GBA 1—Principles of Life, Health and Other Group Benefits (CEBS Course 2)

Quiz 1— Assignments 1-4

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  1. What best describes adverse selection:

    A. Subsidizing the price tags for certain options to encourage broad participation

    B. Tendency of individual to select benefits that are most beneficial to them

    C. The insured employee cannot determine the amount of coverage

    D. Restricting employees’ ability to increase and decrease coverage levels

    E. Insurance is less expensive to obtain under a group plan than in the individual insurance market

    B – Study Guide – page 1.13, question 11 and page 1.27
  2. Creditor insurer generally has the following characteristics, except:

    A. Policyowner is the financial institution which is owed money

    B. Insurance amount changes monthly

    C. The creditor can name any beneficiary to receive the insurance

    D. Insurance can cover death or illness

    E. Unemployment coverage is sometimes available

    C – Study Guide – page 2.18, question19 and Khemani - page 2-17
  3. Administration of group benefits plans may be handled by:

    A. The owner’s secretary

    B. An insurance company

    C. A third-party administrator

    D. All of the above

    E. Only (b) and (c)

    D – Study Guide – page 3.22. Note – Although it is possible to have benefits administration done by one in-house person, the use of in-house administration extends beyond enrolling members and paying premiums. It is normally found in large organizations. Most small companies would have all aspects of administration handled by an insurance company.
  4. All of the following apply to an employee trust, EXCEPT:

    A. Contributions are made by the employer

    B. Benefits are paid to the beneficiaries

    C. The trust is fully distributed every year

    D. The trust is fully allocated every year

    E. Employer contributions are deducted in the year that they are made.

    C – Study Guide – page 4.19 question 20 and page 4.55
  5. Which of the following rules is not a fiduciary responsibility of trustees?

    A. Even-handed rule

    B. Conflict of interest rule

    C. Benefit security rule

    D. Standard of care rule

    E. No delegation rule

    C – Khemani – page 2-9