<p>This paper considers a stochastic evolution of epidemiological model designed for insurance and healthcare management in the presence of diffusion processes. The evolution of stochastic SIDRS (<b>s</b>-SIDRS) epidemic model involves susceptibles that face the risk of infection, infectives that face the risk of death, recovered that face the risk of re-infection and deceased that face the risk of loss of asset, as a result of the disease as stipulated in the insurance contract. It then lead to a system of non-linear stochastic differential equations. Consequently, the basic reproduction number, global asymptotic stability and local asymptotic stability of the model are obtained. This paper aims at determining a Discounted Hospitalization Insurance Liability (DHIL) to a Total Discounted Insurance Liability (TDIL) ratio, optimal insurance reserve, optimal premium rate and optimal claim rate for policy holders (PHs) over time. In determining the dynamics of the insurance liabilities, we derive a DHIL-to-TDIL ratio and other fundamental ratios. It is found that DHIL-to-TDIL ratio will help the insurer and the insured to determine insurance pricing for hospitalization, death benefit and other liabilities. From the <b>s</b>-SIDRS model, we constructed the insurance reserve dynamics and solve using dynamic programming approach. As a result, the HJB equation for our model is obtained. Furthermore, the optimal insurance reserve, optimal premiums from susceptible PHs and a fraction of recovered PHs who chooses to continue with insurance policy after recovery are determined. Also determined are the optimal claims by hospitalized and deceased PHs. In this paper, five different utility functions are considered in the determination of the optimal insurance group products. The utility functions consider include quadratic, logarithm, CRRA, exponential and HARA utility functions. Some numerical results are also presented in this paper.</p>