CEBS - GBA 1 - Practice Exam COMPLETE 2023/2024

CEBS - GBA 1 - Practice Exam COMPLETE 2023/2024 1. 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?: The more unpredictable the event that will trigger a claim, the larger the minimum group size and premium requirements 2. Which of the following statements correctly describes the term graduation as it applies to mortality tables?: It is a mathematical process that removes anomalies that should not appear in the mortality data 3. If the plan sponsor pays the premium, which of the following group insured benefits is taxable to the plan member?: Long-term disability (LTD) 4. Which of the following statements correctly describes phases of a group plan marketing?: Plan features of both contributory and noncontributory benefit plans must be communicated to plan members during the enrollment process 5. Which of the following statements correctly describes a characteristic of an insurable risk?: 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.) 6. With respect to marketing a group insurance plan, which of the following statements best describes insurer representatives known as account executives?: They are involved in enrolling group members and installing new plans 7. Which of the following statements correctly describes the statistical concept known as the law of large numbers?: Future probabilities of loss are not valid unless a large number of incidents exist to ensure the outcomes are less likely to deviate 8. Which of the following statements correctly describes an insured plan that is insurer-administered?: For self-insured plans with an administrative services only (ASO) arrangement, the insurer bills the plan sponsor monthly for administration fees 9. 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?: 0.855 (P (Survive both years) = (0.95) x (1 - 0.1) = 0.95 x 0.90 = 0.855.) 10. Which of the following statements correctly describes the group benefits enrollment process for new employees?: An employee can enroll in the plan any time between his or her date of hire and the end of a waiting period 11. A type of service offered under a third-party administrators (TPAs) claims settlement only arrangement is:: Adjudicating and paying claims 1 / 16 CEBS - GBA 1 - Practice Exam 12. Unless otherwise specified in the group insurance contract, a plan member's status under a group benefits plan terminates the earliest at which:: 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.) 13. Which of the following statements correctly describes eligibility requirements under most group insurance plans?: Unmarried children under a specified age and dependent on the plan member for support are eligible for coverage 14. Which of the following statements correctly describes the negotiated placement method of marketing a group benefits plan?: Once potential insurers are identified, each company submits a brief report that highlights its general strategy, philosophy and proposed group benefits plan 15. 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?: 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).) 16. Which of the following statements correctly describes a group insurance policy?: It is issued on a group of individuals for protection against financial hazards, such as death, accident and sickness 17. 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?: 0.2% (Probability of a resident under the age of 50