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

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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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  95% (hard)

Question Stats:

48% (02:18) correct 52% (02:24) wrong based on 234 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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Re: Insurance policies guaranteeing the policyholder's income if he or she  [#permalink]

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New post 25 Oct 2019, 22:03
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newyork2012 wrote:
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


Can you please elaborate on option A. I am confused with second sentence in the argument
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Re: Insurance policies guaranteeing the policyholder's income if he or she  [#permalink]

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New post 30 Nov 2019, 09:32
Quote:
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.

KAPLAN OFFICIAL EXPLANATION

Identify the Question Type:

The phrase "most seriously undermines" indicates this is a Weaken question.

Untangle the Stimulus:

The conclusion of this argument is that disability insurance will be popular and, therefore, profitable for insurance companies. The evidence explains that, for those at average risk, the cost is minimal.

Predict the Answer:

The evidence certainly shows why the policy could be popular: it doesn't cost too much and the benefits are great. However, as with any prediction, the author does not consider any factors that would prevent that prediction from coming true. The correct answer will show how, despite the low cost and the potential benefits, people may still not opt for the policy.

Evaluate the Choices:

(A) is correct. If most workers do not think they are at much risk for becoming disabled, they are less likely to buy the policy, which would contradict the author's more optimistic prediction.

(B) is irrelevant; what workers at "greater risk" are charged is not the focus of the author's position. The author's argument is that "average risk" workers will make this product profitable.

(C) is also irrelevant. Even if the insurance is more expensive for those who make more money, that may not deter anyone from buying the insurance.

(D) may be tempting, but is ultimately irrelevant. The argument is merely that this insurance product will be profitable and popular; whether people buy it themselves or have their employer buy it for them doesn't matter.

(E) does not weaken this argument because it does not state how often the insurance companies lose money when paying off someone who has become permanently disabled. This may occur infrequently, so the insurance companies still realize a profit.

TAKEAWAY: An author who argues people will make decisions based on a particular factor is assuming that they are aware of that factor.
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Re: Insurance policies guaranteeing the policyholder's income if he or she   [#permalink] 30 Nov 2019, 09:32
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