Module 10

Question 1

A type of group
insurance claim that is
random,
unpredictable, and
usually high cost, such
as an out-of-country
medical emergency

Answer 1

Catastrophic unknown event

Question 2

The basis for
most group
insurance
claims

Answer 2

predictable budgeable event

Question 3

The amount of funds an
insurance company holds in
relation to a disability claims,
which represents the value
of a future liability,
accounting for the loss of
premium, increased
mortality, and potential
coverage to age 65

Answer 3

waver of premium reserve

Question 4

The charge for issuance
of an individual policy
without an individual risk
assessment.

Answer 4

group conversion charge

Question 5

The number of deaths
divided by the number of
individuals insured at
beginning of year

Answer 5

mortality rate

Question 6

The number of disabilities
divided by the number of
individuals insured at
beginning of year

Answer 6

morbidity rate

Question 7

Frequency of health
care, dental and life
insurance claims,
expressed as the
percentage of insured
individuals who incur a
claim.

Answer 7

utilization rate

Question 8

The amount set aside
that represents an
estimate of the current
value of all future
periodic payments to an
LTD claimant.

Answer 8

disabled life reserve

Question 9

A portion of the group
benefits plan premium
set aside for claims
incurred in one contract
year but not reported
until the next contract
year.

Answer 9

incurred but not reported reserve IBNR

Question 10

The rate dependent on
the frequency of claims,
the amount of claims
paid, plus claims-related
reserves.

Answer 10

net premium rate

Question 11

The net premium rate
plus administration
expenses, risk charges,
profit margins, and
applicable sales and
premium taxes

Answer 11

gross premium rate

Question 12

A type of expense that
includes things like cost
to print plan member
booklets, pay
commissions, service of a
group.

Answer 12

general administration expenses

Question 13

Expenses related to the
cost of paying claims
can be expressed as a
percentage of premiums,
flat dollar amount, or
fixed fee per transaction.

Answer 13

claims administration expenses

Question 14

The charge to cover
the possibility of a
group terminating
coverage in a deficit
position.

Answer 14

risk charges

Question 15

A margin built into the
expenses, varying by
benefit, group size,
and premium volume,
by which insurers earn
profits.

Answer 15

profit margins

Question 16

A charge for an
arrangement which limits
financial liability for plan
sponsors.

Answer 16

pool charges

Question 17

The specific definitions of
spouse and child
factored into manual
rate calculations.

Answer 17

contractual definitions of child and spouse

Question 18

The anticipated annual
cost of providing a
benefit plan, which
reflects a number of
factors such as an aging
population, inflation,
economic events, and
forecasts.

Answer 18

cost trend factors

Question 19

A factor included in a
rate that anticipates that
claims may be deferred
if plan members are
aware that new benefits
will be effective at a
future date.

Answer 19

pre notification factor

Question 20

The book used by insurers
to record typical group
rates for various benefits.

Answer 20

manual

Question 21

The average annual
claim for a benefit
divided by 12.

Answer 21

monthly tabular net manual rate

Question 22

Method of rate setting
using demographics of a
group and the collective
claims experience from
benefits plans of a pool
of plan sponsors.

Answer 22

pooled rating

Question 23

Method of rate setting
that uses the group’s
own experience, either
fully or partially.

Answer 23

experience rating

Question 24

The relationship between
total adjusted premiums
and sum of paid claims,
change in waiver of
premium or disabled life
reserves, change in IBNR
reserves and if used,
interest credit on
reserves.

Answer 24

incurred claims loss ratio

Question 25

The ratio that is
effectively equal to
premiums less retention.

Answer 25

target loss ratio