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
the correct answer is A
But I have doubts : although now the company has attracted healthier customers---so in a short future time the company can decrease its loss, in a future, say 30 years later when those middle-aged customers become old, the company will begin to loose a great deal of money as the result of the increase of the claims of those newly aged people. So in a long term, the strategy in A won´t minimize its loss.
Can anyone tells me why my thinking is wrong?
Thank you so much!!
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
the correct answer is A
But I have doubts : although now the company has attracted healthier customers---so in a short future time the company can decrease its loss, in a future, say 30 years later when those middle-aged customers become old, the company will begin to loose a great deal of money as the result of the increase of the claims of those newly aged people. So in a long term, the strategy in A won´t minimize its loss.
Can anyone tells me why my thinking is wrong?
Thank you so much!!
