CEBS GBA 1 EXAMINATION 2026 EXAM QUESTIONS AND
ANSWERS GRADED A+
✔✔Which of the following statements correctly describes prospectively rated
underwriting? - ✔✔It bases premium rates in whole or in part on the group's own claims
experience
✔✔Which of the following statements correctly describes the difference between
mortality tables and morbidity tables? - ✔✔It is more difficult to predict morbidity than
mortality, since there are fewer sources of credible data (Changes in mortality show a
steady and gradual downward trend; changes in morbidity can be both positive and
negative. Option C: Mortality tables are used to price policies where claim amounts are
specified in advance; the potential claim amount under a policy based on morbidity
tables is unknown. Option D: Mortality tables are used to forecast date of death and
date of onset of the insured event; morbidity tables are used to forecast date of death,
date of onset and severity, size and duration of each claim.)
✔✔If the probability that a pregnant woman will bear twins is 0.10, triplets is 0.05,
quadruplets is 0.005 and quintuplets is assumed to be zero, what is the probability that
a pregnant woman will give birth to more than one child at the end of her pregnancy? -
✔✔0.155 (Only one event can occur (i.e., cannot have both triplets and twins). P (twins
or triplets or quadruplets or quintuplets) = P(twins) + P(triplets) + P(quadruplets) +
P(quintuplets).)
✔✔First on Site is a new media company hiring 50 employees in the next few months. It
recognizes that a comprehensive benefits plan can contribute to attracting qualified
employees. Because the company is a start-up, cash flow is a bit unpredictable; it has
limited capacity to cover either fluctuating or large claim amounts. Which of the following
funding methods would BEST address First on Site's concerns? - ✔✔Insured refund
accounting with pooling arrangement (First on Site has an unstable cash flow and
limited capacity to pay fluctuating claims. Under an insured refund accounting
arrangement, they will assume less financial risk than under a self-insured arrangement.
With pooling, the risk of having to pay claims above a specified amount is transferred to
the insurer, so Option A, insured refund accounting with pooling, is the best choice for
First on Site.)
✔✔Under the functional approach to benefits plan design, one method for determining
the length of service required for benefit eligibility considers whether the benefit is
protection-¬oriented or accumulation-¬oriented. Under this method, which of the
following types of benefit plans is likely to have the longest required waiting period? -
✔✔Stock bonus (accumulation-oriented benefits are more likely to have a shorter WP)
✔✔Aiesha invested $1,000 to accumulate simple interest at a rate of 6% annually.
Reggie invested $1,000 to accumulate compound interest at a rate of 6% compounded
, semiannually. How much will they accumulate in total after two years? - ✔✔FVAiesha =
CF0 + (CF0 x r x t)
= $1,000 + ($1,000 x 0.06 x 2)
= $1,000 + $120
= $1,120
FVReggie =
CF0 + (1 + r)^t
= $1,000 x (1 + 0.03)^4
= $1,126
FVAiesha + FVReggie = $1,120 + $1,126
= $2,246.
✔✔A group contract generally defines offsets used to reduce the benefit payable under
a long-term disability (LTD) plan. Which of the following statements correctly describes
direct offsets? - ✔✔They include primary benefits payable under Canada/Quebec
Pension Plan (C/QPP) disability pensions and Workers' Compensation (WC) benefits
✔✔Which of the following statements correctly describes the premium renewal rating
process? - ✔✔The objective of renewal rating is to set future premium rates at a level
that supports projected claims charges and expenses
✔✔The purpose of one of the fundamental principles of group insurance underwriting is
to avoid adverse selection. Which of the following statements best addresses this
principle? - ✔✔The choice of benefits and amount of coverage must be restricted
✔✔Which of the following statements correctly describes a disabled life reserve? - ✔✔It
is the estimate of the current value of all future periodic payments to an LTD claimant
✔✔Which of the following statements correctly describes mortality tables? - ✔✔A select
mortality table is not used for group life insurance products, since evidence of
insurability is not usually required (An ultimate mortality table excludes mortality data
arising from the early years following the purchase of a life insurance product. Option C:
Neither select nor ultimate tables are used since evidence of insurability is not required
for group insurance. Option D: A valuation mortality table is used as the basis for
calculating minimum reserves.)
✔✔With respect to refund accounting plans, what is the possible initial source of funds
for offsetting a deficit for a particular accounting period? - ✔✔Claims fluctuation reserve
(CFR)
✔✔Which of the following statements correctly describes application of the Canadian
Life and Health Insurance Association (CLHIA) coordination-¬of¬-benefits (COB)
ANSWERS GRADED A+
✔✔Which of the following statements correctly describes prospectively rated
underwriting? - ✔✔It bases premium rates in whole or in part on the group's own claims
experience
✔✔Which of the following statements correctly describes the difference between
mortality tables and morbidity tables? - ✔✔It is more difficult to predict morbidity than
mortality, since there are fewer sources of credible data (Changes in mortality show a
steady and gradual downward trend; changes in morbidity can be both positive and
negative. Option C: Mortality tables are used to price policies where claim amounts are
specified in advance; the potential claim amount under a policy based on morbidity
tables is unknown. Option D: Mortality tables are used to forecast date of death and
date of onset of the insured event; morbidity tables are used to forecast date of death,
date of onset and severity, size and duration of each claim.)
✔✔If the probability that a pregnant woman will bear twins is 0.10, triplets is 0.05,
quadruplets is 0.005 and quintuplets is assumed to be zero, what is the probability that
a pregnant woman will give birth to more than one child at the end of her pregnancy? -
✔✔0.155 (Only one event can occur (i.e., cannot have both triplets and twins). P (twins
or triplets or quadruplets or quintuplets) = P(twins) + P(triplets) + P(quadruplets) +
P(quintuplets).)
✔✔First on Site is a new media company hiring 50 employees in the next few months. It
recognizes that a comprehensive benefits plan can contribute to attracting qualified
employees. Because the company is a start-up, cash flow is a bit unpredictable; it has
limited capacity to cover either fluctuating or large claim amounts. Which of the following
funding methods would BEST address First on Site's concerns? - ✔✔Insured refund
accounting with pooling arrangement (First on Site has an unstable cash flow and
limited capacity to pay fluctuating claims. Under an insured refund accounting
arrangement, they will assume less financial risk than under a self-insured arrangement.
With pooling, the risk of having to pay claims above a specified amount is transferred to
the insurer, so Option A, insured refund accounting with pooling, is the best choice for
First on Site.)
✔✔Under the functional approach to benefits plan design, one method for determining
the length of service required for benefit eligibility considers whether the benefit is
protection-¬oriented or accumulation-¬oriented. Under this method, which of the
following types of benefit plans is likely to have the longest required waiting period? -
✔✔Stock bonus (accumulation-oriented benefits are more likely to have a shorter WP)
✔✔Aiesha invested $1,000 to accumulate simple interest at a rate of 6% annually.
Reggie invested $1,000 to accumulate compound interest at a rate of 6% compounded
, semiannually. How much will they accumulate in total after two years? - ✔✔FVAiesha =
CF0 + (CF0 x r x t)
= $1,000 + ($1,000 x 0.06 x 2)
= $1,000 + $120
= $1,120
FVReggie =
CF0 + (1 + r)^t
= $1,000 x (1 + 0.03)^4
= $1,126
FVAiesha + FVReggie = $1,120 + $1,126
= $2,246.
✔✔A group contract generally defines offsets used to reduce the benefit payable under
a long-term disability (LTD) plan. Which of the following statements correctly describes
direct offsets? - ✔✔They include primary benefits payable under Canada/Quebec
Pension Plan (C/QPP) disability pensions and Workers' Compensation (WC) benefits
✔✔Which of the following statements correctly describes the premium renewal rating
process? - ✔✔The objective of renewal rating is to set future premium rates at a level
that supports projected claims charges and expenses
✔✔The purpose of one of the fundamental principles of group insurance underwriting is
to avoid adverse selection. Which of the following statements best addresses this
principle? - ✔✔The choice of benefits and amount of coverage must be restricted
✔✔Which of the following statements correctly describes a disabled life reserve? - ✔✔It
is the estimate of the current value of all future periodic payments to an LTD claimant
✔✔Which of the following statements correctly describes mortality tables? - ✔✔A select
mortality table is not used for group life insurance products, since evidence of
insurability is not usually required (An ultimate mortality table excludes mortality data
arising from the early years following the purchase of a life insurance product. Option C:
Neither select nor ultimate tables are used since evidence of insurability is not required
for group insurance. Option D: A valuation mortality table is used as the basis for
calculating minimum reserves.)
✔✔With respect to refund accounting plans, what is the possible initial source of funds
for offsetting a deficit for a particular accounting period? - ✔✔Claims fluctuation reserve
(CFR)
✔✔Which of the following statements correctly describes application of the Canadian
Life and Health Insurance Association (CLHIA) coordination-¬of¬-benefits (COB)
