Critical reasoning for LIC AAO

Critical reasoning is verbal reasoning. There is no grid to draw and no formula to apply, which is why some candidates skip it and others overthink it. The questions are short: a statement or a small argument, then options that support it, damage it, or follow from it. Every one of them can be answered by asking the same thing: what exactly is the argument claiming, and does this option change how believable that claim is?

The parts of an argument

Every argument has three parts. Label them before you read the options.

• Conclusion: what the writer wants you to accept. It often follows words such as "so", "therefore" or "the company plans to".
• Evidence: the facts offered in support.
• Assumption: the unstated link that must be true for the evidence to support the conclusion.

Take this plan: "An insurer plans to offer a small premium discount on policies bought online, because online sales cost less to process."

• Conclusion: offer an online discount.
• Evidence: online sales cost less to process.
• Assumption: the saving is large enough to fund the discount, and some customers will respond to it.

The question types

The negation test for assumptions

An option is an assumption only if the argument collapses when you deny it.

Statement: A branch manager tells staff, "Send renewal reminders by SMS two weeks before the due date, so that fewer policies lapse."

Assumptions:

• I. Some policies lapse because holders forget the due date.
• II. Every policyholder reads every SMS they receive.

Test I. Deny it: "No policy lapses because the holder forgets." Then reminders would do nothing, and the manager's plan makes no sense. So I is assumed.

Test II. Deny it: "Some policyholders do not read every SMS." The plan still makes sense, because reminders only need to reach some holders to reduce lapses. II is too strong to be an assumption.

Only I is implicit. Words such as "every", "all", "only" and "always" make an assumption too strong far more often than not.

Worked example: strengthen and weaken

Back to the online discount plan. Which option strengthens it?

1. Online policies cost the insurer significantly less to issue and service.
2. Many online buyers cancel their policies within the free-look period.
3. Some agents prefer selling in person.
4. Premium rates vary with the age of the insured.

• Option 1 confirms the evidence and extends it from issuing to servicing. It strengthens.
• Option 2 weakens: cancellations add cost and eat into the saving.
• Options 3 and 4 may be true, but they do not touch the link between lower cost and a discount.

Worked example: inferences

Bank-style inference sets often ask you to grade each inference on a five-point scale: definitely true, probably true, data inadequate, probably false, definitely false.

Passage: A hypothetical insurer's new-business premium rose 12 per cent this year, although the number of new policies it sold fell slightly. The insurer attributes the rise mainly to larger average policy sizes in cities.

The skill is keeping the middle three apart. "Probably true" and "probably false" need something in the passage that points one way. "Data inadequate" means the passage is silent.

Worked example: courses of action

Statement: Complaints about delayed claim payments have risen sharply at one branch.

Courses of action:

• I. Review the branch's claims process and set a time limit for each stage.
• II. Stop accepting new policies at the branch until complaints fall.

• I addresses the cause, is practical and fits the size of the problem. Follows.
• II punishes new customers, does nothing about delayed claims and is out of proportion. Does not follow.

Only I follows. A course of action should solve or reduce the problem, be practical, and not create a bigger one.

Practice set

1. Statement: A company plans to hold its training sessions online instead of at a central office, to cut travel costs. Which option weakens the plan? (a) Travel costs were a large share of the training budget. (b) Most branches lack the internet connection needed for live video sessions. (c) Online tools are improving every year. (d) Some trainers prefer classrooms.
2. Statement: "Buy term insurance while you are young; premiums are lower then." Which is an assumption? I. Premiums for the same cover generally rise with age at entry. II. Young people never have health problems.
3. Passage: A city's metro ridership doubled after a new line opened, while bus ridership stayed the same. Grade: "The new line attracted some riders who did not use buses before."
4. Statement: Many new policyholders in a district do not understand what their policies cover. Courses of action: I. Hold short explanation sessions in local languages at the time of sale. II. Stop selling policies in the district.
5. Statement: A bank plans to open branches in small towns because deposits there are growing. Which strengthens the plan? (a) The bank's competitors have no small-town branches, and deposits in these towns are expected to keep growing. (b) Rent is high in large cities. (c) Many small-town residents already bank online with other banks. (d) The bank's logo was recently redesigned.

Answers

1. (b). If branches cannot run video sessions, the plan fails at its core. (a) strengthens; (c) and (d) do not affect the plan's logic.
2. Only I. Deny I, and "lower premiums when young" has no basis. II is extreme ("never"), and the advice still makes sense if some young people have health problems.
3. Probably true. Ridership doubled while bus ridership did not fall, which suggests new riders, but the passage does not say where they came from. Some could have switched from cars or autos.
4. Only I follows. It tackles the cause directly. II is extreme and removes insurance cover from the district.
5. (a). It shows an open market and continued growth. (c) weakens; (b) and (d) are irrelevant.

A checklist for every question

• Underline the conclusion before reading the options.
• For an assumption, deny the option and see whether the argument survives.
• Discard options that are true but do not touch the conclusion.
• Be suspicious of "all", "never", "only" and "always".
• Use only the passage, never your own knowledge of the industry.

What to do next

• Do five critical reasoning questions a day for two weeks, writing the conclusion in one line before each.
• Read the reading comprehension guide. Inference and main-idea questions use the same skill.
• Fit critical reasoning into your 40-minute plan in reasoning for the LIC AAO mains.