only A

All other answer choices does not minimize the loss. Conclusion: X is concerned that the income from the policies would not be sufficient to pay for the claims.
A=> right it pointing out how they can minimize loss
B=>individuals who did not suffer any serious diseases as children can still suffer in the old age
C=>this will have the reverse effect
D=>this could also have reverse effect
E=>still can not cover the cost


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My gmat story
MGMAT1 - 630 Q44V32
MGMAT2 - 650 Q41V38
MGMAT3 - 680 Q44V37
GMATPrep1 - 660 Q49V31
Knewton1 - 550 Q40V27

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-AD

SC followup question: In the 1st sentence of the Stimulus, is it correct to say "considering issuing" ? Isn't it more appropriate to say "considering to issue" ?

A is most likely the correct answer:

A) allows the company to attract middle aged customers who won't submit claims for years allowing the insurance company to collect years of premiums before they'll likely have to pay coverage for a claim. Correct answer.

B) The insurance policy is discussing coverage for elderly people, not children. Sure, there may be a correlation between getting sick as a kid or getting older, but the stimulus provides no support for it. Let's stick to the stimulus and not assume anything.

C) Would not alleviate the concerns of the company. In fact, the concerns would be magnified if they offered even MORE services under this policy at a low cost. This is an incorrect answer

D) is tricky. It would allow the company to attract more customers which is what they want to do. But the company is concerned about providing the low cost coverage for people likely to get sick (the elderly). Answer choice D allows the company to attract customers, but does nothing to alleviate the potential cost burden. Contrast this answer choice with answer choice A) which allows both a method of attracting customers AND alleviating costs. As between the two, A is the better answer choice.

E) deals with wealth, but is not a great answer choice. Insurance covers the cost of medical services regardless of the income of the patients. Though the company may attract a wealthier clientele with E), E) still does nothing to help attract a broad base of customers (in fact, it suggests only attracting a minority of people) and it does nothing to alleviate the cost that the insurace company would have to pay in potential claims. Another way to think of this is: Old people will get sick whether they are rich or not. Being rich has no bearing on the company's liability under the insurance policy - at least not in this particular stimulus. Thus, E is incorrect.

But isn't the argument talking about the elderly people insurance policies so in that case how can A be right? Please explain