A) Mortality is inversely related to age
B) Other family members may help old people
C) Young people are mostly dependent
D) Old people can afford to pay more
E) Mortality is related to age
Correct Answer: E
Solution :
Mortality is related to age and hence young people who are less likely to die are charged lower premiums as compared to old people. One result is that individuals who are old but otherwise in good health, tend to withdraw while unhealthy members remain in the scheme. Insurance companies faced serious problems as a result.
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