A model that provides medical cover to policy holders when they reach the retirement age

Abstract

The entire project was based on an objective to design medical insurance product that covers the medical expenses of persons above the retirement age (60) upon outpatient and inpatient medical services and is affordable to the insured having paid premiums before retirement. Premium calculation technique was used as various actuarial computations were carried out to determine the premium for different ages. The key assumptions made include; Interest rate, charges, Ugandan mortality rates and Expenses. The premium calculating technique helped to determine the premiums of different ages for every gender. From the above, a premium calculating technique was adapted in doing actuarial calculation in MS excel and VBA to yield premiums at particular given age. From the results, it is observed that premium increases gradually with age from 20 to 40, and exponentially from ages 41 to 59. The results of the sensitivity analysis show that a slight change in interest rate and expenses greatly affects the premium amount thus are the most sensitive assumptions. In conclusion, the product is affordable for younger ages up to age 46. However, two assumptions namely interest rate and expense rate should be monitored frequently because they are so sensitive to amount of premium to be paid upon small changes. The recommendation from me is that consideration should be made for a medical insurance for one to be covered in their retirement age having paid the premiums during their active age.