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Insurance policies guaranteeing the policyholder's income if he or she

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Tuck School Moderator
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Insurance policies guaranteeing the policyholder's income if he or she  [#permalink]

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New post 01 Nov 2018, 18:16
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  85% (hard)

Question Stats:

55% (02:13) correct 45% (02:27) wrong based on 134 sessions

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Insurance policies guaranteeing the policyholder's income if he or she becomes permanently disabled will surely provide the insurance industry with a popular and profitable product. When compared to the potential lost income, the cost to a worker who is at average risk of disabling injury is very little, often no more than a few dollars a month, and is far outweighed by the benefits paid to the disabled.

Which of the following, if true, most seriously undermines the prediction made above?
A. The large majority of workers significantly underestimate the likelihood of suffering a disabling injury.
B. Workers at greater than average risk are likely to be charged higher premiums on disability insurance.
C. Disability insurance that guarantees the policyholder's income will be more expensive for those with large incomes.
D. Some employers already provide disability insurance that guarantees their employees' incomes.
E. Insurance companies will lose money on any disability insurance policy they sell to a worker who later becomes permanently disabled.

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Re: Insurance policies guaranteeing the policyholder's income if he or she  [#permalink]

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New post 01 Nov 2018, 19:24
A. The large majority of workers significantly underestimate the likelihood of suffering a disabling injury.

this says that most people don't think that they will get disabled ..no point of wasting money buying the insurance

IMO A
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Insurance policies guaranteeing the policyholder's income if he or she  [#permalink]

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New post 03 Oct 2019, 13:21
Argument states that "the cost to a worker who is at average risk of disabling injury is very little,and ouweighed by the benefits".We need to find an answer choice,which can doubt on this reasoning of author .What if this particular group of people(who is at average risk of disabling injury ) has to pay a high premium.That's what we have in answer choice B.
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Insurance policies guaranteeing the policyholder's income if he or she   [#permalink] 03 Oct 2019, 13:21
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Insurance policies guaranteeing the policyholder's income if he or she

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