CEBS GBA 1 ACTUAL 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.)
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.)
