Critical Reasoning

Insurance Company X is considering issuing a new policy to cover services required by elderly people who suffer from diseases that afflict the elderly. Premiums for the policy must be low enough to attract customers. Therefore, Company X is concerned that the income from the policies would not be sufficient to pay for the claims that would be made.
Which of the following strategies would be most likely to minimize Company X's losses on the policies?

A.Attracting middle-aged customers unlikely to submit claims for benefits for many years
B.Insuring only those individuals who did not suffer any serious diseases as children
C.Including a greater number of services in the policy than are included in other policies of lower cost
D.Insuring only those individuals who were rejected by other companies for similar policies
E.Insuring only those individuals who are wealthy enough to pay for the medical services

Insurance Company X is considering issuing a new policy to cover services required by elderly people who suffer from diseases that afflict the elderly. Premiums for the policy must be low enough to attract customers. Therefore, Company X is concerned that the income from the policies would not be sufficient to pay for the claims that would be made.
Which of the following strategies would be most likely to minimize Company X's losses on the policies?

A.Attracting middle-aged customers unlikely to submit claims for benefits for many years.
Strong contender since having middle aged customers who take policies for long term perspective could add to company revenues without any liabillity.
B.Insuring only those individuals who did not suffer any serious diseases as children.
Contender - but could not conclude anything since the stimulus does not talk anything about the relation between childhood and old age of a policy holder.
C.Including a greater number of services in the policy than are included in other policies of lower cost.
No - This would actually increase the number of claims.
D.Insuring only those individuals who were rejected by other companies for similar policies
No - This would actually increase the liabilities of company.
E.Insuring only those individuals who are wealthy enough to pay for the medical services
No - Out of context. If an individual is capable of bearing a medical expense then why would one go for an insurance policy.


IMO A.

OA please!

pzazz12 wrote:Insurance Company X is considering issuing a new policy to cover services required by elderly people who suffer from diseases that afflict the elderly. Premiums for the policy must be low enough to attract customers. Therefore, Company X is concerned that the income from the policies would not be sufficient to pay for the claims that would be made.
Which of the following strategies would be most likely to minimize Company X's losses on the policies?

A.Attracting middle-aged customers unlikely to submit claims for benefits for many years
B.Insuring only those individuals who did not suffer any serious diseases as children
C.Including a greater number of services in the policy than are included in other policies of lower cost
D.Insuring only those individuals who were rejected by other companies for similar policies
E.Insuring only those individuals who are wealthy enough to pay for the medical services

this is an OG question, right? and the answer is A
B : children is out of scope.
C. including other lower cost policy plus this policy will make the insurance company's benifit go down worse and worse
D. the people who were rejected by other company with similiar policies is out of scope. even if it is within the scope, this is the wrong choice because the other company cant affort them, why should we affort em??? not a good idea in business.
E. is out of scope and i think that people who are rich wont wait for money from insurance company to go to hospital... only the poor has to expect little money in insurance company... the poor is the naive for me