CEBS - GBA 1 - Practice Exam 2026
Questions and Answers
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
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,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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, 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).)
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
Questions and Answers
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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, 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).)
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
