SOA Benefits and Pricing Examination Practice Test
Benefits and pricing work connects employee benefit plan provisions with the cost of providing coverage. The practice question vocabulary includes dental maximums, disability definitions, eligibility clauses, stop-loss protection, group life mortality, claims per member-year, trend projections, and employer premium contributions. These scenarios focus on how contract terms and rating assumptions affect benefits and expected plan costs.
Exam overview
About the SOA Benefits and Pricing Examination Exam
Pricing analysis translates covered benefits and group characteristics into estimates of claim costs and premium needs. Relevant tasks include calculating claims per exposure unit, projecting costs with compounded trend, and assessing how age mix may affect mortality-related claims. Plan design comparisons require holding population, utilization, and provider-price assumptions consistent so the cost effect of a benefit change can be isolated. Contract interpretation also matters: annual maximums can limit further payments, an own-occupation definition ties disability to the employee’s prior work, and an actively-at-work clause sets an eligibility condition subject to its stated exceptions. Stop-loss analysis distinguishes protection against unusually large claims from the plan’s underlying expected costs. Benefit replacement levels and employer contributions involve balancing coverage, incentives, and affordability.
Sample Practice Questions
Review a selection from this exam's published US Practice Tests practice bank.
An employer’s dental plan sets a maximum payable benefit of $1,500 per member per year. A member has already received $1,500 in plan payments for the year. Under this limit, what is the general effect on additional covered services for that member during the same year?
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Correct answer: AAn annual maximum caps the plan’s total payments for the specified period. Once the member has reached that limit, the plan generally makes no further payments subject to that maximum until it resets, though other plan provisions may apply.
A disability plan defines an employee as disabled only if the employee cannot perform the material duties of their own occupation. What type of disability definition is this?
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Correct answer: BAn own-occupation definition focuses on whether the claimant can perform the material duties of their own occupation, as defined by the policy. An any-occupation definition generally uses a broader test involving ability to work in other suitable occupations.
A benefit plan’s contract states that a covered person must be actively at work on the coverage effective date, subject to specified exceptions. What is the main purpose of this provision?
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Correct answer: AAn actively-at-work provision is an eligibility or effective-date condition intended to specify when coverage can commence for an employee, subject to the contract’s terms and exceptions. It does not determine claim reserves, cost-sharing percentages, or beneficiary order.
A group health plan has a large claim that exceeds the threshold specified in its stop-loss contract. What does specific stop-loss coverage generally do?
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Correct answer: ASpecific stop-loss protects a plan against unusually large claims for an individual by reimbursing eligible amounts above a contractually defined threshold. It does not set member cost sharing or pay a fixed amount per enrollee.
A disability income benefit replaces a portion of an employee’s earnings during a qualifying period of disability. Why might the benefit be set below 100% of pre-disability earnings?
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Correct answer: BPartial income replacement can help preserve work incentives and may account for other income sources, such as statutory or employer-provided benefits. The exact design depends on the contract and applicable requirements.
A group life insurer sets rates using the covered group’s age distribution. If the group becomes older while coverage amounts and other rating assumptions remain unchanged, what is a typical expected effect on mortality-related claim costs?
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Correct answer: BMortality rates generally increase with age, so an older age distribution typically raises expected death claims, all else equal. Actual pricing also depends on factors such as benefit amounts, underwriting, and contract terms.
A group medical plan has annual claim costs of $1,200,000 for 600 member-years of exposure. What is the observed claim cost per member-year?
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Correct answer: BObserved claim cost per member-year is total claims divided by exposure: $1,200,000 ÷ 600 = $2,000.
How to use this practice test
The free practice bank contains 50 published questions. Each session presents up to 20 questions selected at random, then shows results. Use a session to check calculations and reasoning about benefit provisions, claim-cost projections, and group pricing; revisit any missed item by identifying the assumption or contract clause that drives the result.
Preparation tips
- Calculate claim cost per member-year from total claims and exposure, and label the units in each step.
- Practice applying annual trend with compounding; distinguish a two-year projection from adding two annual percentages to the starting amount.
- For plan-design comparisons, hold population, utilization, and provider prices constant before attributing a cost difference to the design change.
- Separate benefit eligibility provisions, such as actively-at-work clauses, from benefit definitions and payment limits.
- Compare specific stop-loss protection with the plan’s own claim costs, and explain how an individual large claim affects the two.