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INTERNSHIP REPORT

STATELIFE INSURANCE CORPORATION


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PRESENTED TO:

SIR IRSHAD
PRESENTED BY: TAYYABA RAFIQUE Mi09MBA049 MBA (IRM) SESSION 2009-2011 4TH SEMESTER

HAILEY COLLEGE OF BANKING & FIANACE


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ACKNOWLEDGEMENT
All gratitude and thanks to almighty ALLAH the Gracious, The Most merciful and Beneficent who gave me courage to undertake and complete this task. I am very much obliged to my ever caring and loving parents whose prayers have enabled to reach this stage. I am grateful to almighty ALLAH who made me able to complete the work presented in this report. It is due to HIS unending mercy that this work moved towards success. I am highly indebted to my Sir Irshad for providing me an opportunity to learn about the insurance system of Pakistan which is vital ingredient of MBA program. I am very great full to officers of STATE LIFE for providing me guideline for the completion of this report. I feel great pride and pleasure on the accomplishment of this report.

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EXECUTIVE SUMMARY
I started my internship in state life insurance corporation of Pakistan at western zone 27 June 2011. I worked for six weeks there and it gives me a lot of practical knowledge about the operation of an insurance company .I has learned many things in this duration. In the following pages I have summarized my experience, observations and working activities which I observed in my six week internship. This report will discuss internship with state life .It will outline following. History Departments Swat analysis Financial analysis The source of information used during the preparation of this report includes Personal observations Discussions with staff & management Annual reports Handouts Different websites Report is based on my personal experience & observations about insurance sector which I gain during my internship in state life.

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CONTENTS
Sr. No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Description INSURANCE Definition History Principles Types of insurance Life Assurance INTRODUCTION OF STATE LIFE History Functions Achievements Core Values Organizational Structure PRODUCTS Individual Life Products Group life Insurance Products MY EXPERIENCE DEPARTMENTS P&GS AUDIT DEPATMENT PH&S NEW BUSINESS AGENCY FINANCE&ACCOUNTS SWOT ANALYSIS PERFORMANCE ANALYSIS FINANCIAL ANALYSIS HORIZENTAL ANALYSIS RATIOANALYSIS RECOMMENDATION CONCLUSION BIBLIOGRAPHY GLOSSERY Page No. 6 7 8 8 10 12 19 20 22 23 26 27 33 34 62 81 84 86 92 97 106 115 121 124 130 139 141 142 148 154 158 159

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Part: 1

INSURANCE

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INSURANCE
DEFINTIONS:
Insurance can be defined into a number of ways. Some of them are as follows: A contract between an insurance company and a person or group which provides for a money payment in case of covered loss, accident or death

Insurance is a contract between two parties whereby one party agrees to undertake the risk of another in exchange for consideration known as premium and promises to pay a fixed sum of money to the other party on happening of an uncertain event (death) or after the expiry of a certain period in case of life insurance or to indemnify the other party on happening of an uncertain event in case of general insurance. The party bearing the risk is known as the 'insurer' or 'assurer' and the party whose risk is covered is known as the 'insured' or 'assured'

It is a system whereby contributions are received from insuring public and pool of money is created from where the claims are paid to few unfortunate persons who died during the insurance period

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History of Insurance
Insurance began as a way of reducing the risk of traders, as early as 2000 BC in China and 1750 BC in Babylon. Life insurance dates only to ancient Rome; "burial clubs" covered the cost of members' funeral expenses and helped survivors monetarily. Modern life insurance started in 17th century England, originally as insurance for traders, merchants, ship owners and underwriters met to discuss deals at Lloyd's Coffee House, predecessor to the famous Lloyd's of London. Thus from Lloyds of London insurance begins

PRINCIPLES OF INSURANCE
In every sort of contract there are some principles which must be followed in order to accomplish the contract. Following are the principles of every insurance contract.

Principle of utmost good faith


An insurance contract is one of utmost good faith. What this means is that all material facts about an insured risk must be disclosed to the insurers at the time of completing the proposal form, or subsequently if the facts change.

Principle of indemnity
Indemnity means that the insurers agree to compensate in the event of loss such that the insured is left substantially in the same position financially after the loss as she was before it but the insured cannot profit from a loss.

Principle of contribution
If more than one policy covers the same risk it is not possible for the insured to claim on both and make a gain. In this situation each of the

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insurers involved would be required to contribute a proportionate amount of the loss - this is known as the principle of contribution

Principle of subrogation
In the event of a claim and where the insurers have fully indemnified the insured, the insured's original interests can be taken over by the insurers this is known as the principle of subrogation.
For example, where a third party causes damage to the insured's property, after the insurers have settled the claim they can pursue the third party for the cost of the damage.

Principle of average
Underinsurance can have serious implications when insuring a property. Underinsurance means that the replacement value of the property or the value of the contents has been understated on the proposal, thereby lowering the premiums paid.
The principle of average means that the amount of the claim payment will be reduced proportionality if the property was not insured to the full amount of its replacement cost.

Principle of proximate cause


In the event of a claim the insurers will want to ascertain if the cause of the loss was an insured risk. The principle of proximate cause relates to this and is define as: The efficient cause which brings about a loss with no other intervening cause which breaks the chain of events.

Insurable interest
You must have an interest (insurable interest) in the thing insured. If you could insure something which you did not have an insurable interest in (ownership of) it would be possible to gain in the event of another's loss!

Insurable risk
The risk which is going to cede must be insurable

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TYPES OF INSURANCE:
There are two types of insurance

LIFE INSURANCE

GENERAL INSURANCE

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General Insurance:
General insurance is basically an insurance policy that protects you against losses and damages other than those covered by life insurance. For more comprehensive coverage, it is vital for you to know about the risks covered to ensure that you and your family are protected from unforeseen losses General insurance include following types of insurance. Vehicle insurance Health insurance Home insurance Property insurance Liability insurance Credit insurance Marine insurance Aviation insurance

Travel insurance Professional indemnity

Life Insurance:
Life insurance covers the life of a person. Life insurance provides a monetary benefit to a decedents family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses. Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity. Now we will discuss this in detail as this is the main point of discussion.

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LIFE ASSURANCE
Types of Life Insurance:
Life insurance may be divided into two basic classes temporary and permanent or following subclasses - term, universal, whole life and endowment life insurance

Term Insurance
Term assurance provides life insurance coverage for a specified term of years in exchange for a specified premium. The policy does not accumulate cash value. Term is generally considered "pure" insurance, where the premium buys protection in the event of death and nothing else. These are main factors to be considered in term insurance. 1. Face amount (protection or death benefit), 2. Premium to be paid (cost to the insured), and 3. Length of coverage (term) Various insurance companies sell term insurance with many different combinations of these three parameters. The face amount can remain constant or decline. The term can be for one or more years. The premium can remain level or increase. Common types of term insurance include Level, Annual Renewable and Mortgage insurance.

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Level Term Policy


Level Term policy has the premium fixed for a period of time longer than a year. These terms are commonly 5, 10, 15, 20, 25, and 30 and even 35 years. Level term is often used for long term planning and asset management because premiums remain consistent year to year and can be budgeted long term. At the end of the term, some policies contain a renewal or conversion option.

Guaranteed Renewal
Guaranteed Renewal, the insurance company guarantees it will issue a policy of equal or lesser amount without regard to the insurability of the insured and with a premium set for the insured's age at that time. Some companies however do not guarantee renewal, and require proof of insurability to mitigate their risk and decline renewing higher risk clients (for instance those that may be terminal).

Annual Renewable Term


Annual renewable term is a one year policy but the insurance company guarantees it will issue a policy of equal or lesser amount without regard to the insurability of the insured and with a premium set for the insured's age at that time

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Mortgage Insurance
Another common type of term insurance is mortgage insurance, which is usually a level premium, declining face value policy. The face amount is intended to equal the amount of the mortgage on the policy owners

residence so the mortgage will be paid if the insured dies. A policy holder insures his life for a specified term. If he dies before that specified term is up (with the exception of suicide see below), his estate or named beneficiary receives a payout. If he does not die before the term is up, he receives nothing.

Permanent Life Insurance


Permanent life insurance is life insurance that remains in force (in-line) until the policy matures (pays out), unless the owner fails to pay the premium when due (the policy expires OR policies lapse). The policy cannot be canceled by the insurer for any reason except fraud in the application, and that cancellation must occur within a period of time defined by law (usually two years). Permanent insurance builds a cash value that reduces the amount at risk to the insurance company and thus the insurance expense over time. This means that a policy with a million dollar face value can be relatively expensive to a 70 year old. The owner can access the money in the cash value by withdrawing money, borrowing the cash value, or surrendering the policy and receiving the surrender value. The four basic types of permanent insurance are whole life, universal life, limited pay and endowment.

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Whole Life Coverage


Whole life insurance provides for a level premium, and a cash value table included in the policy guaranteed by the company. The primary advantages of whole life are

Guaranteed death benefits; Guaranteed cash values, Fixed and known annual premiums,

And mortality and expense charges will not reduce the cash value shown in the policy. The primary disadvantages of whole life are premium inflexibility, and the internal rate of return in the policy may not be competitive with other savings alternatives. Also, the cash values are generally kept by the insurance company at the time of death, the death benefit only to the beneficiaries. Riders are available that can allow one to increase the death benefit by paying additional premium. The death benefit can also be increased through the use of policy dividends. Dividends cannot be guaranteed and may be higher or lower than historical rates over time. Premiums are much higher than term insurance in the short-term, but cumulative premiums are roughly equal if policies are kept in force until average life expectancy. Cash value can be accessed at any time through policy "loans" and are received "income-tax free". Since these loans decrease the death benefit if not paid back, payback is optional. Cash values support the death benefit so only the death benefit is paid out.

Universal Life Coverage


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Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return. There are several types of universal life insurance policies which include "interest sensitive.

Limited-Pay
Another type of permanent insurance is Limited-pay life insurance, in which all the premiums are paid over a specified period after which no additional premiums are due to keep the policy in force. Common limited pay periods include 10-year, 20-year, and paid-up at age 65.

Endowments
Endowments are policies in which the cash value built up inside the policy, equals the death benefit (face amount) at a certain age. The age this commences is known as the endowment age. Endowments are considerably more expensive (in terms of annual premiums) than either whole life or universal life because the premium paying period is shortened and the endowment date is earlier. Endowment Insurance is paid out whether the insured lives or dies, after a specific period (e.g. 15 years) or a specific age (e.g. 65).

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This is type of life insurance whereby a specific term is selected and premiums are paid throughout that term or earlier death. If life insured survives that term the sum insured along with accrued bonuses is paid as maturity value .This class of insurance carries loan and surrender value provided the policy has been enforced at least two consecutive years. There are different types of endowment insurance. Simple endowment Anticipated endowment Joint life endowment Progressive endowment Children endowment Single premium endowment Family pension endowment Optional maturity endowment Mortgage protection endowment Personal pension endowment Annuities endowment

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Riders or Supplementary Contracts


Riders are modifications to the insurance policy added at the same time the policy is issued. These riders change the basic policy to provide some feature desired by the policy owner.

Types of Riders Life insurance companies offer different types of riders. These are of following types. ACCIDENTAL INDEMNITY BENEFITS (AIB) ACCIDENTAL DEATH BENEFITS (ADB) FAMILY INCOME BENEFIT RIDER (FIBR) GUARANTED INSURABILITY RIDERS (GIR) REFUND OF PREMIUM RIDER TERM INSURANCE RIDER (TIR) WAVIER OF PREMIUM RIDER (WPR)

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Part: 2

INTRODUCTION OF STATE LIFE

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BRIEF HISTORY
The Life Insurance Business in Pakistan was nationalized during March 1972. Initially Life Insurance business of 32 Insurance Companies was merged and placed under three Beema Units named A, B and C Beema Units. However, later these Beema Units were merged and effective November 1, 1972 the Management of the Life Insurance Business was consolidated and entrusted to the State Life Insurance Corporation of Pakistan. State Life Insurance Corporation of Pakistan is headed by a Chairman and assisted by the Executive Directors appointed by Federal Government. Up to July 2000 the Corporation was run by Board of Directors constituted under Life Insurance (Nationalization) Order 1972. In July 2000, under Insurance Ordinance 2000, the Federal Government reconstituted the Board of Directors of State Life which runs the affair of this Corporation. The basic structure of the Corporation for Individual Life Insurance consists of Four Regional Offices Twenty-Six Zonal Offices Few Sub-Zonal Offices 111 Sector Offices 461 Area Offices

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For Group & Pension there are Four Zonal Offices 6 Sector Offices 20 Sector Heads

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FUNCTIONS PERFORMED BY OFFICES


Zonal Offices
The Zonal Offices deal exclusively with Sales and Marketing Underwriting of Life Insurance Policies and the Policyholders Services

Regional Offices
Regional Offices, each headed by a Regional Chief, supervise business activities of the Zones functioning under them.

Principal Office
The principal office, based at Karachi, is responsible for corporate activities such as investment, real estate, actuarial, overseas operation, etc.

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MAJOR ACHIEVEMENTS
The major function of the State Life Insurance Corporation of Pakistan is to carry out Life Insurance Business; however, it is also involved in the other related business activities such as Investment of policyholders fund in Government securities Stock market Real Estate The major achievements of State Life are as under: 1. The Corporation has reduced up to 33% in the premiums on the past and potential Life Policies for the benefit of the Policyholders. 2. It is a profitable organization and it paid Rs.2.657 billion as dividend to the Government of Pakistan since its inception in 1972. 3. State Life has played very vital role in the economy by providing employment to the people of the country i. ii. iii. As permanent employees As part of its marketing force Investing the huge funds in different sectors of the economy.

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4. . The Investment Portfolio of State Life as at 31.12.2009 stands at Rs.191.445 billions. 5. Investment portfolio also includes investment in Real Estate which stands at a i. Book value Rs.2.538 billion as at 31.12.2009 6. Whereas i. Fair value is Rs.21.681 billion as at 31.12.2009 7. The Paid up Capital increased from Rs.10 million in 1972 to Rs.1, 100 million in 2009. 8. The Premium income increased from Rs.0.317 billion in 1972 to 28.367 billion in 2009. 9. Similarly Investment income including rental income increased from Rs.0.81 billion in 1972 to 274.152 billion in 2009. 10.Total statutory fund of State Life stands at Rs.199.445 billion in 2009 as against Rs.1.494 billion in 1972. 11.State Life is smoothly striving towards its objective of making life insurance available to large section of the society by extending it to common man. As at December, 2009 the total number of policies in force Under individual life Under group life insurance 2.895 million 3.754 million

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CHRONOLOGY OF EVENTS
Taking over of management of life insurance companies 19 March 1972 Establishment of state life insurance corporation Reduction of premium rates on new policies Reduction of premium rates on old policies Establishment of UK branch Merger of units and formation of zones Establishment of branch office in Dubai Establishment of agency office in Kuwait Establishment of Multan zone Establishment of Faisalabad zone Establishment of Gujranwala zone Establishment of Sucker zone Establishment of branch office in Pakistan 1st Nov, 1972 1st Nov, 1972 1st Jan, 1973 1st Jan, 1974 1st Oct, 1975 July 1978 May, 1983 1st Oct, 1985 1st march, 1986 1st July 1986 1st April, 1990 May, 1992

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CORE VALUES
MISSION:
To remain the leading insurer in the country by extending the benefits of insurance to all sections of society and meeting our commitments to our policy holders and the nation.

QUALITY POLICY:
To ensure satisfaction of our valued policyholders in processing new business, providing after sales service and optimizing return on Life Fund through a quality culture and to maintain ourselves leading life insurer in Pakistan

OBJECTIVES:
To run life insurance business on sound line. To run life insurance business on sound line. To provide more efficient service to the policyholders. To maximize the return to the policyholders by economizing on expenses and increasing the yield on investment. To make life insurance a more effective means of mobilizing national savings. To widen the area of operation of life insurance and making it available to as large a section of the population as possible, extending it from the comparatively more affluent sections of society to the common man in towns and villages. To use the policyholders fund in the wider interest of the community.

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ORGANIZATIONAL STRUCTURE
It is headed by chairman Mr. Shahid Aziz Siddiqi who is a CHIEF EXECUTIVE of the corporation and appointed by the government the other administrative level and authorities is given below

MANAGEMENT HIERARCHY:
CHAIRMAN

EXECUTIVE DIRECTOR

DIVISIONAL HEADS

REGIONAL HEADS

ZONAL HEADS

DEPARTMENTAL HEADS

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ORGANOGRAM:
CHAIRMAN

EXECUTIOVE DIRECTOR

DIVISONAL HEAD

ZONAL HEAD

DEPUTY GENERAL MANAGER

ASST GENERAL MANAGER

MANAGER

DEPUTY MANAGER

ASST MANAGER

EXECUTIVE OFFICER

ASST SUPERINTENDENT

SUPERINTENDENT

OFFICE ASST

SENIOR OFFICE ASST

RECORD

NAB QUASID

QUASID

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Board of Directors:
It comprises of 7 directors, chairman and secretary board who are responsible for making plans and policies to achieve the set goals of the organization. Mr. Shahid Aziz Siddiqi from 12-06-2008 Mr. Qamar Zaman Chaudhry Mrs. Spenta Kandawalla Mr. Aslam Faruque Mr. Amin Qasim Dada Mr. Rasheed Y. Chinoy Syed A. Wahab Mehdi Syed Hur Riahi Gardezi Mr. Akbar Ali Hussain CHAIRMAN DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR SECRETARY BOARD

Executive Directors:
It comprises of 4 members responsible for implementation of policies and directives of the board of directors. Syed Arshad Ali Ms. Nargis Ghaloo Mr. Mohammad Yahya From 12-08-2008 Mr. Allah Rakha Aasi from 06-10-2008

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Regions:
There are 4 regions in Pakistan headed by regional chiefs responsible for looking after all the zones under his administration. These regions are; Southern Region Central Region Multan Region North Region

Zones:
There are 26 zones in Pakistan headed by the zonal head responsible for procurement of business to achieve the set business target of the organization. The basic structure of the Corporation consists of: Four Regional Offices, Twenty-Six Zonal Offices, A few Sub-Zonal Offices, 111 Sector Offices, A network of 461 Area Offices across the country for Individual Life Insurance; Four Zonal Offices, 6 Sector Offices with 20 Sector Heads for Group & Pension are involved in the Marketing of Life Insurance Plans policies and products offered by State Life and a Principal Office. The Zonal Offices deal exclusively with Sales and Marketing. Underwriting of Life Insurance Policies and the Policyholders Services. Regional Offices, each headed by a Regional Chief, supervise business activities of the Zones functioning under them. The Principal Office, based at Karachi, is responsible for corporate activities such as investment, real estate, actuarial, overseas operations, etc.
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Karachi (Southern) Zone Karachi (Central) Zone Karachi (Eastern) Zone Hyderabad Zone Quetta Zone Sukkur Zone Mirpurkhas Zone Larkana Zone Lahore Central Zone Lahore Western Zone Gujranwala Zone Faisalabad Zone Sargodha Zone Sialkot Zone Multan Zone Sahiwal Zone RahimYar Khan Zone Dera Ghazi Khan Zone Bahawalpur Zone Peshawar Zone Rawalpindi Zone Abbottabad Zone Gujrat Zone Islamabad Zone Mirpur (AK) Zone Swat Zone

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Group and Pension:


There are 4 zonal offices of Group &Pension and under these zones there are many sector offices; Group and Pension Rawalpindi Zone Group and Pension Peshawer Zone Group and Pension Karachi Zone Group and Pension Lahore Zone

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Part: 3

PRODUCTS
As we know that SLIC has dominated life insurance market and it acquires about 90%market share of life insurance. So it has introduced a great number of products and it is offering products appropriate for every inhabitant of Pakistan

SLIC offers different products for Individual life

Group life insurance

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INDIVIDUAL LIFE PRODUCTS


Whole Life Assurance:
It is a unique combination of protection and savings at a very economical premium. Death at any time before age 85 years terminates payment of premiums and the sum insured and attached bonuses become payable. In the event the insured survives to the policy anniversary at age 85 years, the policy matures and the sum insured plus bonuses become payable. Under this plan the rates of bonuses are usually much higher than the other plans and they help in increasing not only protection but also the investment element of the policy substantially. This plan is best suited for youngsters who have at initial stages of their careers and cannot afford to pay high premiums. Individuals who anticipate requirement of a lump sum in far future can also this plan

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Endowment Assurance:
Its a safest and surest method of guaranteed cash provision either at a specified time or at death (Allah forbid). Under these policies, the sum insured plus bonuses are payable at the end of the specified number of years or at death of the life insured if earlier. Premiums are payable for the specified number of years or till death, if earlier. The benefits under the plan can be further increased by attaching supplementary covers. The plan serves the requirements of a family in various shapes by way of financial help at retirement, education of children or provision of capital for business.

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Anticipated Endowment Assurance:


This is a modified form of endowment assurance and is also called Three Payment Plan. Besides fulfilling the long-term financial needs, it also helps in meeting the short-term financial exigencies. As the name suggests, the plan offers three payments throughout term of the policy. The plan offers survival benefits equal to 25% of sum insured on completion of 1/3rd and 2/3rd term of the policy. If the policyholder does not withdraw the survival benefits, a very attractive special reversionary bonus is available. On completion of term of the policy, the remaining 50% sum insured plus accrued bonuses shall be payable. If the life insured expires during term of the policy, sum insured, accrued bonuses, unclaimed survival benefits and special reversionary bonuses are payable. The plan is suitable for the individuals who have long-term financial needs but also anticipate requirement of money relatively earlier. Three Payment Plan helps fulfilling these short-term financial needs without terminating the actual contract.

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Sadabahar Plan:
Sadabahar is an anticipated endowment type with-profit plan that provides lump sum benefit at certain stages during the premium-paying term or on earlier death. In addition, this plan has a built-in Accidental Death Benefit (ADB) rider so that the policyholder gets an additional sum assured in case of death due to an accident. This plan is a safe instrument for cash provision at the time of need. With this plan, the policyholder can secure greater protection and continued prosperity for the family at affordable cost affordable cost.

Admissible Ages and Terms this plan is available to all members of the general public, aged from 20 to 60 years nearest birthday. Both males and females may purchase this plan. Terms offered under this plan are 12, 15, 18, 21, 24, 27 and 30 years.

Survival Benefits:
On completion of one-third of the policy term, 20% of basic sum assured can be taken by the policyholder. Another 20% of the sum assured can be taken on
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completion of two-third of the policy term and the remaining 60% of basic sum assured plus accrued bonuses (if any) shall be payable at the end of the policy term in the event of survival of the assured.

1) If the option to withdraw an installment of 20% sum assured is not exercised on the due date or within 6 months after the due date, a special bonus will automatically be added to the policy at the end of 6 months. In this event:

2) On death of the assured while the policy is in force, the special bonus will be payable in addition to (1) Basic Sum Assured (2) Other Reversionary Bonuses accrued on the policy and (3) the amount of any installment left with State Life.

3) On the maturity date, the special bonus will be payable together with all the installments of the sum assured remaining with State Life, in addition to regular reversionary bonuses accrued on the policy.

4) So long as the policy remains in force, the policyholder may surrender the unclaimed installment of sum assured together with the related special bonus. The aggregate cash surrender value of the two shall not be less than the amount of the said unclaimed installment.

5) The reversionary bonuses as per usual practice will continue to be allotted each year on the basic sum assured (if in force) as and when Actuarial Surplus is declared. However the unclaimed installments of the
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sum assured and related special bonus will not participate in State Lifes Actuarial Surplus.

Death Benefits:

The full basic sum insured plus accrued bonuses are payable on death of insured any time while the policy is in force. In addition, if death occurs as a result of an accident, additional amount equal to one basic sum assured, subject to maximum limit, will be paid. The usual maximum on the ADB of Rs. 4 million will apply and premium will be calculated accordingly Bonuses: This policy will participate in State Lifes surplus. Rates of bonus applicable will be 25% higher than those on anticipated endowment plan. Under endowment insurance these plans are available.

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Shad Abad Assurance:


Shad Abad Plan is an extended form of endowment assurance. The benefits under the policy increase manifold in the event of death of the life insured. On completion of term of policy, sum insured plus bonuses attached to the policy are payable. However, on death during the policy term, the death benefit consists of double of sum insured with accrued bonuses. In case of death due to accident, the death benefit consists of four times the sum insured plus bonuses. The coverage can be further widened by attaching supplementary covers with the policy. This plan meets the requirements of those who appreciate the basic savings purpose of endowment assurance but also like some additional cover to protect loved ones in case they die, Allah forbid, before maturity.

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Child Education & Marriage Assurance:


Child Education & Marriage Assurance is a plan for the protection of childs future. It provides a lump sum benefit for the child at the completion of the policy term. On completion of term of the policy, full sum insured together with the accrued bonuses become payable to the policyholder. If the policyholder dies (Allah forbid) before completion of the term, a family income benefit of Rs 240 per 1000 sum insured per annum is paid to the child until the completion of policy term. Further, future premiums under the policy are waived and policy remains in force with full sum insured and continues to participate in State Lifes surplus and receive bonuses. Upon the completion of policy term, the child gets two options of either getting the proceeds in a lump sum or in five equal installments.

i.

Continue the policy in the same manner as earlier by switching the plan for the benefit of another child.

ii.

Get a refund of all the previous premiums paid till the death of the child or the cash value of the policy, whichever is higher and terminate the contract.

iii.

Continue the policy without naming another child in which case the benefit of Refund of Premium [as provided above under condition (b)] will not be available.

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Child Education & Marriage Plan is suited for the parents who are conscious about the future of their children. The term of the plan is such that the lump sum benefit becomes payable when the child attains a predetermined age of 18, 21 or 25 years. These ages may be selected considering the occasion at which children generally need financial assistance for higher education, marriage, or setting up business. Depending upon your individual needs, the plan is available in two separate versions of with and without built-in family income benefit. In addition to parent, this plan can also be affected by grandparents, uncles, aunts or any other person who is paying for the maintenance of the child

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Jeevan Sathi Assurance:


This is a joint life plan and covers lives of two partners say husband and wife simultaneously. Premiums are payable till the end of the specified term or till death of either of the insured persons, if earlier. The plan contains extensive benefits; an overview of which appears as under: On the death of the first life, the sum insured will be paid to the survivor. Further premiums under the policy will be waived, but the insurance protection of the second life will continue. Also, the policy will continue to participate in profits of the Corporation. On death of the second life, again the sum insured will be paid together with the attaching bonuses. In this event the policy will terminate. If the second life survives the term of the policy, he or she will be paid sum insured together with the attached bonuses, even though the sum insured has been paid once, on the death of the first life. If both the lives survive the term of the policy, the sum insured will be paid to them jointly, only once, together with the attached bonuses. Different supplementary covers are also available for increasing coverage under the policy.

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Child Protection Assurance:


This is a joint life assurance and covers the lives of child and either of the parents. If the policyholder and the child both survive full term of the policy, sum insured and accrued bonuses become payable. If the policyholder dies before completion of term of the policy the payment of premiums ceases and the child is paid an income of Rs 100/- per thousand sum insured per annum till the completion of the policy term. On completion of policy term, sum insured inclusive of bonuses accrued till the death of the policyholder is paid to the child. If the child dies (Allah forbid) before maturity of the policy and during lifetime of the policyholder, the death claim payable to the policyholder depends on the age at death of the child. As the name suggests, the plan is suitable for parents who want to cater future financial needs of their children in case of death of the breadwinner of the family. The plan has a unique feature of providing coverage on the life of child. The coverage of the policy can further be widened by attaching supplementary covers.

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Sunehri Policy:
Sunehri Policy is an innovative life insurance product. It is flexible, secure and meets the challenges of inflation quite economically. Under a special feature of this plan, from third policy year onwards, sum insured under the policy and premium will increase by 6% per annum without providing any evidence of insurability. From the third policy year onward, the policyholder is provided with a statement showing the buildup of cash value of the policy and sum insured for the year. The policy also participates in the surplus of State Life and currently the rate of bonus is Rs 105 per thousand per annum of the adjusted opening cash value.

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Optional Maturity Endowment:


It is an endowment assurance with a built in option to mature early. The plan is available for individuals aged 20 to 45 years. The policyholder has following options regarding maturity of this plan.

After the policy has been in force for 20 years or more, the policyholder gets an option to mature the policy for a proportionately reduced sum insured.

After the policy has been in force for 20 years or more, the policyholder, depending on his or her needs, can mature the policy in parts.

Let the policy mature at originally selected term. In this case the policyholder gets an additional bonus.

The policy participates in bonuses declared by State Life from time to time. Please click here for details of bonuses currently available for this plan. Coverage under the policy can also be enhanced by attaching supplementary covers.

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Nigehban Plan:
This plan provides term insurance cover for a period ranging from 5 to 10 years. As the name suggests, this plan is meant to provide protection during the term of the policy only i.e. sum insured is payable on death if it occurs during the term of insurance while the policy is in force. The plan does not carry any survival benefits, maturity benefits, surrender values, loan values etc. The policies will be without profits. The plan is available in two versions namely, with single premium and with annual premiums. Attaching certain supplementary covers can widen the coverage under the plan.

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Muhafaz Plus Assurance:


Muhafaz Plus provides a substantial sum of money on maturity or earlier death (Allah forbid) of the life insured. On maturity, the policyholder will receive sum insured plus bonuses attached with the policy. However if the life insured dies before completion of term of the policy, basic sum insured plus attached bonuses will be paid to the dependants immediately. In case of death due to accident, the double of the sum insured is paid. In addition, the dependents will also be paid an income of Rs 240 per thousand sum insured per annum for a fixed period of 15 years. The first payment will fall due on the policy anniversary immediately after the death of the life insured.

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SHEHNAI POLICY:
Features:
Shehnai Policy is an innovative life insurance product. It provides a solution to the problems of many concerned parents who want to save now in order to provide for their childrens higher education, marriage and other expenses when the need arises. The term of the plan is such that the lump sum benefit becomes payable as the child attains the age of 25 years. Shehnai Policy also caters from the ravages of inflation. This is done by the option of automatic increase of 6% per annum in sum insured and premium from third policy year onward. From the fourth policy year onward, the policyholder is provided with a statement showing the buildup of cash value of the policy and sum insured for the year. The policy also participates in the surplus of State Life and currently the rate of bonus is Rs 105 per thousand per annum of the adjusted opening cash value

Maturity Benefit:
The policy matures when the child attains age 25 years. At maturity the cash value of the policy is paid to the child. The cash value includes all the bonuses attached with the policy.

Death Benefit:
If the life insured dies during term of the policy, premium payments stop and the sum insured applicable to the policy year of death is deferred to be payable when the child attains age of 25. At the time of death of the life insured, the said sum insured is added to the adjusted opening cash value to be called the enhanced cash value and participates in State Lifes surplus until it is paid out to the child when he or she attains the age of 25 Years. The child will have an option of either collecting the benefit in a lump

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Sum or in five equal annual installments.

SUPPLEMENTARY CONTRACTS
SLIC offers a number of supplementary covers to enhance coverage under different plans. These supplementary covers can be attached with the main policy and are not available exclusively. Accidental Death & Indemnity Benefit (AIB) Accidental Death Benefit (ADB) Family Income Benefit (FIB) Waiver of Premium (WP) Special Waiver of Premium (SWP) Term Insurance (TI) Guaranteed Insurability (GI) Refund of Premium Rider (RPR) Hospital & Surgical Benefit (H&S)

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Accident Death & Indemnity Benefit (AIB):


This supplementary cover provides for payment of additional amount equal to the sum insured under the policy in the event of death by accidental means, or in the event of loss of two or more limbs or loss of sight in both eyes. One-half of the sums insured will be paid for loss of one limb; one-third of sum insured in the event of loss of one eye and one-fourth of sum insured will be paid for loss of thumb and index finger. Moreover, weekly indemnities are also available for total and partial disability of the life insured as a result of the accident. If the life insured becomes permanent and total disable, an annuity of 10% of sum insured will be payable for a maximum period of ten years. AIB is suitable for office commuters and individuals who travel and use different modes of transport. The rates of premium for this supplementary benefit range from Rs 4 to Rs10 per thousand sum insured depending upon the occupational rating of proposer for standard lives whose age should be between 18 to 55 years. AIB can be attached with following plans:

Whole Life Assurance Endowment Assurance Anticipated Endowment Assurance Jeevan Sathi Assurance Child Education & Marriage Assurance

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Shad Abad Assurance Shehnai Policy Child Protection Assurance (For adult life only) Muhafiz Plus Assurance Nigehban Plan Optional Maturity Plan

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Accidental Death Benefit (ADB):


This supplementary cover will provide for payment of an additional amount equal to sum insured in the event of death by an accident as defined in the contract. On payment of a modest premium, a handsome accidental coverage is obtained through this supplementary cover. ADB is highly recommended for individuals who travel daily through road transport. The cover is available to lives between 5 and 55 years of ages. Maximum term of this supplementary benefit is not allowed to exceed the premium paying term of the basic policy, or 60 years of age of the life proposed whichever is earlier ADB can be attached with following plans:

Whole Life Assurance Endowment Assurance Anticipated Endowment Assurance Jeevan Sathi Assurance Child Education & Marriage Assurance Shehnai Policy Child Protection Assurance Muhafiz Plus Assurance Nigehban Plan Optional Maturity Plan

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Family Income Benefit (FIB):


This supplementary cover provides that incase of death of the life insured during term of this cover, an annuity of 10% to 50% per annum of the basic sum insured will be payable till the completion of term of this cover. For instance, if a life insured has taken 25% FIB supplementary cover for 20 years on his policy having sum insured of Rs 1,000,000. If the life insured expires during term of FIB, say at the end of fourth year, an annual sum of Rs 250,000 will be payable for rest of 16 years. While the basic plan provides a lump sum, FIB provides a regular stream of income to the dependents and helps in meeting the day to day expenses. This supplementary cover is available to lives between 18 and 55 years of ages. It can be attached with following plans: Whole Life Assurance Endowment Assurance Anticipated Endowment Assurance Jeevan Sathi Assurance Child Education & Marriage Assurance Shad Abad Assurance Shehnai Policy Child Protection Assurance (For adult life only) Muhafiz Plus Assurance Optional Maturity Plan
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Waiver of Premium (WP):


This supplementary cover provides for waiver of due premiums in the event of the life insureds Total and Permanent Disability caused by accident as defined in the contract. With the help of WP, the life insured gets relieved of vagaries of paying premiums in case of his or her being incapacitated as a result of accident. The rate of premium for standard risk will be Rs 0.50 to 1.00 per thousand of sum insured depending upon the age of life insured. WP is available to lives between 18 and 55 years of ages. It can be attached with following plans:

Whole Life Assurance Endowment Assurance Anticipated Endowment Assurance Jeevan Sathi Assurance Child Education & Marriage Assurance Child Protection Assurance (For adult life only) Muhafiz Plus Assurance Optional Maturity Plan

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Special Waiver of Premium (SWP):


This supplementary cover will provide for waiver of premiums under the policy in case of the life insureds Total and Permanent Disability due to accident or disease which renders him unable to engage in any occupation. With the help of SWP, the life insured gets relieved of vagaries of paying premiums in case of his or her being incapacitated as a result of accident or disease. SWP is available to lives between 20 and 55 years of ages. SWP can be attached with following plans:

Whole Life Assurance Endowment Assurance Anticipated Endowment Assurance Jeevan Sathi Assurance Child Education & Marriage Assurance Child Protection Assurance (For adult life only) Optional Maturity Plan

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Term Insurance (TI):


In the event of death of the life insured during term of TI supplementary cover, the sum insured will be payable in addition to the benefits payable under the basic policy. Suppose, Mr. A, covered under a policy of Rs 1,000,000, and also attaches TI supplementary cover with his policy. In case of his death during term of TI, a sum equal to Rs 1,000,000 will be payable under this supplementary cover. This will be in addition to the benefits payable under main policy. This supplementary cover is an excellent opportunity for individuals who want to enhance coverage of their policy substantially on payment of a meager amount of premium. TI is available to lives between 18 and 55 years of age. TIR can be attached with following plans:

Whole Life Assurance Endowment Assurance Anticipated Endowment Assurance Jeevan Sathi Assurance Child Education & Marriage Assurance Shad Abad Assurance Shehnai Policy Child Protection Assurance (For adult life only) Muhafiz Plus Assurance Optional Maturity Plan
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Guaranteed Insurability (GI):


Under this supplementary cover, State Life gives the policyholder a right to purchase additional life insurance up to specified maximum amounts on specified further dates at standard rates, without evidence of insurability being required at such later dates. The specific further dates on which additional insurance can be taken are the policy anniversaries of the basic policy nearest the 25th, 28th, 31st, 34th, 37th and 40th birthdays of the life insured. Thus the option dates for various issue ages

Issue Ages No of Option Dates

Option Date Ages

10 24 25 27 28-30 31-33 34-36 37

6 5 4 3 2 1

25, 28, 31, 34, 37, 40 28, 31, 34, 37, 40 31, 34, 37, 40 34, 37, 40 37, 40 40

This supplementary cover is available only to standard lives between 10 and 37 years of ages and who are not engaged in hazardous occupations. Only one GI will be issued on the life of any one person. GI is available only at the time of issue of the basic policy and cannot be attached to the policy after its issuance. Individuals who foresee increase in their insurance needs in the near future can get benefit from this supplementary cover. It saves them from providing
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any further evidence of insurability in case they desire to enhance coverage under the policy. GI can be attached with following plans: Whole Life Assurance Endowment Assurance Anticipated Endowment Assurance Child Education & Marriage Assurance Optional Maturity Plan

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Refund of Premium Rider (RPR):


RPR provides for refund of premiums paid under the policy in the event of death of the life insured during term of the policy. It is an ideal form of enhancing the life cover under the policy with a modest increase in premium. This supplementary cover is available to lives between 20 and 60 years of ages. The available term ranges from 10 to 25 years. RPR can be attached with following plans: Endowment Assurance Anticipated Endowment Assurance Shad Abad Assurance Child Protection Assurance (For adult life only) Optional Maturity Plan

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Hospital and Surgical Benefits (H&S):


This supplementary cover provides benefits in case of hospitalization of the life insured, in State Lifes approved hospitals, as a result of sickness or accident. On payment of double amount of premium specified for H&S, the benefits and their limits will also be doubled. H&S is available to lives between 18 and 50 years of ages. The available term ranges from 10 to 25 years. RPR can be attached with following plans:

Whole Life Assurance Endowment Assurance Anticipated Endowment Assurance Jeevan Sathi Assurance Shad Abad Assurance Child Protection Assurance (For adult life only) Optional Maturity Plan

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GROUP LIFE INSURANCE PRODUCTS


These includes Term Insurance Scheme House Building & perquisites Insurance Scheme Pay Continuation Scheme Group Endowment Insurance Scheme Group Pension Scheme

Term Insurance Scheme:


Group Term Insurance Plan provides life insurance coverage to the member of a group, such as the employees of an employer. The amount of coverage of each member is determined with reference to either his designation or salary or employment category or some other similar variable. This plan provides insurance protection to the members of a group at a very affordable minimum possible cost, 24 hours coverage around the world. By promoting a sense of financial security amongst the employees it contributes to improving the working environment for the employer resulting in higher productivity. In most cases the employer is legally obliged to provide insurance cover to his employees. This plan helps the employer to fulfill this requirement.
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Premiums are tax-deductible for the employer. Total premium under group term insurance is lower as compared to sum of premium of all policies if issued individually to each life, due to savings in expenses. On death of any insured member the sum assured on his life is paid for the benefit of his surviving family. This benefit is payable regardless of the total number of the deaths even if the total amount paid out exceeds the total premiums received under the policy. However, if in any three-year period State Life earns a net profit on any policy, then some share in the profit is passed on to the policyholder, depending upon the total number of members in the scheme. This share can go up to 90% in case of large sized schemes. The supplementary contracts or riders which can be attached with this scheme are:

PTD (Accident) Rider:


Under this rider the insured member is entitled to payment of the sum assured in case of any accident causing permanent and total disability, which includes loss of two limbs or two eyes or loss of hearing in both ears or severe facial disfigurement. If the disability is permanent but not total then some percentage of the sum assured is payable depending upon the severity of the disability. In this regards the same schedule of disabilities is applicable as is prescribed under the labor laws. In case of a temporary accidental disability causing absence from work a fortnightly benefit calculated at the rate of Rs. 3,000 per month or the monthly salary whichever is less is payable.

A.D.B. Rider:

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Under this rider the death benefit of an insured member is doubled if the death was caused by an accident.

Natural Disability Rider:


Under this Rider if an, insured member is rendered incapable of pursuing any occupation or vocation for gainful employment due to permanent disability caused by disease or sickness then he is entitled to the sum assured as benefit.

Critical Illness Rider:


If an employee contracts any of the following critical illnesses while insured under this rider then he is entitled to the rider sum assured as benefit. Covered critical illnesses include.

Heart attack Coronary Artery by-pass surgery Stroke Cancer Kidney Failure Major organ transplant such as heart, kidney or liver

The insured member must survive for at least 31 days after contracting the illness to become eligible for his benefit. Some restrictions apply during the first two years of coverage. Suitable For: The plan is suitable for employers who desire to provide financial security to their employees by means of insurance coverage or for members of a professional body or association or some welfare association or a social club who desire to avail insurance protection on their life.
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House Building & Perquisites Insurance Scheme:


Under this plan each member of the group is insured for the total amount of loan outstanding against him inclusive of accumulated interest. The amount of Insurance is the actual amount of loan outstanding on the date of death whereas the premium is charged on the average loan outstanding over the whole policy year. It provides financial security to employers and financial institutions against the risk of untimely death of any of their indebted employee or client. Very often the family of the deceased person is not is a position to repay the loans taken out by him, especially if the deceased person was the sole breadwinning member of the family. In such a case the insurance coverage provides an assurance to the creditor that he would be able to recover his capital without causing hardship to the distressed family. The creditor is also protected from the headache of constantly monitoring cases of delayed repayments of loan in hardship cases caused by unforeseen death of a bread winning family member. The premium due under this policy may be recovered by the creditor from the borrowers along with the loan repayment installments.

Benefits:
Benefits of this plan are In case of death of an insured member of the scheme the total amount of the loan outstanding against him including accumulated interest is payable to the policyholder. In case State Life earns a profit on any policy
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during a 3-year period, the policyholder is also entitled to some share in the profits depending upon the size of the group. Riders or supplementary contract that can be attach with this plan is PTD (Accident) and NDB rider may be attached with this plan. These riders provide insurance cover against permanent disability due to accidental and natural causes rendering the insured member unable to earn a livelihood for himself and his family. In such a case the attaching riders can facilitate the creditor in recovering the outstanding amount of loan. This plan is suitable for employers who have a scheme for providing loans to their employees for house building, purchases of conveyance or any other goods of household use. It is also suitable for banks that are in the business of granting loans to their clients for purchase of house or conveyance or for some business venture. Similarly leasing companies and other financial institutions with similar facility may find this plan quite attractive.

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Pay Continuation Scheme:


1. Manpower is still considered as one of the most important elements of productions in spite of the dramatic growth of microchip based automation in all walks of life, especially in commerce and industry. The overall efficiency of an organization therefore depends upon the quality of the manpower of its employees. The more devoted, hardworking and loyal the employees the higher the reward to the employer in the form of greater efficiency and profitability. Quality manpower can be attracted by offering a good employee benefits package based on ensuring security and peace of mind of the workforce so that a greater commitment is obtained from them. This is why the enlightened employer pays particular attention to the welfare and well being of their workforce through various employee benefits scheme.

2. One of the functions of such schemes is to provide protection to the employees dependants in the event of his death. Progressive employers do provide group insurance which pays a lump sum to the dependants. This however does not last long. What is required in addition is a regular monthly income for a period of time. To meet this Requirement State Life proudly presents a plan, which offers invaluable protection to the employees family during his working life. The familys regular monthly income is protected for 15 years or until age 60 whichever is earlier. In this way coverage is provided for pay upon the death of the employee. This is illustrated by the following example: a. Supposing the pay of an employee is Rs 2000/- per month. If death takes place at age 47 then the benefits payable will be Rs
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2000/- per month up to age 60, I-e., for a period of 13 years. Total amount payable Rs.3,12,000/-

b. If death takes place at age 35 then the benefit payable will be 2,000/- per month for a period of 15 years. Total amount payable Rs. 3,60,000/-

3. Annual premiums will be calculated on the basis of the employees pay and his age and will be payable at the beginning of each scheme year. If this policy qualify for profit commission it will be payable in accordance with the rules at the end of 3 years. 4. Cover without medical evidence is allowed on the same basis as group term with the monthly benefits being converted into a lump sum equivalent. The total of the benefits so arrived at should, however not exceed the maximum allowable under the policy.

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Group Endowment Insurance Scheme:


Group Endowment Scheme is a unique saving and protection scheme through which the employees of an employer can enjoy insurance protection throughout their service and also get a lump sum cash amount upon their retirement if they survive up to retirement. In Pakistan most employers do not operate any pension scheme for their employees although some employers may have a provident fund scheme or a gratuity scheme. The expected benefits at retirement under a typical provident fund scheme and gratuity scheme combined are woefully inadequate for a retiring employee for maintaining his standard of living after retirement unless he supplements these benefits with his own personal savings. Keeping this in view some employers may wish to encourage a habit of saving amongst their employees for their own welfare. Group Endowment Insurance Scheme can be a means of introducing a compulsory saving scheme for the employees under the sponsorship of the employer. Participation in the scheme is usually compulsory. However, if participation in the scheme is voluntary, at least 75% of eligible employees must participate.

Benefits:

Under this scheme each employee is provided insurance protection for an amount which may be flat or depends upon the designation or salary of the employee. The amount of insurance is payable on maturity or death if it occurs earlier. In most cases the term of the endowment insurance for each employee is determined in such a way that the policy matures at or near his retirement date.

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This enables the maturity proceeds to coincide with retirement and supplement the retirement benefits.

Profit Participation:
The endowment insurance is issued on a with profits basis. The same bonus rate is applicable as for the corresponding individual endowment insurance policies.

Premium Rates
The same premium rates are applicable as for individual endowment policy but with the added attraction that in group form some volume discounts are also applicable depending upon the size of the annual premium.

Surrender Value
The policy acquires Surrender Value in respect of a member after insurance cover has been in force for at least two years on that member and no premiums are in default.

Loan Facility
Under this scheme if the member needs immediate liquidity and a policy has acquired Surrender Value in respect of member, he/she can avail a maximum loan of 80% of the net surrender value of the policy.

Continuation Privileges :
If an employee leaves the service of the employer, he can surrender his policy against the Net Surrender Value. He is also provided with the option of continuing his endowment insurance coverage in an individual capacity

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without any evidence of good health, for the same sum assured and term as he was enjoying during his service. The premium rates applicable to the policy are the same as are generally applicable to the same class of business in and individual capacity. The ADB, PTD (Accident) and NDB can be added to this policy if desired.

Suitable For:
This plan is suitable for employers who desire to inculcate a habit of saving amongst their employees in addition to providing them insurance against premature death.

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Group Pension Scheme:


State life, have become increasingly aware of the predicament of progressive employers wanting to better the lifestyle of their employees by providing financial security and job satisfaction, but not being able to do so, due to lack of availability of avenues and opportunities. This booklet is a guide to the State Lifes Pension Scheme that enables an employer to provide substantial benefits to employees and ensure a higher state of well being for them. It explains the institution, administration and benefits of the pension scheme and with the help of expert professionals in our Pensions Division, we can assist you in availing it, in your own and your employees interest. Our representatives will only be too pleased to be of any service to you.

Introduction:
Once the working life of an individual is over, or he has retired, what will he live on? This is a question which every individual faces during his working life and is of equal importance to a concerned employer. Personal savings, Provident Fund and Gratuity are the normal assets he acquires. If not spent prudently, these assets can fritter away in a short time. State lifes Pension Scheme is the only source which provides a steady monthly income, when other sources of income stop. This booklet explains step-by-step the nature of the Pension Scheme, how it operates and what are its benefits to the employer as well as to the employees.

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What is Pension Scheme? Basically it is a saving, or calls it a contribution, which is collected during the working life of an individual and invested profitably. After retirement the individual is entitled to a steady monthly income from a fund built up from the earlier savings. In a sense, it is a reward to the employee, granted today, while money is to be received on retirement.

Benefits/Why a Pension Scheme?


We advise a pension scheme due to following benefits to the Employees: o After retirement when the monthly pay-cherub stops, the individual starts receiving a regular monthly income in the form of a pension. o While contribution to the scheme, the individual gets a tax concession. o The individual, after retirement, need not fear of a drastic reduction in his standard of living. o All pensions are completely tax-free. o Retirement comes as planned and not abruptly as a shock.

Benefits to the Employer:

Contributions to the Pension Scheme by the employer are treated as business expenses and deductible in full.

The knowledge that at the end of the career, the employee will get a regular pension helps to build up his job loyalty and the adherence to the job, to the employers satisfaction.
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Employer does not have to find money to compensate an employee when he ceases to work.

Shows that the Management cares for their staff and is concerned about their welfare.

Attracts new employees. Retirement of personnel is planned in advance, removing uncertainty both for the employer and the employee.

Promotion channels in the management hierarchy are unclogged.

Comparison with Provident Fund and Gratuity:


a. Provident Fund : This is like a savings bank. The contribution of the employer as well as the employee along with interest accumulated over the years is handed over to the employee on his retirement. However, in case an employee wishes to leave before retirement is due, employers contribution may not have to be paid; or only part payment may be made.

b.

Gratuity :

Gratuity is exclusively the employers contribution for the benefit of the employee. From half to a full months salary is credited for every year of service. Reserves are set aside in the balance sheet but they do not attract tax concession, unless it is a funded scheme. The security of the employee to receive the gratuity is dependent on the continued existence of the employer and his profits, except in case of a funded scheme.

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c.

Pension Scheme:

In comparison with the aforementioned two retirement benefits the Pension Scheme has distinct advantages: Payments through Pension Scheme are guaranteed for life. A pensioner can look forward to his retirement with confidence and security. Pension Scheme is the only method through which regular income accrues to an employee after retirement. The payment of the pension is not dependent upon the fortune of the employer. Lump sum comparable to those received from Gratuity or Provident Fund, can still is drawn by commutation or the pension while maintaining a steady monthly income. State Life maintains a full-fledged pension Department capable of handling each and every scheme in the most competent and professional manner. It has actuaries, lawyers and other experts, besides offering a unified administrative, technical and investment service. An employer can relieve himself of the tedious and cumbersome work by using the professional service offered by State Life, the major ones being: Designing a Pension Scheme according to an employers exact requirements, in addition to determining the rate of contribution etc. Preparation of explanatory documents, if required, for consideration by employees.

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Assisting the employers legal advisers with the preparation of Trust deed and Rules. Providing reasonable assistance in negotiations with the Central Board of revenue for approval of the scheme. Maintenance of Individual records of members of the scheme, their contributions, the employers contribution, and pension accrued etc. Facilities for payment of pensions, when due

Security:
All policies issued by State Life are guaranteed and enjoy full financial security, backed by the Government under Article 35 of Life Insurance Nationalization Order 1972.

Payment of Pension
The pension will be payable by monthly installments; commencing from the retirement of member and ceases upon his death.

Guaranteed Payments
By incorporating a Guaranteed Pension period, payment can be ensured for a defined period say 5 to 10 years, whether or not a pensioner is alive after retirement, if, however, a pensioner survives the guaranteed period, pension will continue throughout his lifetime.

Supplementary Benefits
They may be termed as supplementary, but are indeed those invaluable finishing touches that make the picture complete. Employees would not feel secure unless their families were provided for in the event of their untimely
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demise. At a little extra cost employees may be given peace of mind by providing these benefits, some of which are listed below:-

a) Widow's Pension (upon death in service)


The pension will be payable to the wife of a member if he dies while in service. Normally, a widows pension is one half of the members pension entitlement.

b) Widows Pension (upon death after retirement)


The pension is payable to the wife if the member dies after retirement. In this case also a widows pension is one half of the pension the member was receiving. The widows pension, in either case would be payable for life but would cease in the event of remarriage.

c) Orphan's Benefits
The inclusion of orphans benefits in Pension Scheme along with the widows pension, gives the scheme a level of completeness. A normal scale of orphans benefit is 33% of the widows pension per child, payable upon the childs attainment of age 18 or earlier marriage. Limit is imposed on the number of children who can claim such benefits.

d) Retirement Aspects
Pension will be payable to a member according to a predetermined scale on the normal retirement date fixed by the employer.

e) Early Retirement
A member who retires before his normal retirement date on account of becoming incapacitated, or for any other reason, may be granted a reduced

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immediate pension to commence on the day following the actual date of retirement.

f) Late Retirement
A member who remains in employers service after the normal retirement date will receive an appropriately increased pension on retirement.

g) Withdrawal Benefits :
If a member withdraws from the service of the employer before the normal retirement date due to any reason and without any entitlement to early retirement pension, his future contribution, or contribution made on his behalf, will cease. Benefits to be paid on withdrawal will depend upon the withdrawal from service rules of the scheme. In such a case one of the following procedures may be adopted: i. Refund of contribution:

If a member withdraws from the contributory scheme a refund is made of all the contributions made by the employee. ii. Deferred Paid-Up Pension:

A withdrawing member may be allowed a deferred paid-up pension of the amount accrued to his account on the date of withdrawal. The reduced pension will commence on his normal retirement date.

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Group Provident Fund Insurance Scheme:


Group Provident Fund Insurance Scheme provides life insurance coverage to the members of the provident fund scheme of an employer. The amount of coverage of each member depends upon his age and the amount of his provident fund balance at any time.

What Need Does It Fulfill?


Young employees normally have short service to their credit and consequently their Provident Fund balance is also quite meager. In case of unfortunate death of such a person the provident fund amount is not adequate for meeting the financial needs of the family such as schooling of the children, their marriage expenses and housing accommodation. Group Provident Fund Insurance Scheme is specially designed to meet such an eventually since the benefits under the scheme are on a sliding scale.

Benefits:
On the death of any member of the provident fund scheme his family is paid a lump sum amount equal to the amount of his fund balance on the date of his death multiplied by a factor depending upon the age of the employee at death. The factors applicable for a typical scheme are already given above however the employer in a particular case may adjust these factors to suit his own special requirements. If the scheme has 200 or more members then at the end of three years the fund is also entitled to some share in the profits depending upon the size of the scheme.

Riders:
Any rider which can be added with group term insurance plan can also be added with this plan such ADB, PTD (Accident), NDB or Critical Illness Cover

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Education Continuation Scheme:


Education of children is clearly cherished by every parent. While parent is alive there is no problem. But unforeseen can happen sometimes disrupting the education of children. To protect against these Eventualities State life has designed this plan.

AIM:
The purpose of this plan is to provide smooth continuation of education of child until he/she completes education.

BENEFITS:
In event of (God forbid) insured father or guardian death SLIC will provide following benefits: School fee will be paid for remaining period of children education In addition, an amount equivalent to 12 months fee be payable for uniform, books, stationery, and other expenses. An increase of 5% per annum in payment will be given in order to cater inflation. All payments will be made to school for benefits of children.

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Part: 4

My Experience in State Life Insurance Corporation (Western Zone Lahore)

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It was 27th of June, 2011 when I started my internship at State Life Corporation Of Pakistan, Western zone , Jaen Mandir , Lahore. I reported attendance register at 9.am, which was in P&GS Department. After marking my attendance, I went to Mr. Javed Iqbals room, who was my incharge for my internship program. He welcomed me with open arms because of my reference of respected teacher Sir Irshad. Javaid Iqbal ordered his P.A to make schedule for my next six weeks in State Life insurance as internee and to guide me about it. According to my schedule I had to spend one week in six different departments. My schedule is as follow:Departments Financial and Accounts Policy Holder Department New Business Agency Audit Department Personnel & General Services Duration One week One week One week One week One week One week Date 27/06/11 04/07/2011 11/07/2011 18/07/2011 25/07/2011 01/08/2011

Six weeks is a short period of time to get through with all the functions and departments of SLIC but I tried my level best to gain maximum knowledge of SLIC and its working mechanism of those departments were I was sent. Throughout my internship program the whole staff members were very kind and co operative with me. Despite of shortage of time due to their office work they gave special time to me and helped me where ever I needed there help. I would like to mention names of some of the staff members who provide special assistance to me during my internship. Sajjad sahib of Finance & Accounts department, Syed Ehtaram of audit department, Shakeel sahib of Agency department and Maam Naseem of PHS department etc.

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The overall atmosphere of SLIC was very disciplined, well mannered and perfectly organized. Other than lot of knowledge of insurance , I learned some other valuable things like ethics and norms of a good organization from SLIC. It was a really good experience to be a part of such a prestigious organization . In above lines , I have written the gist of my internship program, following are the details of what I have learned during my six weeks internship from State Life Insurance Corporation, Lahore

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Part: 5

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SLIC has following departments which performs the different functions of SLIC. These departments are;

Personnel & General Service Department

Audit Department

Finance &Accounting Department

Policyholder Service Department

New Business Department

Agency Department

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PERSONNEL & GENERAL SERVICE DEPARTMENT


This division has dual functions 1. 2. Personnel management General services

This department performs following functions;

FUNCTIONS: Personal Management


Personnel policies, motivation, incentive and implementation of service regulations Office management development Personnel management Liaison with government labor relations and maintenance or office discipline including investigation against officers and staff

General Services
Procurement Purchase of goods and services Uniforms Communication Other services
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Maintenance Office machines & equipment Furniture & fixture Transport & conveyance Telephone and telex Receipt and dispatch Assets register Service like canteen security and cleanliness

Relation of personnel & general service department with other departments:

AUDIT

P&GS
NEW BUSINESS B& F

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Management Hierarchy:
MANAGER P&GS

ASST. MANAGER

STAFF

SECTIONS:
Personnel Section:
All the employee matters such as appointment, promotion, demotion, transfer and allowances are dealt by personnel section. Annual confidential reportsACR the employees are prepare, under the supervision of this section, by the departmental heads. For the appointment of the staff, an advertisement is initiated in the newspaper. Zonal head is competent authority for this appointment. This appointment also depends on the business of zonal office .the appointment of officers is done by principal office Karachi or regional office. Selection committee constituted by zonal head conducts test and interview. For promotion of the employees, there are ACRS are necessary and minimum three years are required to remain in one cadre. Each employee is promoted

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by the criteria and instructions set by principal office. PO or Regional office does promotion of officers. In Lahore there are 362 office employees, 9 sector head and 43 area managers (AM).

Sub Sections:
There are no of subsections in this department;

1. Medical Section:
All the medical expenses are beard by SLIC provided that these are incurred in approved hospital the expenses of medicine are reimbursed. The reimbursement of medicine is not allowed to staff (having grade 1 to 8) but they are given Rs 1500 per month in shape of salary as medicine allowance.

2. Leave Section:
Following are the two main types of leaves: Casual leave Medical leave 18 days casual leaves are allowed to all employees in a year .the medical leave or application leave is allowed for 48 days in a year .unused leaves are accumulated and after two years these leaves in excess of 180 days can be enchased, in case of death all leaves, not utilized, can be enchased.

3. Rent Section:
When sale manager is promoted to area manager he is categorized as A, B, C, and he is entitled to his own office at his own choice at the expenses of state life .a good location is selected by AM. After selection of place, zonal head is
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informed about the location, by application written by AM. This application is transfer to P&GS department for the analysis of location of the office. This location is analyzed by zonal rent committee (ZRC). A lease agreement is made with the landlord after analyzing the approved map for the location and property registration form. The office rent entitlement for categories of A, B, C, Am is Rs .2000, Rs 2000, & Rs 2000-10000 P.M. respectfully.

4. Stationary Section:
This section maintain the record of stationary such as paper, pencil, envelops printed letters, forms, calculators, etc .when ever any department requires the stationary ,the concerned department fills a requisition slip. The stationary is issued to concerned department and is recorded in the register.

5. Capital Section:
This section is responsible for purchase, sale and maintenance of furniture & fixture; equipment etc .a zonal procurement committee is constituted for purchase of assets. The assets are purchased from suitable supplier after critically analyzed the quotation offered by different venders. Each year assets are depreciated @ 10% p.a. the entry for the purchase asset is made in the register for fixed assets. Each year the closing balance is intimated to PO Karachi.

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6. Daily Attendance:
All the employees of Group and pension call their attendance before starting their duty. If any employee is not at time than he will call late attendance and three late attendances will be considered a casual leave.

7. Record of Employees:
There is complete record of employees who are at work or have retired. And all necessary data is maintained about every employee as date of appointment, date of retirement, promotions, medical services and all other data.

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AUDIT DEPARTMENT
Audit department of state life do internal audit of transactions which occur on daily basis. Management of any organization is responsible for ensuring that proper accounting records are kept and its assets are safeguard. To best discharge this responsibility instituting a system of internal control is essential to ensure that work is properly carried out by the employees. The organization then relay on its system for the production of reliable management information and the financial accounts , and to prevent ERROR,FRAUD AND LOSS OF ORGANIZATIONS ASSETS actually internal audit is a part of internal control.

Internal Control:
Internal control may be defined as whole system of control, financial and otherwise, established by the management in order to carry out the business of the organization in an ordinary manner, safeguard its assets and secure, as far as possible .the accuracy & reliability of its records. It may be noted that the concept of internal control goes beyond financial and accounting matters and the custody of organization assets to include controls designed to improve operational efficiency and adherence to organization policies.

Objects of Internal Audit


Internal audit is an independent appraisal function established within an organization to examine and evaluate its activities as service to the organization. The object of internal audit is to assist member of the organization is effective discharge of their responsibilities. To this end internal
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auditing furnishing those with analyses, appraisal, recommendations, counsel, and information concerning the activities are viewed.

Internal auditor should:


Review the system to ensure compliance with those policies, plans, procedures, laws and regulations which could have a significant impact on operations and report, and determine whether the organization is in compliance. Review the means of safeguard assets and as appropriate verify the existence of such assets. Appraise the economy and efficiency with which resources are employed. Internal auditor should be independent of the activities they audit Internal auditors are independent when they can carry out their work freely and objectively.

TYPES OF INTERNAL AUDIT: Pre- audit:


Audit before making payment is called pre audit.

Post- audit:
Audit after making payment is called post audit. In GROUP & PENSION mainly is pre audit is used.

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External-audit:
The audit which is done through the external parties like chartered firms. GOVT organization audit/Commercial Audit: Audit of the Pakistani GOVT owned organization is done through the AGP

Objectives of Internal Accounting Controls:


The system of internal accounting control is intended not only to maintain an adequate method of processing accounting data but also to safeguard the organization against possible financial loss due to fraud or error. The control is designed to ensure that; The organization receives and enters its accounting records, all the income and revenue to which it is entitled. All expenditure is properly authorized. All assets are properly recorded and safeguard. All liabilities are properly recorded and provision is made for known or expected losses. The accounting records provide a reliable basis for the preparation of accounts.

Internal Audit Role in State Life:


Accurate information is one of the essential factors in the process of decision making both policy and management; this is as true in state life as in any other organization. in the absence of accurate and dependable information management/board of directors are unable to make policy and management decisions .as the function is passed downward to the infrastructure of state
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life, function of internal audit apart from the verification of financial evaluation to pin point week areas in the system, internal control .in state life some items are subject to pre-audit while some are subject to post-audit.

List of payment subject to post audit:


All payment vouchers of salaries, except December, January and changes. Staff overtime fortnightly. Monthly fixed overtime to staff Entertainment to officers for sitting late Monthly officers entertainment and newspapers Monthly car rental to officers Monthly tea expenses to staff Air ticket Air insurance Telephone antiseptic bills Labor charges Office telephones Current t monthly salary advances

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Payments subject to pre-audit:


All increase in retainer ship payments will be pre audited. All payment vouchers of recoveries on account of bank loan association/union subscription p.f contributions, income tax at source and insurance premium, will be pre-audited in July and December only. All cases where accident benefit is payable will continue to be preaudited.

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POLICYHOLDER & SERVICE DEPARTMENT


Management Hierarchy of PHS Department:

ASSISTANT GENERAL MANAGER

MANAGER

DEPUTY MANAGER

DEPUTY MANAGER

ASSISTANT MANAGER

ASSISTANT MANAGER

STAFF

STAFF

PHS department performs following functions. Renewal or revival of policies Alteration in the policy Payments of death claims
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Payment of maturity claims Payment of injury claims

Renewal/ Revival of Policies:


PHS does renewal or revival of policies. Renewal of policies is done when term of the policy ends and policyholder wants to renew his policy. Revival is done of those policies which has been lapsed due to none payment of policies premium. A lapsed policy may be revived during the lifetime of the life insured, but within a period of 5 years from the due date of the first unpaid premium and before the date of maturity. Revival of a lapsed policy is considered either on non-medical or medical basis depending upon the age of the life insured at the time of revival and the sum to be revived.

Alteration:
Alteration may be done in table or in conditions or in sum insured. The endorsement will be attached with original policy documents for alteration purpose.

Kinds of alteration
Calculated alteration Contractual alteration

Calculated alteration This alteration includes alteration in Sum insured


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Table & term Load After revival term & condition Special revival after revival Change in terms & conditions Contractual alteration For legal point of view this alteration is called contractual alteration. Alteration may have specified period for alteration in the policies for example in anticipated policies before the 4 year of term of policy alteration can be made. In Jeevan Sathi policy if any alteration is done it should be done with in one year. For this policy the evaluation will be on Financial aspect Physical aspect Moral aspect

Mode of payment is usually yearly then policy holder in the time on need say to change it in the monthly, quarterly, half yearly. Excess is charged for this purpose.
Half yearly Quarterly Monthly 52 % of annual premium 27 % annual premium 9% of annual premium 99

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Procedure for Maturity Claims:


A good news letter is send to policyholder consists of following information. It is a matter of great pleasure that your policy has matured. It is a time to fulfill the goals that you had set years back. For collecting maturity benefits, please send a written request along with following documents to your servicing State Life zonal office: Original policy document Copy of National Identity Card Maturity discharge voucher duly verified by your bank If your signature has changed over the years, please send us your three specimen signatures of old and new styles. Immediately on receipt of above documents, we will process the case further for payment of amount due, if any, against maturity claim under above policy.

Procedure for Death Claim:


State Life insurance policies provide wide range of benefits in case of death of the persons covered against them. If loved one covered under any of State Life has expired, you should lodge a death claim with state life. All you have to do is to send a written intimation to the zonal office of State Life servicing the policy against which you are lodging a death claim. State life will, after evaluating the case, contact for other required documents for processing of death claim.

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Survival Benefit Claim:


If Anticipated Endowment Assurance policy has completed 1/3rd or 2/3rd term of the policy, it can withdraw a sum equal to 25% of the sum insured of policy. For withdrawal of Survival Benefit, send a written request along with following documents to the servicing State Life zonal office: i. ii. iii. iv. Original policy document Copy of National Identity Card Survival Benefit discharge voucher duly verified by your bank If the signature of persons has changed over the years, then are need to send three specimen signatures of old and new styles Immediately on receipt of above documents, state life will process the case for payment of amount due, if any, against survival benefit claim under above policy.

Injury Claim:
If State Life insurance policy contains an Accidental Death & Indemnity Benefit (AIB) supplementary cover, and the insured have sustained an injury as specified in the contract, he can apply to state life for an injury claim within 20 days of sustaining the accident. For lodging injury claim, there is need to send a written intimation of the accident mentioning therein the date of accident to servicing State Life zonal office. After receipt of intimation from insured, the case will be further looked into and zonal office will contact accordingly.

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Procedure for Loan against Insurance Policy:


State Life insurance policy provides a valuable facility of loan to meet immediate financial exigencies. Policyholder can avail a loan up to 80% of net surrender value of policy. On policy loans, state life charge markup @ of 10% per annum compounded semiannually. If policyholder is interested to avail loan under his policy, he can apply for loan.

Procedure for Volunteer Policy Surrender


If policy holder wants to surrender his policy he informs to the state life about its decision and fills a form of surrender of policy after that his request will be entertained and surrender amount will be transferred to policyholder.

PROCEDURE OF DEATH CLAIMS IN GROUP LIFE INSURANCE;


Procedure to lodge Death Claim
Procedure / requirement for the settlement of death claims Death intimation, on death of any government employee, the department / employer sends the written death intimation to the Incharge Claims concerned G&P zone along with the death certificate.

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On receiving the death intimation, the department / employer would sent the claim forms C & D by the claim department of the Group & Pension Zone. The Department / employer is required to fill in the claim forms C & D, properly sign and stamp them and send them back to the concerned G&P zone, along with the following requirements.

1. Death certificate, issued by Local Municipal body, Cantonment bodies, Union Councils, Services hospital, Government hospitals, Semi Government hospitals, Railway hospitals and Trust hospitals (any one of the above). In case of tribal areas, the death certificate issued by political agents, Commissioner, Assistant Commissioner, Magistrate Class-I are also acceptable. 2. NIC of the deceased and the claimants (attested photocopies). 3. Pension book in original for post retirement death (the same would be returned back after verification). 4. Attestation: All the photocopies must be attested by the concerned Gazetted officer. NOTE: The provision of all above requirements would ensure the quick settlement of the claims. Deficiency of any one of the above would result in the delay in the claim settlement.

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Commercial Groups:
Procedure / Requirement for the settlement of Death/Disability Claims:
1. Death intimation: The policyholder/employer is required to send the written death intimation, to the Incharge Claims of concerned Group & Pension zone. 2. On receipt of intimation, after necessary checking, the necessary claim forms would be sent to the policyholder/employer by the Claims department of the Group & Pension zone. 3. The policy holder/employer is required to fill in the claim forms, properly sign and stamp them and send them back to the G&P zone along with the following requirements.

For Death Claims:


1. Death certificate, issued by the local bodies, cantonment board, services hospitals, government hospitals, semi government hospitals and railway hospital. (Any one of above) 2. Last attending physicians statement. 3. Post Mortem report and FIR/police investigation report in case of Accidental death benefit.

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A. For Age proof: i. ii. iii. iv. v. vi. School/college certificate showing date of birth National Identity card Valid passport Discharge certificate (in respect of ex-defense forces Personnel) Certificate of age by the policyholder organization Birth certificate issued by local body/cantonment board (Any one of the above)
B.

For disability claims:

1. Employees statement. 2. Employers statement. Attending Surgeons statements. (Claim forms A, B, and C, respectively). 3. X-rays and medical investigation reports etc, if any. 4. (All the photo copies must be attested by the concerned Gazetted Officer). 5. The provision of all above requirements would ensure the quick settlement of the claims. 6. Deficiency of any one of the above would result in the delay in the claim settlement.

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NEW BUSINESS DEPARTMENT


Management Hierarchy of New Business Department

A.G.M

MANAGER DEPUTY MANAGER ASSISSTANT MANAGER

STAFF
The business of SLIC is initiated through new business department (NBD) when insurance sales rep sells policy to any client then this department handles all the document procedures

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Mr. malik nazir ahmad is the incharge of new business department. In this department as the name shows, new contracts start between proposes and insurance company. Proposer is a person who applies for the insurance protection. Main function of the NB is underwriting

The department is responsible for processing the new business introduced by the sales force right from receiving a proposal on the counter to mailing the policy document to the policy holder It has various sections to perform the different task relating to the acceptance or rejection of risks for life insurance, the proposals are received and initially is checked in all respects i.e. Completion of all columns and then processed by the underwriters depending upon whether they have been introduced under the medical or non medical scheme. The risk is assessed keeping in view the following factors personal data , occupation ,physical and social features , health , family history of the prospect , moral hazard , source of income , nomination , relationship between the nominee and the prospect . Previous life insurance history of the prospect if any, field officers or sale representative confidential report included in the proposal from,
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Financial underwriting i.e. Source of income, its legality and proof, relationship between the prospects income and sum assure .in case of field officers or sale representatives reports have more importance. After this assessment, the underwriting decision is made which may be acceptance of a risk at ordinary rate or with loading, calling additional evidences relating to health or financial status of the prospect, postponing for a definite period or straight away declination. Premium rates, installments are the checked and first premium receipts are issued on receiving payments. In the last, policy contract are issued under intimation to the field force, and concerned department like commission payment, agency administration, computer division and marketing. This in brief terms is the function on new business department. This is also a key function as the underwriters are responsible for the financial health of life institution. By accepting good risks they promote profitability and growth, which helps in meeting the financial obligations of the life institutions towards the policyholders, its employees and government.

Process of dealing with new customer:


First of all sale rap motivate the customer to take policy. Then sale rap fills proposal form for that customer.

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Then sale rap takes Rs 500 as token money as underwriting fee for customer. Then proposal form come in new business for allotment of proposal number where proposal number for a particular customer is allotted. Then process of underwriting is done. If the customer fulfills the requirements of underwriting then further process continues otherwise request is rejected and underwriter suggests some other alternative. If underwriter accepts the proposal then calculation of premium is done. After the calculation of premium the policy number is allotted and policy bond is issued to customer.

Sections of New Business


1. Proposal section 2. Underwriting section 3. Calculation section 4. Policy issue section 5. Computer section

1. Proposal Section:
In proposal section policy number is allotted to a new customers proposal for future reference. All the work performed in proposal section is entered in a register called proposal register. First of all issue the proposal number and then record the proposal number, serial no, age, table & term and then SR, AR, PR no and the name of owner of policy form.
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These proposal forms are attaching with balance statements with the issue no but those policy form that have no balance statements take a side. Those who have balance statements send it to the underwriting department. There are some other forms which have some objections if they are clear than recorded into the ledger to OK its mean ok.

Underwriting Section:
Underwriting is the process through which the underwriter assesses the risk associated with the insurance proposal. Underwriter verififies the proposal information provided in the proposal form. If he feels that client should have a medical check up than SLIC have its own panel of doctors to provide medical assistance.

Types of underwriting
I. II. Lay underwriting Final authority

I.

Lay underwriting:

A junior underwriter who checks all the documents of policyholder, if the documents are correct, then he sends to final authority. II. Final authority:

A person who checks all the documents and decision of lay underwriter makes final decision.

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Underwriting panel: The underwriting specialist check the case thoroughly and see his name, NIC no, age, weight, height, nominee, name occupation and address. If they think there is something wrong then they must be conscious and call medical report or other tests of medical. If they seem that case are correct they fill the form of policy brief sheet of bottom line which they enter the height, weight and also give the rate about to see his occupation and they can also use some code which they give different occupational person. For example carpenter code is 161.if they forget the code of any occupational person then they give code of 078.they think that 078 codes, is best solution. They sign the form and send to doctors. Doctors panel: The doctor panel head is known as CMA (CHIEF MEDICAL ADVISOR) i.e. Dr Naeem and also authorized doctors Dr Saira who has recommended the case by underwriters for medical reports etc. They must check the nominee name, NIC no and his occupational stress. If the policy holder has some disease problem then they can mark them his case by N.D and they can also give a declaration certificate that if he die during two years then the company cannot pay the claim. The maximum limit of N.D case is 15, 00,000. If the policyholder has government employee then they can give the categories no 4 such as school teacher, doctor etc. but if they are carpenter, bricks holder then they can give 5,6.
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There are basically three categories of female. Government job and education Private illiterate Household

But the male have only one category. If the case has 10, 00,000 then only one person sign but if they are Rs 20, 00,000 then they are Rs 30, 00,000 then three persons can check. If the policyholder are smoker then they will allow only smoking daily 6 up to 10.but if they smoke 20 up to 25 then they are not capable to grant the policy. The doctors also decide & check the age and check the underwriting requirement table e.g. if the person age is 18-40 then they have Rs 200,000 sum insured and they are non-medical case.

2. Calculation section:
In calculation section calculation of premium is done. Premium can be pay in the following way; Yearly Half yearly Quarterly Monthly

Rate of interest and premium rate is calculated.


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Rate of premium depends upon the age of a person. If the age is higher, then more rates will be charged and if age is low then low rate will be charged. Rate also depends upon the maturity period. Different tables are used for calculating the rate of premium. Most commonly used table is; Table 03 Table05 Table07 Table 12 Table 18 Table 19 3. Policy issue section:

After completing the calculation, the number is allotted to policy holder .in policy issue section; all the records are maintained in the policy register.

4. Computer section
New business department has its own computer section, which contains all the records of policy holders. The department is computerized in 1995.window AIX version 3 is used for sorting the data. A code number is allowed to each policyholder. There are two prints used for office work. One is raw print 7 the other is office copy. The raw print is used to check the record of each policyholder. And the office copy is used for their record.

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Smart term program IBM are used and they start login by college and then enter the new business department and open the whole table of proposal form no and his bio data. first they can enter table a and then proposal no and series that means proposal forms series and then his name are also enter and policy no and then also enter the table and term and then issuing date of underwriting and date of receipt and write his date of birth ,age, mode i.e. Yearly Quarterly Monthly

Similarly they can allot the no and then write postal code i.e.078 and then his address. So write the sum assured and enter the AIB value and the rate which they can allot. They Can enter the series vise FIB NO and they give the command of print with the recipient printer no 03

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AGENCY DEPARTMENT
Management Hierarchy of Agency Department:

ASSISSTANT GENERAL MANAGER

MANAGER

DEPUTY MANAGER

ASSISSTANT MANAGER

STAFF

State life is one of those few organizations whose product is not over the counter but it has to be introduced to the expected buyer through a huge marketing. The marketing force, usually known as field workers, is regulated through an important department which in insurance industry is called agency administration department

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The agency administration results, trained, promote and provide services to its field workers so as to ensure them skilled profession, sound career, handsome income and many fringe benefits to ease their life. Service provided by the SLIC is tangible and therefore are not acquired at the counter by the people, who need it so it must be sold them through persuasive method. Field force of SLIC is tangible and therefore is persuasive method. Field force of SLIC plays an effective role in selling of intangible products. In order to maintain record of the field force agency department was established. The head of agency department is Mr. Shakeel ansari and executive officer Mr. Asif mir .the main function of this department includes recruitment, promotion, and termination of field force, allied and medical facility for field force. This department is also responsible for issuance and renewal of licenses to the field force. State life has two levels of recruitment.

Recruitment:
The sale representative is appointed by SO/SM .The requirement and conditions for the appointment of SR are as follows. State life has two level of recruitment.

Regular sales representatives:


Minimum qualification required is matric Age at entry must not be less than 18 years.

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Annual quota for SR is Rs 10000 Application for the issuance of license is necessary and is renewed after each 3 years. An application form, along with license fee Rs 50, attested photocopies of documents and nomination form is submitted to the agency department .a code number is allotted at the submission of application to SR and he can start working as agent of the SLIC of Pakistan.

Graduate sales representatives:


Must be graduate required Less than 30 years of age having N.I.C. They are paid stipend. Both above type of sale representative are registered under insurance ordinance 2000 and insurance rules 2002.they are required to get their registration renewed after every two years and submit a statement and declaration annually as required under above referred ordinance & rules .Their primary job is to sell life insurance policies.

Promotion:
SR is promoted, upon fulfillment of certain terms and conditions and on achievement of business targets, to SO. Similarly SO is promoted to SM and SM to AM.

Prize & Awards:

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The field workers are motivated by giving those prizes and awards on their monthly and yearly achievements. The height of it is an annual convention which held at a prominent place of prestige in the country in which all the qualities around the country share their knowledge and experience, enjoy recreational activities and above all get benefit of company of successful seniors. They disperse filled with thrill and enthusiasm to go at more height to catch new stars.

Other Benefits:
In order to run their offices company maintained furnishes offices are provided and those who wish to open their officers, as they desire are paid cash compensation in lieu of an office to maintain their own offices. State life give their field workers and families a due care for which they are covered for indoor and outdoor medical treatment, consultation from senior doctors and for clinical investigation from reputed pathological labs .In case of chronic diseases additional medical facilities are given. Their lives are also covered for heavy sum of insurance against accident and death through variety of Group Insurance Policies. The Company pays the premiums and for additional coverage subsidized rate of premium is charged which is deducted from their commission.

Termination and Demotion:


Any agent of SLIC, who behave negatively, violates the rules and regulation or indulge fraud or mal-practice, can be terminated by the zonal head. Any agent who fails to meet the annual quota of FYP is demoted to immediate lower rank of the field force.

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License:
The license to work as agent for SLIC is issued by the controller of insurance Karachi. At specific interval of time, a list of the field force is transferred to controller of insurance Karachi for new and renewal of license.

The list of license fee is given below: SR (new license for IST year) = Rs 50 SR (renewal of license) SR (renewal with late fee) SO/SM (renewal of license) = Rs 150 = Rs 250 = Rs 250

SO/SM (renewal with late fee) = Rs 400 The agency department is also involved in the following matters of field persons, 1. Medical of field persons 2. Rent

Contest arrangement (giving the prizes to those who make good business)

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FINANCIAL AND ACCOUNT DEPARTMENT


This department maintains the record of all the cash transactions. It prepares payroll for the regular employees and disburses the amount. It also takes care of the fringe benefit such as medical facilities provided to the office staff. Commission that is paid to sales representatives, sales officers and sales managers are also calculated and paid through this department.

To keep the corporation on financial track balance sheets and income statement also prepared on annually, monthly and weekly basis. The principal office sends annual budget to the department and department is responsible for proper utilization of cash disbursements. The department also send budget forecast for new budget proposal. Payment on behalf of the other zones and preparation of bank reconciliation statements are also function of this department.

This department consists of following section: Commission Salary Disbursement Loan Cash counter
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COMMISSION:
Commission department facilitates the field force by offering commission and due bonuses .the department is directed to calculate and analyze the earning of last year, providing advances and loans to field force and offer other fringe benefits to motivates the field force. Commission is only give to commission based persons who are SM, SO AND SR. Commission is calculated from the premium after subtracting the tax. Then check that SM not takes any advanced loan and any claim from zonal, regional.

Structure of commission:
First year premium SR-------- 35% SO------- 15% SM------ 8% QUARTER BONUS 2.5% 2.5% 2%

Persistency bonus:
It gives on the persistency of the last year business. On 80% business the commission is 1.1 percent. On 81, it is 1.2 and onward.

Second year premium SR-------- 10% SO------- 2% SM------ 1% THIRD YEAR PREMIUM
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SR------ 5% SO----- 1% SM----- 0.5%

SALARY & LOAN:


Employees are lying in the four categories Related to their appointment and their promotion. According to their category the funds, benefits and salary are gives to employees. In this section loan application and salary form are filled here related their category and then according to that make the voucher slip and passed by the officer.

CASH COUNTER:
In cash counter premium and loan amount is submitted .There is two accounts for policy holders. First year account e.g. 1173 A/C Renewal A/C 1089 A/C is account no of renewal account.

Collection is done in two ways: Cash Cheque

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Part: 6

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SWOT ANALYSIS
SWOT analysis is a process to identify where we are strong and where we are vulnerable, where we should defend and where we should attack. It tells us our strengths, our weaknesses, the opportunities which prevail in the market and the threats which we may face from our competitors and other from other potential factors. This analysis can be performed on a product, on a service, a company or even on an individual. Swot analysis consists of strength, weakness, opportunity and threats to state life.

STRENGTHS:
Following are the strengths of state life insurance company

Market share:
State Life Insurance Company has almost 90 % of market share of all life business in the market in Pakistan. It is a big strength of state life to hold such a big share of the market.

Excellent set up:

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State life has excellent setup .It has a lot of zones, sub-zones and offices which spread in the whole country.

Infrastructure:
The infrastructure of state life is excellent .It has a wide infrastructure a lot of buildings and offices.

Training academies:
State life has training academies for the training of field staff and different training courses are offered to field staff.

Authorizes capital:
State life has authorized capital of Rs.1, 100 million. It is a great strength of company to have such a big amount of authorized capital.

Reduction of premium:
State life has reduced his premium rates on the policies up to 33% .It is a great strength of state life and a big advantage on competitors.

Real estate business:


State life has done a lot of investment in real estate business .This is an edge on the competitors to have such a big profitable investment which strengthen the financial rating of the company. State life investment portfolio is of Rs.191.445 billions.

Experienced staff:

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The staff of state life is consists of experienced and qualified persons .It means the workforce of state life is a biggest strength of the company.

Goodwill:
State life has goodwill in the market. The goodwill of state life is a great asset of the company and a big advantage over the new life insurance company.

Sales force:
State life has big sales force which seals the policy of the company; no other company has such a big sales force.

Advertising & promotion:


State life does a lot of advertising and promotion of their products. It is good for company as a lot of people recognize the products of the company.

Division of market:
In state life division of area is done so that better services can be performed for that area policyholder .It is strength of the company.

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WEAKNESSES:
Less job rotation:
In state life less rotation of job is done. The employees do that work for which they are hire .and work of other employees are not done. So there are no rotation of employee or very less rotation is done .it is a weakness of the company if any employee go on leave it is difficult for other employee to do work of other employee.

Centralized decision making:


The decisions which are made in state life are of centralized nature and principal office makes all the decisions. This is a disadvantage in the dynamic environment where there is need to make quick decisions.

Selection and recruitment process:


The selection and recruitment process of state life is not transparent. Due to which incompetent staff is hired or the staff hired is not up to mark. There is need to hire staff on the merit so that performance can be improved.

Work overload:
In some departments there are overload of work to employees such as in new business department and claim department. There is need to hire more persons in this department. So that employee can perform their duties without taking workplace stress.

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OPPORTUNITIES:
Diversification:
As SLIC is providing services in just only in life insurance, it can also start general insurance, like the insurance of property etc.

Government regulations:
The regulations made by government are supporting the insurance industry .so there is need to take benefit from it.

Entry barriers:
The regulations of SECP and insurance ordinance 2000 has certain requirements for insurance company .this can prove a barrier for new companies so there is an opportunity to avail this situation.

Growth of financial sector:


As financial sector of Pakistan is starting better which will make better the financial position of people and will increase saving of people. So this is an opportunities for SLIC to increase their business.

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THREATS:
Recession in Economies:
As Pakistan economic condition is not so stable so recession in economy can effect its performance by increasing the surrender rate of policy by policy holder.

Competitors:
Now insurance industry is flourishing in Pakistan and lots of private sector insurance industry is being established. There is needed to make competitor edge on these industries.

Political instability:
Political instability in the country is disturbing the economy of the country. There is needed to keep concentration on the situation so that it does not affect the company situation.

Fear of war:
The war on terror is also affecting the country conditions and may makes a large no of claims for company. This is a threat to company.

Investment climate:
Due to instability the company may face lose because he is making huge investment in the country.

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Part: 7

PERFORMANCE HIGHLIGHTS

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PRIMIUM Income- Individual Life:

YEAR (RS. IN MILLION) 2005 2006 2007 2008 2009 2010 11,260.0 13,112.0 15,907.1 19,152.1 24,853.2 31,943.0

Sales

2006 2007 2008 2009 2010

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35000 30000 25000 20000 15000 10000 5000 0

PREMIUM INCOME-INDIVIDUIAL LIFE

2005

2006

2007

2008

2009

2010

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Premium Income-Group Life


YEAR (RS. IN MILLION) 2005 2006 2007 2008 2009 2010 2,560.1 2,879.6 2,809.6 3,543.2 3,513.7 3,705.3

GROUP LIFE
4000 3500 3000 2500 2000 1500 1000 500 0 2005 2006 2007 2008 2009 2010

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Group Life

2005 2006 2007 2008 2009 2010

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Investment Income
Year (Rs. In Millions) 2005 2006 2007 2008 2009 2010 13,105.5 14,923.8 17,505.2 19,134.6 21,544.7 27434.1

INVESTMENT INCOME
30000 25000 20000 15000 10000 5000 0 2005 2006 2007 2008 2009 2010

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Total Premium Income:

Total Premium Income: YEAR (Rs. In Millions) 2006 2007 2008 2009 2010 30915.4 36221.9 41829.9 49911.6 63072.9

TOTAL INCOME
70000 60000 50000 40000 30000 20000 10000 0 2006 2007 2008 2009 2010

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Investment Portfolio:

Investment Portfolio

Year (Rs. In Millions) 2005 2006 2007 2008 2009 2010 124,983.7 142,158.8 161,965.8 182,874.2 205,804.2 235,934.5

250000 200000 150000 100000 50000 0

INVESTMENT PORTFOLIO

2005

2006

2007

2008

2009

2010

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Life Fund:
Life Fund Year (Rs. In Millions) 2005 2006 2007 2008 2009 2010 122,775.2 137,958.8 156,737.3 177,459.1 199,445.3 230,422.0

LIFE FUND
250000

200000
150000 100000 50000 0 2005 2006 2007 2008 2009 2010

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Total Assets:
Total Assets Year (Rs. In Millions) 2005 2006 2007 2008 2009 2010 132,017.1 149,448.6 169,821.4 193,117.6 217,685.4 251,478.1

ASSETS
300000 250000 200000

150000
100000 50000 0 2005 2006 2007 2008 2009 2010

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State Life Insurance Corporation of Pakistan invests its funds in accordance with the provisions contained in Insurance Ordinance 2000, Insurance Rules 2002 and SRO(309) K of 1970 as amended to date by the Government of Pakistan. Govt. Securities: These include instruments issued by Government of Pakistan such as Treasury bills, Pakistan Investment Bonds etc. Approved Govt. Securities: These include instruments as Wapda Bonds, Provincial Securities/TFCs etc Loans: these include loans in the form of Term finance certificates etc. Investment Portfolio 2008
As at 31-12-2009 (Rs. in millions) Particulars Govt. Securities TFCs/Approved Govt. Securities Equities Bank Deposits Investment properties Policy Loans Portfolio 145,687 4,598 24,450 12,485 2,538 16,046

205,804

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FINANCIAL ANALYSIS

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Horizontal Analysis
Profit & Loss Account
2008
Return on government securities Interest income loan & advances to employees Interest income on bank deposits Net investment income Expenses not attribute to statutory fund Surplus appropriated to shareholders fund Profit before tax Taxation Profit after tax Earnings per share -5.19% 0.844% 110.50% 12.34% 15.03% 37.15% 31.05% 36.39% 28.49% 5.15%

2009
-5.58% 16.03% 55.65% 13.97% (23.7%) 10.57% 11.24% 18.43% 7.61% 7.61%

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Interpretation:
Return on GOVT securities decreased in 2008 which is a negative sign although the investment in these securities increased in 2008 but return decreased. And in 2009 return is increased which is a positive sign but investment is also increased in 2009. Loans are increasing in 2008 and 2009 but interest on it is decreased in 2009 which is negative sign it means that loan is given on interest free bases. Interest income from deposits increased it is positive sign and it is also a big source of income for organization. Investment income is also increasing in both years it is also positive sign that Corporation is increasing its investment which is also returning to it. Profit before tax was increased 31% in 2008 which is so good and it means that performance of Corporation is improving with passage of time. And it also increased in 2009 which is also a good sign. Taxation is also increasing proportionately with increasing in profit. Profit after tax is also increasing it means profitability of company is increasing. Earnings per share is also good and it is also increasing.

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Balance Sheet
2008
Share capital & reserves Issued subscribed & paid-up capital Accumulated surplus Net shareholder equity Balance of statutory fund Deferred liabilities Staff retirement benefits Creditors & accruals Outstanding claims Premium received in advance Amount due to other insurers Amount due to agents Accrued expenses Inter-fund balance Others Total creditors & accruals Total liabilities 19.57% 15.44% 38.61% 41.51% 34.87% -36.01% 109.64% 22.15% 13.77% 20.01% 1.77% 74.37% 41.27% 31.27% 49.65% 29.44% 16.54% 12.68% 8.6% 13.57% 22.2% -58.26% 5.8% 13.22% 0% 231.3% 18.60% 12.38%

2009

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Total equity & liabilities

13.77%

12.72%

ASSETS
Cash & bank deposits Cash & others Current & other accounts Deposits maturing within 12 months Fixed deposits maturing after 12 months 42.83% 277.4% 41.76% 44.85% 51.45% 3.91% 23.37% 6.32% 20.93% 4.11% 11.70% 4.15% 15.39%

Loan secured against life insurance policies 19.37% Loan secured against other assets Unsecured loan Investment properties Investments Current assets-others Premium due but unpaid Amount due from insurer/reinsurer Agents balance Investment income due but outstanding Investment income accrued Taxation-payment less provision 20.27% 177.11% 0% 9.87% 17.5% 4996% 0.09% 1.56% 4.5% 10.25%

5.57% 80.65% 0% 22.98% 16.63% 1984.8%

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Prepayments Inter-fund balances Sundry receivables Other Fixed assets tangible Furniture, fixture, office equipment Total assets

2.09% -36.01% -48.50% 17.37%

13.03% 49.65% 180.53% 15.20%

7.75% 13.71%

10.19% 12.72%

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Interpretation:
Cash and bank balance increased in 2008 which increased liquidity of company but in 2009 Corporation invest it cash so cash decreased in 2009. Loan secured to employees and agents is increasing it means that economic conditions of them is not good and they are acquiring more loans but its a negative sign. Unsecured loan to employees is showing partial increase but in 2009 it has increased 10% which is a negative sign. Investment in property and in other securities is increasing it also a positive sign and corporation is increasing its investment which will increase returns on these securities. Premium unpaid decreased in 2009 it is a positive sign it means that corporation is able to get premiums on timely manner from policy holders. Amounts due from other insures and reinsures in increased in these two years so much which is negative sign. And it means that corporation is not able to clear account with them in timely manner. Sundry receivables have increased in 2009 54% which is a negative sign. And it shows that net cash is decreasing and it is a negative sign.

Fixed assets of corporation increasing it show that it is enhancing its


operations and it also acquire more buildings, furniture and other assets.

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RATIOS ANALYSIS
Cash Ratio 2008
1.267

2009
0.874

Interpretation:
The cash position of the corporation was good in 2008 but the ratio decreases because the corporation invests cash.

Claim Ratio

2008
56.31%

2009
55.43%

Interpretation:
Claims ratio is decreasing gradually it is a positive sign and corporation must tried to decrease it more but it is much better and it cannot be said a negative sign and it is marginal but it must be decreased and corporation should try to accept those which have less mortality ratio.

Expense Ratio

2008
9.15%

2009
12.56%

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Interpretation:
The ratio is increasing as the corporation is expanding so the expenses are that is a negative sign on the profitability of the corporation.

2008
Fixed Asset turnover ratio Total Asset turnover ratio 11.75% 182.33%

2009
179.35%

13.03%

Interpretation:
These two ratios show how efficiently corporation is utilizing its resources to generate cash.

Asset to Equity 2008


161.44%

2009
153.43%

Interpretation:
This ratio show how much of the assets of the corporation is self owned by company as compare to lease. As this ratio is decreasing

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which shows that company now owns more of its asset.

Return on Equity

2008

2009

24.76%

22.46%

Interpretation:
Return on equity is so good and is so positive sign but its percentage decreased in 2009 because there was recession globally. But it survived so well and return on equity is much better in two three years.

2008
Current ratio Liquid Ratio 1.91% 1.89%

2009
1.53% 1.49%

Interpretation:
Current ratio is much better and it is a positive sign that corporations liquidity position is much better. It was near about 2 but in 2009 it decreases because in 2009 investments were increased and claims ratio also increased which decreased liquidity but it is more than 1 which is a positive sign.

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Opportunity cost of the capital

2008

2009

12.34%

12.11%

Interpretation:
Investment return is about 12% in these three years and it is a good return on assets it means that opportunity cost of capital is much better. And it is more than interests of banks. It means corporation is investing in profitable business.

Dividend Rate
Interpretation:

2008
21.1%

2009
8.7%

It decreases in 2009 because profitability decreases in 2009. And there was high claim ratio in 2009.

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Overall Expense Ratio

2008

2009

35%

41%

Interpretation:
Overall expenses are increasing with passage of time and it is a negative sign and corporation must try to decrease these expenses. Salaries and travelling expenses are increasing it means that it is overstaffing and is also huge amounts on travelling expenses.

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Part :8

Recommendation & Conclusion

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RECOMMENDATIONS
SLIC no doubt a positive contributor in economic as well as insurance industry growth. I am not able enough to make any suggestions about the efficiency and working of the company however during my internship period I think there are some certain points , adopting of which can serve more effectively and efficiently. These points are as under It is observed that the employees were overburdened so they have work a lot. In this way their efficiency is affected and hiring more employees can reduce their work. The employees should be signed jobs for specific period and than they should shifted to other department so that they gain knowledge of other jobs. It means rotation of their jobs must be done. State life should properly advertise and Communicate to public about the services provided by it, so that more customers will be attracted. The management of company should give more incentives and pay scale of officers should be revised & improved.
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IT draw backs should be improved. Expenditures must be control, which are very high. There is also a need of proper recruitment and selection program. New young talent should be introduced to inject the new ideas

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CONCLUSION
From the above brief and wide discussion I have come to the point that SLIC insurance plays a vital role in present insurance market in Pakistan. The gross premium of the company is increasing. It was an interested experience to do internship in state life insurance corporation. The staff was highly cooperated and due to their help I learned big deal about insurance sector. I suggest that such an internship program highly integrative for the students of management so that the students should be enquired with the knowledge of practice world .I do summarize that it would be a great help to me in selection of job or future field of work.

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Part:9

BIBLIOGRAPHY & GLOSSERY

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BIBLIOGRAPHY
In the preparation internship report me discussed various books economist newspapers and visited websites. Following are references from which I took assistance in preparation of my projects on State Life Insurance Corporation. My course books Class Notes during our class lectures Special Instructions and guideline by teachers Booklets provided by the concerned organizations In house newsletters of State Life Insurance Corporation. E-Data Sources: www.statelife.com.pk www.kse.com www.iap.gov.pk www.secp.gov.pk www.businessplus.com www.wrightreport.co www.brecorder.com www.cii.co.uk/ www.lloyds.com/

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GLOSSARY
Coinsurance:
A provision under which an insured who carries less than the predetermined percentage of insurance to value, will receive a loss payment that is limited to the same ratio which the amount of insurance bears to the amount required.

Company Adjustor:
Person who settles claims or Claims adjustor who is a salaried employee representing only one company.

Conditions / Warrantees:
Provisions inserted in an insurance contract that qualify or place limitations on the insurer's promise to perform.

Contract:
A necessary agreement between two or more parties for the doing or not doing of certain things. A contract of insurance is embodied in a written document called the policy.

Correspondence:
A document used for interoffice communication.

Coverage:
The scope of protection provided under a contract of insurance; any of several risks covered by a policy.

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Cover Notes:
Known as temporary form which is used for issuing insurance policy that contains information about the client, the total amount of cash or particular stock, or property and the amount of the premium.

Deductible:
An amount which a policyholder agrees to pay, per claim or per accident, toward the total amount of an insured loss.

Deferred Compensation:
Arrangements by which compensation to employees for past or current services is delayed until some future date.

Deposit Premium:
The premium deposit paid by a prospective policy holder when an application is made for an insurance policy. It is usually equal, at least, to the first month's estimate premium and is applied toward the actual premium when billed.

Direct Loss:
Financial loss that results directly from an insured peril.

Adjuster:
A person who investigates and settles losses for an insurance carrier.

Adjusting:
The process of investigating and settling losses with or by an insurance carrier.

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Agent:
An insurance company representative licensed by the state, who solicits, negotiates or effects contracts of insurance, and provides service to the policyholder for the insurer.

Amendment:
A formal document changing the provisions of an insurance policy signed jointly by the insurance company officer and the policy holder or his authorized representative.

Application:
A signed statement of facts made by a person applying for insurance and then used by the insurance company to decide whether or not to issue a policy. The application becomes part of the insurance contract when the policy is issued.

ASC:
Administration surcharge taken by the Company while preparing the Cover

Cancellation:
The discontinuance of an insurance policy before its normal expiration date, either by the insured or the company.

Capacity:
The amount of capital available to an insurance company or to the industry as a whole for underwriting general insurance coverage or coverage for specific perils.

Cargo Insurance:

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Type of ocean marine insurance that protects the shipper of the goods against financial loss if the goods are damaged or lost.

CED:
Central Excise Duty taken by the Company while preparing the Cover Notes.

Certificate of Insurance:
A statement of coverage issued to an individual insured under a group insurance contract, outlining the insurance benefits and principal provisions applicable to the member.

Lapsed Policy:
A policy terminated for non-payment of premiums. The term is sometimes limited to a termination occurring before the policy has a cash or other surrender value.

Loss Adjustment Expense:


Expenses incurred in the process of evaluating, defending and paying claims.

Loss Ratio:
A ratio calculated by dividing claims into premiums. It may be calculated in several different ways, using paid premiums or earned premiums, and using paid claims with or without changes in claim reserves and with or without changes in active reserves.

Multi-Peril Policy:
A package policy which provides protection against a number of separate perils. Multi-peril policies are not necessarily multiple line policies, since the combined

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perils may be all within one insurance line.

Policy:
A contract of insurance or a legal document issued by the company to the policyholder, which outlines the conditions and terms of the insurance; also called the policy contract.

Policy Term:
That period for which an insurance policy provides coverage.

Policyholder:
A person who pays a premium to an insurance company in exchange for the insurance protection provided by a policy of insurance.

Premium:
The sum paid by a policyholder to keep an insurance policy in force or the price that insurance company charges for coverage, based on the frequency and cost of potential losses. Prices vary from company to company, as with any product or service.

Principal Sum:
The amount payable in one sum in case of loss or the amount on which the Company calculate the amount of premium.

Proof of Loss:
Documentary evidence required by an insurer to prove a valid claim exists.

Ratemaking:
The statistical process by which insurers determine risks and pricing for the basic

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classes of insurance.

Reinsurer:
Reinsurer known as Reinsurance Company that issues the insurance policies to any insurer.

Risk:
Any chance of loss.

Salvage:
Recovery made by an insurance company by the sale of property which has been taken over from the insured as a part of loss settlement.

SECP:
Security Exchange Commission of Pakistan

Standard Packing:
A type of packing in which any particular stock can remain without any damage.

Tariff:
It is a legal document provided to the insurance companies by the IAP. It contains all rules, regulation and rate list for issuing insurance policies that every insurance company has to follow.

Time Limit:
The period of time during which a notice of claim or proof of loss must be filed.

Treaty:
An agreement between reinsurer and insurer setting forth details of the
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reinsurance arrangement. Underwriter: The company employee who decides whether or not the company should assume a particular risk.

Underwriting:
The process of selecting risks for insurance and determining in what amounts and on what terms the insurance company will accept the risk.

Underwriting Results:
The amount of money that any insurance company gains or losses as a result of its insurance operations. It excludes investment transactions and federal income taxes.

Unearned Premium:
The portion of a premium that a company has collected but has yet to earn because the policy still has unexpired time to run.

Subrogation
The legal process by which an insurance company, after paying a loss, seeks to recover the amount of the loss from another party who is legally liable for it.

Terrorism coverage
Included as a part of the package in standard commercial insurance policies before September 11, 2001 virtually free of charge. Since September 11, terrorism coverage prices have increased substantially to reflect the current risk.

Third-party administrator

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Outside group that performs clerical functions for an insurance company. Thirdparty coverage Liability coverage purchased by the policyholder as a protection against possible lawsuits filed by a third party. The insured and the insurer are the first and second parties to the insurance contract.

Tort
A legal term denoting a wrongful act resulting in injury or damage on which a civil court action, or legal proceeding, may be based.

Total loss
The condition of an automobile or other property when damage is so extensive that repair costs would exceed the value of the vehicle or property.

Treaty reinsurance
A standing agreement between insurers and reinsurers. Under a treaty each party automatically accepts specific percentages of the insurers business.

Underinsurance
The result of the policyholders failure to buy sufficient insurance. An underinsured policyholder may only receive part of the cost of replacing or repairing damaged items covered in the policy.

Underwriting
Examining, accepting, or rejecting insurance risks and classifying the ones that are accepted, in order to charge appropriate premiums for them.

Underwriting income
The insurers profit on the insurance sale after all expenses and losses have been paid. When premiums arent sufficient to cover claims and expenses, the result is an underwriting loss. Underwriting losses are typically offset by investment
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income.

Unearned premium
The portion of a premium already received by the insurer under which protection has not yet been provided. The entire premium is not earned until the policy period expires, even though premiums are typically paid in advance.

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