmarried children under a specified age and what is the probability of a resident under the age
dependent on the plan member for support are of 50 dying? - ANSWER -0.2% (Probability
eligible for coverage 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 negotiated placement method of Which of the following statements correctly
marketing a group benefits plan? - describes the predictability of an event and the
ANSWER -Once potential insurers are cost of insurance under a group benefits plan? -
identified, each company submits a brief report ANSWER -An out-of-country emergency is
that highlights its general strategy, philosophy an unforeseen event with a potentially high cost
and proposed group benefits plan (Disability is an unforeseen event with a
potentially high cost. Option C: Basic dental
services are a predictable event with a low cost.
True North Insurance has established a waiver- Option D: Paramedical services are an
of-premium reserve of $100,000 and will have to unforeseen event with a low cost.)
pay out an optional life insurance benefit of
$200,000. With an interest rate of 6%
compounded annually, how many years will it Which of the following statements best describes
take for the reserve of $100,000 to accumulate to individual large amount pooling? -
$200,000? - ANSWER -12 years (Use the ANSWER -It protects the plan sponsor from
relationship between future value and present claims payments with respect to any one insured
value to solve for the number of time periods. individual in excess of the pooling limit or pool
FVt = PV x (1 + r)^t ceiling.
$200,000 = $100,000 x (1 + 6%)^t
$200,000/$100,000 = (1.06)^t
2.00 = (1.06)^t Nevaeh works full¬time as a business manager
on her family's dairy farm. She has an allergy to
The number of time periods can be approximated grain that is triggered by direct contact. If she
using the future value table. With an interest rate becomes sick and is unable to work, she loses
Answers Rated A
Which of the following statements correctly installing new plans
describes minimum requirements that group
benefit plans typically must meet in order to be
prospectively rated on contract renewal? - Which of the following statements correctly
ANSWER -The more unpredictable the describes the statistical concept known as the
event that will trigger a claim, the larger the law of large numbers? - ANSWER -Future
minimum group size and premium requirements 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 the term graduation as it applies to
mortality tables? - ANSWER -It is a Which of the following statements correctly
mathematical process that removes anomalies describes an insured plan that is insurer-
that should not appear in the mortality data administered? - ANSWER -For self-insured
plans with an administrative services only (ASO)
arrangement, the insurer bills the plan sponsor
If the plan sponsor pays the premium, which of monthly for administration fees
the following group insured benefits is taxable to
the plan member? - ANSWER -Long-term
disability (LTD) 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
Which of the following statements correctly an individual will survive both years? -
describes phases of a group plan marketing? - ANSWER -0.855 (P (Survive both years) =
ANSWER -Plan features of both (0.95) x (1 - 0.1) = 0.95 x 0.90 = 0.855.)
contributory and noncontributory benefit plans
must be communicated to plan members during
the enrollment process Which of the following statements correctly
describes the group benefits enrollment process
for new employees? - ANSWER -An
Which of the following statements correctly employee can enroll in the plan any time between
describes a characteristic of an insurable risk? - his or her date of hire and the end of a waiting
ANSWER -The loss must have financial period
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 A type of service offered under a third-party
be predictable for the insurer.) administrators (TPAs) claims settlement only
arrangement is: - ANSWER -Adjudicating
and paying claims
With respect to marketing a group insurance
plan, which of the following statements best
describes insurer representatives known as Unless otherwise specified in the group
account executives? - ANSWER -They are insurance contract, a plan member's status under
involved in enrolling group members and a group benefits plan terminates the earliest at
, CEBS - GBA 1 - Practice Exam Test Questions and
Answers Rated A
which: - ANSWER -The plan member of 6%, it will take 12 years to accumulate to a
retires (Unless otherwise specified in the group sum of $200,000 (or 2.01220).)
insurance contract, the order in which coverage
terminates is effective the earliest date the plan
member retires, the plan member's service with Which of the following statements correctly
the plan sponsor is terminated, the plan member describes a group insurance policy? -
ceases active work, and the plan member is no ANSWER -It is issued on a group of
longer a member of an eligible class and individuals for protection against financial
premium payments stop.) hazards, such as death, accident and sickness
Which of the following statements correctly Last year, a small town reported that 20 people
describes eligibility requirements under most under the age of 50 died. If the population of
group insurance plans? - ANSWER - people under the age of 50 in the town is 10,000,
Unmarried children under a specified age and what is the probability of a resident under the age
dependent on the plan member for support are of 50 dying? - ANSWER -0.2% (Probability
eligible for coverage 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 negotiated placement method of Which of the following statements correctly
marketing a group benefits plan? - describes the predictability of an event and the
ANSWER -Once potential insurers are cost of insurance under a group benefits plan? -
identified, each company submits a brief report ANSWER -An out-of-country emergency is
that highlights its general strategy, philosophy an unforeseen event with a potentially high cost
and proposed group benefits plan (Disability is an unforeseen event with a
potentially high cost. Option C: Basic dental
services are a predictable event with a low cost.
True North Insurance has established a waiver- Option D: Paramedical services are an
of-premium reserve of $100,000 and will have to unforeseen event with a low cost.)
pay out an optional life insurance benefit of
$200,000. With an interest rate of 6%
compounded annually, how many years will it Which of the following statements best describes
take for the reserve of $100,000 to accumulate to individual large amount pooling? -
$200,000? - ANSWER -12 years (Use the ANSWER -It protects the plan sponsor from
relationship between future value and present claims payments with respect to any one insured
value to solve for the number of time periods. individual in excess of the pooling limit or pool
FVt = PV x (1 + r)^t ceiling.
$200,000 = $100,000 x (1 + 6%)^t
$200,000/$100,000 = (1.06)^t
2.00 = (1.06)^t Nevaeh works full¬time as a business manager
on her family's dairy farm. She has an allergy to
The number of time periods can be approximated grain that is triggered by direct contact. If she
using the future value table. With an interest rate becomes sick and is unable to work, she loses
