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CR fewer families

Expert replies
by gmatapril2011 » Tue Mar 29, 2011 11:02 am
45. Fewer families lose their houses because of major disasters such as fire or flood
than because of a wage earner's illness that results in death or disability. Yet,
whereas most mortgage companies require borrowers to carry insurance to
protect against major disasters, they do not require insurance to protect against
the death or disability of a wage earner.
Which of the following, if true, would contribute most to an explanation of the
difference in insurance requirements?
(A) Some people are less aware of tragedies caused by major disasters than of
those caused by the death or disability of a wage earner.
(B) Many people are made uncomfortable by having to consider the possibility of
their own death or disability or that of a family member.
(C) Few wage earners are insured by their employers against a temporary loss of
income resulting from disability.
(D) The value of a property to a mortgage company is not affected by the death
or disability of a wage earner.
(E) Insuring against major disasters can be more costly than insuring against
death or disability.
Last edited by gmatapril2011 on Tue Mar 29, 2011 12:31 pm, edited 2 times in total.
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Source: — Critical Reasoning |

by chendawg » Tue Mar 29, 2011 11:56 am
I would go with D.
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by gmatapril2011 » Tue Mar 29, 2011 12:29 pm
thank you . can you please explain your answer
chendawg wrote:I would go with D.
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by chendawg » Tue Mar 29, 2011 2:09 pm
Sure, np.

We are told:
-Families that lose house to major disaster (fire, flood, etc)<Families that lose house because of loss of wage earner.
-Mortgage companies only require borrowers to protect against disasters, and do not require insurance for loss of wage earner.

Basically there are only statements of fact here, no conclusions. We are expected to figure out which explanation fills in the gap, or explain why mortgage companies don't expect insurance for a loss of a wage earner also.

We are looking for an answer choice that can explain why the mortgage company has no incentive to insure wage earners.

A) Some people are less aware of tragedies caused by major disasters than of
those caused by the death or disability of a wage earner.
This doesn't affect whether the mortgage company can collect on the sale of the house. It doesn't explain why the death of a wage earner doesn't matter.

(B) Many people are made uncomfortable by having to consider the possibility of
their own death or disability or that of a family member.
This doesn't affect the value of the house or the mortgage company's ability to collect on the sale of the house. This doesn't explain why the death of a wage earner doesn't matter

(C) Few wage earners are insured by their employers against a temporary loss of
income resulting from disability.
This doesn't affect the mortgage company's ability to collect on sale of the house if the house goes into foreclosure. This still doesn't tell why the death or disability of a wage earner matters.

(D) The value of a property to a mortgage company is not affected by the death
or disability of a wage earner.
This explains why the death of a wage earner doesn't matter.

(E) Insuring against major disasters can be more costly than insuring against
death or disability.
This doesn't give the mortgage company incentive to insure on death or disability of a wage earner, even if the insurance were cheaper than disaster insurance.


This question was rather hard to explain! :?
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