California Life and Health Insurance Practice Exam 2025 – Complete Test Prep

Question: 1 / 400

At what point does a self-insured group qualify for stop-loss coverage?

When claims exceed a specified limit in a set period of time

A self-insured group qualifies for stop-loss coverage when claims exceed a specified limit within a certain period of time. This is because stop-loss insurance is designed to protect self-insured groups from unexpectedly high claims that can pose a significant financial risk. By establishing specific thresholds, the stop-loss coverage acts as a safety net, ensuring that the group does not bear the burden of excessive claims beyond its predetermined financial capacity. This way, the group can manage risk more effectively while still providing health benefits to its members.

The requirements regarding group size, occurrence of catastrophic events, or merely choosing to purchase additional insurance do not dictate eligibility for stop-loss coverage. Instead, the focus is on the financial claims experience and exceeding a designated limit, which triggers the need for this type of protection.

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When the group size reaches a certain number of members

Only when a catastrophic event occurs

When the group chooses to purchase additional insurance

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