Insurance Company X is considering issuing a new policy to : GMAT Critical Reasoning (CR)
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Insurance Company X is considering issuing a new policy to

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Insurance Company X is considering issuing a new policy to [#permalink]

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15 Aug 2006, 16:49
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4. 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 Xâ€™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
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15 Aug 2006, 17:06
this is exactly how insurance works 100% A

(A) Attracting middle-aged customers unlikely to submit claims for benefits for many years
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15 Aug 2006, 19:34
I'll go with A. If the policies afflict the elderly, targeting middle aged people will allow them to collect lower premiums over a longer period of time.
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15 Aug 2006, 20:40
Should be A
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16 Aug 2006, 04:58
Insuring only healthy middle aged subscribers would prove to a stable source of income for Company X. (A)
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16 Aug 2006, 13:48
Straight A
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16 Aug 2006, 15:04
A for me. We are looking for a way for the insurance companies to increase their profit per customer. If they can do that they can go from an income that is insufficient to one that results in a profit. We need to find a way for them to do this.

A clearly provides this. Any customers who are is not likely to submit a claim for a long time is good for the net income, and helps the company to offset its expenses on the elderly.
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15 Jul 2008, 09:25
I understant that 'A' is the only one that makes some sense but how do we know middle-aged customers suffer from diseases that affect elderly? This policy is designed for elderly who suffer from diseases that affect elderly.
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15 Jul 2008, 11:11
A -
only A provides a way to make money
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15 Jul 2008, 11:23
A, Bilk while they are young and healthy.....
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09 Mar 2010, 09:09
I have the same question as mbawaters. The policy in question is for elderly. What has it to do with middle-aged customers.

I marked C coz

If there are services that are offered in low cost policies, they are obviously inexpensive. If these are included in the policy for elders,
X can offer more services at low cost which would attract a lot of customers.

So why not C.
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12 Mar 2010, 07:13
A for me too.
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12 Mar 2010, 12:41
IMO A: this is the only way they can minimize the losses.
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13 Mar 2010, 11:17
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I will go with A
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Re: Insurance Company X is considering issuing a new policy to [#permalink]

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18 Jan 2014, 18:08
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: Insurance Company X is considering issuing a new policy to   [#permalink] 18 Jan 2014, 18:08
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