LLQP Group Benefits Plan Concepts 5

Question 1

Which provision in a group benefits plan allows a departing employee to convert their group life insurance to an individual policy without evidence of insurability?

Accepted Answer

Conversion privilege

Answer

The conversion privilege lets a terminating employee convert group life coverage to an individual permanent policy within a specified period (usually 31 days) without a medical exam.

Question 2

A group benefits plan includes 'stop-loss' insurance. What is its primary purpose for an ASO (Administrative Services Only) plan sponsor?

Accepted Answer

To cap the plan sponsor's financial exposure when aggregate or individual claims exceed predetermined thresholds

Answer

Stop-loss coverage protects a self-insured employer under an ASO arrangement by reimbursing claims that exceed a specific per-claimant or aggregate annual limit.

Question 3

What is the role of a 'third-party administrator' (TPA) in a group benefits plan?

Accepted Answer

To administer claims and plan operations on behalf of a self-insured employer without assuming insurance risk

Answer

A TPA handles administrative functions such as claims adjudication, record-keeping, and reporting for self-funded plans while the employer retains the financial risk.

Question 4

Under a group long-term disability (LTD) plan, what is the 'definition of disability' most favorable to the claimant?

Accepted Answer

Own occupation — unable to perform the material duties of the insured's own occupation

Answer

The 'own occupation' definition is most favorable to the claimant because it pays benefits if the person cannot perform their specific job, even if they could work in another field.

Question 5

An employer wants to add vision care to their existing group benefits plan. Which factor would most directly affect the premium for this benefit?

Accepted Answer

The age and gender distribution of the employee group

Answer

Vision care utilization tends to vary by age and, to some extent, gender, so the demographic profile of the group is a primary rating factor for this benefit.

LLQP - Life License Qualification Program Practice Test

LLQP - Life License Qualification Program Practice Test

LLQP Group Benefits Plan Concepts 5