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Pricing and profit testing of ’Key Man’ life policy of insurance companies in Ghana
(May, 2016) Twum, Richard Berimah
Proﬁt testing was run on three insurance companies in Ghana using the Modern Method of Proﬁt testing under the Asset and the results obtained indicated that an increase in premium was not enough to increase eﬃciency and proﬁt instead the investment rate had to be increased and expense decreased whiles giving shareholders substantial dividend rate. This project exhibited the fact that the investment rate has a great eﬀect on the proﬁt of the product and also illustrated that it was expedient to spread out the expense over a longer period of time with the ﬁrst two years having the greater share of the expense followed by a low constant expense rate for the continuing years. The amount paid as dividend should motivate and attract investors, commission rate should motivate agents to bring more clients on board, at the same time there should be a strong reserve to cater for claim payment and the surrender and death beneﬁt should be well allocated. All these factors were necessary to keep the insurance company running irrespective of the claims that must be paid that year.