state life insurance
DESCRIPTION
State Life InsuranceTRANSCRIPT
86
We shall guide who strive in our cause to
the path leading to us. Surely ALLAH is
with those who do well.
(AL-ANKABUT).
DEPARTMENT OF MANAGEMENT SCIENCES IUB 1
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DEDICATION.
Dedicated to my beloved country and
to the people who devoted their lives for
the freedom of this country.
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PREFACE.The contribution of the service to the Pakistani
economy is increasing at an extra ordinary rate and the
present financial services revolution looks certain to
reinforce that trend considerably. The context does not
claim to exhaustive and the balance must inevitably be
open to criticism, but in attempting to give a general
insight to the casual inquirer, the needs of those seeking
in-depth knowledge within particular areas must
inevitably be sacrificed.
This report covers a detail and analytical view of the
State Life Insurance Corporation. As the title that this
report is the essence of the hard working which I have
done during my internship tenure. This report has been
written in the hope that it will help anybody, who read it
carefully to obtain a real understanding of the basic
structures, functions and techniques of the different
departments of State Life Insurance Corporation. The
report is long and wordy.
I hope that the report is relatively free of errors and
will appreciate if errors are brought to attention.
UBAID-UR-RAHMAN.
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ACKNOWLEDGMENT.I thank all mighty ALLAH, the beneficent and the
merciful, who gave me a chance and enough power to
write this report. I want to express my gratitude and
thanks to the Zonal Head Mr. Tufail Ahmad Ch. , Mr.
Ishfaq Abbasi Deputy Manager PHS and specially Mr.
Imtiaz Ali for enabling me to devote part their precious
time in the presentation of this report. I feel it my
bounded duty to acknowledge with deep gratitude and
invaluable help extended to me by my respected teachers
and friends. I am especially grateful to Mr. Nazik Hussian
for his encouragement and guidance to complete this
report.
All the additional typing was elegantly effected
by Mr. Shoib Akbar, who showed considerable
cruptographical expertise, not to mention immense
patience, in making some sense out my untidy and much
annotated scripts.
To all these I can only say - Thank You. I hope that
the end product is not totally unworthy of the time and
efforts they most generously gave.
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UBAID-UR-RAHMAN.
Table of Contents
1- Company and it's Introduction.
2- Mission and Objectives.
3- Organizational Structure.
4- Divisions.
5- Departments.
6- File Movements.
7- Customer and Products.
8- Bonuses.
9- Supplementary Contracts.
10- Basic Salary and Grading.
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11- Calculations.
12- Marketing Channel.
13- Selling Process.
14- Managment Stretagies.
15- SWOT Analysis.
16- Competitors.
17- Ratio Analysis.
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INTODUCTOIN
Insurance.
Insurance Companies.
Insurance Evaluation.
Life Insurance in Pakistan.
State Life in Pakistan.
State Life in Bahawalpur.
INTRODUCTION
Insurance
Insurance means that the Probable loss occurring
in future can be so shared that the overall
impacted of total loss to any individual or section
of the society is mitigated.
Insurance can be of l i fe for the compensation in
case of normal or accidental death or of property
l ike car, bus ship, airplane, etc. in case of loss
caused by fire, f loods, earthquakes etc. insurance
provides compensation for the loss to a maximum
extent.
History of Insurance:
The need of sharing losses caused particularly by
sea peri ls was left several hundred-year ago. The
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merchant ships remaining away for months with
valuable cargo carried with them the hope of
marketing profits upon their safe return. The
peri ls of the sea however, infl icting extensive
damage to the ships and the goods loaded on
them resulting in sometimes the total disaster
ultimately caused great concern to those involved
in the business. They consequently jointed hand
to the way out and thus insurance was found to be
the only possible means to save individual from
total disaster. This idea originated from China
and then developed by England and other
European countries. In the beginning merchants
used to sit together and for certain define
amounts, members used to sign documents
accepting their share of risk in the ships or cargo
carried. This initial arrangement finally developed
to highly skil led and most scientif ic ways for
assessment of risk and underwriting and sti l l
countries. The persons signing in acceptance of
their shares are called underwriters.
Life INSURANCE:
Life insurance is a contract whereby the insure
promises to pay, in exchange of certain premium,
the sum insured, on the completion of a definite
period, or on the death of the insured person.
There is a difference between l ife insurance and
other forms of insurance l ike fire insurance,
marine insurance automobile insurance etc.
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covering immediate financial and economic losses.
In l ife insurance, it is not easy to ascertain with
exactness the total impact l ikely to occur due to
the death of the person. The values placed on the
l ife for possible assessment of the financial
repercussions anticipated as a result of death,
nevertheless, are related to a great extant and as
possible workable solution for maintaining source
of income to a maximum possible extant. In short
when a man dies, not only he but either the entire
source of income dies if he is only responsible for
producing the income for the family or important
part of source of income for the family, for the
family, in such case l ife insurance takes over the
l iabil ity and the responsibil ity of meeting family
needs.
BENEFITS OF LIFE
INSURANCE
Finacial Protection
Necessary Saving
Property Building
Loan Facility
Eduction and Marriage plan
Income Tax rebate
Retirement Fund
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STATUE UNDER WHICH CREATED:-
Life insurance (Nationalization) order, 1972 (Presidential Order X of 1972)
Date of incorporation : November 01, 1972
Legal status: Autonomous coporation under the control of the ministry of Commerce, Govt. of
Pakistan.
Principal Office: State Life Building No.9Dr. Ziauddin Road Karachi, Pakistan.
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MISSION OF STATE LIFE INSURANCE
CORPORATION
“To ensure satisfaction of our valued policy
holders in processing new business providing
after sales services and optimizing returns of l i fe
fund through quality culture and to maintain our
position at the leading l ife insurer in Pakistan.”
OBJECTIVES OF SLIC
Following are the objectives:
To run l ife insurance business in sound l ines,
To provide more efficient services to
policyholder,
To maximize the return to policyholders by
economizing on expenses and increasing the
yield on investment,
To make l ife insurance a more effective means
of mobil izing national savings,
To widen the area of operation of l i fe insurance
and making it available to as large a section of
the population as possible, extending into from
the comparatively more efficient sections of
society to the common man in town and
vil lages,
To use th3e policyholders funds in the wider
interest of the community.
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History of Life insurance In Pakistan:
Before partition, there were only three major
insurance companies named Christian Mutual,
Muslim and eastern Federal Union transacting l ife
insurance through their Head Office in the ears,
which ultimately formed Pakistan. The need for
having a composite insurance company
particularly for Muslims was felt by some of the
eminent Muslim personalities. And Eastern
Federal Union Insurance Company was established
in 1932 by the struggle of those Muslim
personalities. The Muslim Insurance Company of
Pakistan was established in 1949.
Before the nationalization of companies in 1972,
there was a big competition between companies
involved in l ife insurance business in Pakistan as
there were more than thirty companies offering
the insurance facil ity. Upon nationalization of l i fe
insurance business in 1972, State Life Insurance
Corporation was formed to take entire l iabil it ies
and assets as they related to l ife insurance
business. Starting with three units A,B and C, it
was soon merger into a single corporation. Now
including Bahawalpur Zone, there are thirty zone
of Stat Life Insurance Corporation are working in
different parts of the country with Head Office at
Karachi.
In Pak , l i fe insurance business was nationalized
by Govt., Order in March 19, 1972 and in fact this
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was an important step toward economic
development in the history of Pak.
The nationalized process was completed in two
phases. In f irst phase (March 19, 1972), the Govt.
has taken over the administration of 32
companies. After this, these were handed over to
trustee and sub-trustee in accordance to l ife
insurance nationalization order 1972.
In the second phase of nationalization (November
1, 1972) a single corporation, having three units,
came into existence by the name of State Life
Insurance Corporation (SLIC) of Pakistan.
These three units, constituted by merging of one
or more insurance companies, were named as A,B
and C units. For further improvement of the l ife
business in Pak, these units (A,B & C) were
merged together and converted into zones.
SLIC has enjoyed a complete monopoly the l ife
business ti l l 1990 when the Govt, had decided to
open it to local private sector insurers. At present
, besides SLIC, there are four other l ife insurers
operating in the country including two foreign
companies. The state Life Insurance Corporation
is reinsured by foreign insurance “Swiss RE”
(Switzerland).
REGIONAL & ZONAL OFFICES
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REGIONAL & ZONAL OFFICESDEPARMENTS:-
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Regional Off ice Zonal Off ice
LAHORE Region
Lahore (Central)
Lahore (Western)
Faisal Abad
Sargodha
Gurjranwala
Sialkot
KARACHI Region
Karachi (Southern)
Karachi (Eastern)
Karachi (Central)
Hyderabad
Mir Pur Khas
Larkana
Quetta
RAWALPINDI Region
Rawalpindi
Mir Pur
Islamabad
Peshawar
Abbottabad
Swat
Gujrat
Multan Region
Multan
Sahiwal
Rahim Yar Khan
Dear Ghazi Khan
Bahawal Pur
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1- Agency Adminstration Department.2- Human Resources Devolpment Department.3- New Buisness Department.4- Policy Holder Service Department.5- Budget and Accuonts Department.6- Personal and General Services Department.7- Marketing Department. 8- Audit Department.
NEW BUSINESS DEPARTMENT
New Business (NB) is considered the soul of
Insurance companies. Profitabil ity and
survival of the business depends on the NB.
FUNCTION OF NEW BUSINESS
In this department, as the name shows, new
contracts start between proposes and
Insurance Company. Proposes is a person who
applies for the insurance protection.
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Main function of the NB is underwriting.
This department is responsible for processing
the new business introduced by the sales
force right from receiving a proposal on the
counter to mail ing the policy document to the
policyholder. It has various section to
perform the different task relating to the
acceptance or rejection of risks for l ife
insurance, the proposal are received and
initial ly is checked in al l respects i .e.
completion of al 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 l ife insurance history of the
prospect if any.
Field officer’s or sale representatives
confidential report included in the
proposal form.
Financial underwriting i .e. source of
income, its legality and proof,
relationship between the prospect’s
income and sum assure.
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In case of non-medical scheme, the prospects
own statement and fi led officers or sales
representative’s reports have more importance.
After this assessment, the underwriting decision
is made which may be acceptance of a risk at
ordinary rated or with loading, call ing additional
evidences relating to health or f inancial status of
the prospecting for a define periods or straight
way declination. Premium rates, installments are
then checked and first premium receipts are
issued to the field force, and concerned
department l ike commission payments, agency
administration, computer division and marketing.
This is brief terms are the function on the new
business department. This is also a key function
as the underwriters are responsible for the
financial health of the l ife institution. By
accepting god risks they promote profitabil ity and
growth which help in meeting the financial
obligations of the l ife institution towards the
policyholders, its employees and the government.
WORKING OF NEW BUSINESS
The precise working of NB department is as
fol lows:
PROPOSAL NUMBER
In order to fulf i l l the recognition of the
insurance policy, NB department al locates a
number t each insurance policy for future
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references. NB department verif ies whether
the cl ient is a new customer or a past
customer.
UNDERWRITING
Underwriting is the process through which the
underwriter assesses the risk associated with
the Insurance Proposal. Underwriter verif ies
the personal information provided in the
Proposal form (See annex. No.1). If he feels
that cl ient should have a medical checkup
then SLIC has its own penal of doctors to
provide medical assistance.
PREMIUM CALCULATION
After underwriting the premium of Sum
Assured is calculated in Policy Brief Sheet
(see annex No.2) in according with the rate
book provided by the SLIC. The policy fee is
charged of Rs. 100 or Rs 2.5 per thousands of
sum assured whichever is less. Further the
rates of supplementary contracts are added in
premium.
POLICY ISSUE SECTION
After premium calculation the insurance and
revenue stamps are embossed on the policy
bond and the policy d documents is sent to
cl ient (See annex No.3) one copy of policy
document is sent of (PHS) department of
record purpose.
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UNDERWRITING GUIDELINES
Taking of Authentic Age Proof
Verification on Nominee Relation with
Policyholder
Analyzing of health and financial status
of Prosper.
Verification of stated information on
Proposal Form.
Requirement of Medical Reports and
Tests.
Analyses of Medical Reports and Tests.
Analysis of health history and family
background.
Others requirements.
BUDGET & ACCOUNTS
DEPARTMENT
This department deals in:
Cash Collection
Cash Disbursement
Salary Preparation
Budget Preparation
Inter-Zone Transaction
Agents Commission
Imprest
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CASH COLLECTION:
There are two mode of cash collection i.e., by Cash and by
Cheque. The collection is made for II Renewal Premium and I
.The premium is paid by cash in SLIC, and it is also paid by
cheque. These cheques are sent to the department. These
cheques are attached along with “ daily collection sheet”
(DCS) with full detail i.e. Banker’s name, location, date of
issue etc. and this sheet is sent to the SLIC’s authorized
bank (UBL) in Bahawalpur for collection.
CASH DISBURSEMENT:
For cash disbursement, f irst the voucher is
prepared, singed and prepared by authorized
officer, for the person to whom the payment is
made. This voucher is audited in case of having
the amount in excess of Rs.10000. these voucher
are punched (feeding) in computer. Voucher
l istings are maintained, cheques are prepared,
and these cheques are sent to concerned party.
Bank Statement is prepared by daily the
authorized bankers regarding total coactions and
payments of cheques i .e. realization of cheques.
These banks Statements are punched into the
computer. The data in f loppy regarding Cash Book
and Bank Statement is sent to Principle Office
(PO) Karachi. Different lodgers are prepared in
P.O and these are sent to SLIC Bahawalpur Zone
for further reconcil iation. Errors and commissions
are corrected.
Following l ist are prepared by this section:
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Data Wise Total List of Cheques
Encased.
List of Cheques Issued (Cash
Book)
List of Unmatched Cheques of
Bank & Cash Book Files.
Along with the above mentioned l ists, a “Daily
Cheques Realization Report” is prepared in the
following manner:
Total No. Of Cheques Deposited in Dec. 19
—
****
*
Total Amount of Cheques Deposited in dec,
19---
****
*
Total No. Of Cheques Realized to day ****
*
Total Amount of Cheques Realized Month
To date(MTD)
****
*
Total Amount of Cheques Realized (MTD) ****
*
Realization Ratio ****
*
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SALARY PREPARATION:
In B&A Department Salary of the employees is
calculated. Different al lowances are offered to
the employees. Loan facil it ies are availed for the
employees. Tax is deducted from Salary. A
provision of recoveries of the loan is made.
Following are the addition to the salary of the
employees: (see Annex No.)
Basic Pay.
Special/Technical Pay
House Rent Allowance @80% and 75%
of Basic Pay for staff and officer respectively.
Conveyance Allowance @Rs. 600 and
Rs. 500 p.m. for officer & staff respectively.
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Car maintenance Allowance @ Rs.550
and Rs. 750 for, only staff, unmarried and
married respectively.
Tea Expenses @ 7% of Basic Pay.
The deductions from salary are as fol lows:
Provident Fund (PF) Contribution @
1/12 t h of the Basic Pay.
Union Subscription @ Rs. 50 and Rs.
30 for officer & staff respectively.
Salary Advance Repayment (24
monthly installments).
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PF Loan Installement-2 (50 monthly
installments).
Pf Loan Installement-1 (26 monthly
installments).
Convince Loan Recovery (40 monthly
installments).
House Building Loan Installments.
House Rent Installment (18 monthly
installments).
Following are the different types of loans,
which can be availed by employees of SLIC
managed by salary section:
Two-Month Advance Salary.
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Loan-I against PF (3 Basic Pay).
Loan-2 against PF (12 Basic Pay or
90% of Pf employee own contribution,
whichever is less).
Conveyance Loan @ Rs. 55000 and Rs.
150000 for staff & officer respectively.
House Building Loan.
After preparation of salary payable (Additional &
Deduction) the data is purchased (feeding) into
the computer database. Different types of l ists
are prepared such as total loan payment,
al lowances etc.
BUDGET PREPARATION:
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Budget is prepared annually. Proposed Budget is
sent to PO. The funds of different heads of
proposed budget are transferred to Zonal Office
Bahawalpur wholly or partial ly. It is assumed that
each year First Year Premium (FYP) is increased
by 25%. According to this base the commission of
the agents are calculated and budgeted.
Following are the main types of budget:
Income Budget
Claim Budget
Commission Budget
Admin, Expenses Budget
Admin & Claim Budget is estimated by considering
previous year actual expenses. Zonal & Regional
Offices have separate budgets. If the funds
transferred from PO Karachi are less than the
proposed budget, additional funds are acquired
from PO whenever required. The Budget Register
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is maintained in the department for
employee/party/expense is debited and cash is
credited. No additional expense is made when the
budget is in short.
INTER-ZONE TRANSACTION :
There is separate section for inter-zone
transaction in budget and accounts. Whenever any
expense is made on behalf of any other zone, the
debit note is issued to the concerned zone for
that expense. Similarly, other zone can issue
debit note to Bahawalpur Zone is they have
occurred the expenses on behalf of Bahawalpur
Zone.
The expense incurred on behalf of other zone can
be claimed, salary, TA/DA, claim investigation
expense, uti l ity, Meeting expense, entertainment,
repair & maintenance, rent, Medical expense etc.
COMMISSION SECTION:-
In B&A Department, the commission Section
calculates the commission. First Premium Receipt
(FPR) is prepared by the New Business
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Employee
Grade
Loan % age Rate
(interest)
1,2,3 Rs. 150000 6
4 to 7 Rs. 200000 6
7 & onward Rs. 2155000 (or
30 Basic Pay
whichever is
high)
10
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Department is sent to Commission Section to
calculate the commission of agent. It has four
copies, one for commission section and other
three for agents (SR,SO,SM).
The commission rates vary with the amount of FYP
and term of the policy. The Mode Bonus is given
to SR if the premium installment is annually,
@1.5% of FYP. All ied Bonus is given to SO,SR
@4.35% of FYP P.A., paid by monthly if they
have 72% of I I year persistency, 90% renewal
persistency, 10 SRS and last year FYP of
Rs.120000 and Rs.150000 respectively. Production
Bonus is given SR,SO & SM if they have last year
FYP of Rs.6000,Rs.15000, Rs.50000 respectively
and have minimum 70% of I I year persistency.
Further the tax is deducted @10% of commission
from the commission of agents. In commission
section different types of loans are given on
fulf i l lment of certain requirements and targets to
agent i .e. Emergency Advance, Eid Advance,
Conveyance Loan, House Building Loan.
COMMISSION RATES
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F i r s t Y e a r R a t e
F o r S a l e s
R e p r e s e n t a t i v e
P r e m i u m T e r m ( Y e a r )
P r o d .
B o n u s
1 4 - O c t 1 5 - 1 9
2 0
A b o v e
R s . 1 - 3 9 9 9 2 5 % 3 0 % 3 5 % - -
4 0 0 0 - 5 9 9 9 2 5 % 3 0 % 3 5 % 2 . 0 0
6 0 0 0 - 7 9 9 9 2 5 % 3 0 % 3 5 % 2 . 5 0
8 0 0 0 - 9 9 9 9 2 5 % 3 0 % 3 5 % 3 . 0
1 0 0 0 0 a b o v e 2 5 % 3 0 % 3 5 % 3 . 5
F O R S A L E S O F F I C E R
P r e m i u m T e r m ( Y e a r )
1 0 T o 1 4 1 5 - 1 9
2 0
A b o v e
1 - 1 9 9 9 9 1 3 . 1 3 % 1 4 . 8 8 % 1 7 . 5 0 %
2 0 0 0 0 - 3 4 9 9 9 1 5 1 7 2 0
3 5 0 0 0 - 4 9 9 9 9 1 6 . 8 8 1 9 . 1 2 2 2 . 5
5 0 0 0 0 - 7 4 9 9 9 1 8 . 7 5 2 1 . 2 5 2 5
7 5 0 0 0 - a b o v e 1 9 . 5 2 2 . 1 2 6
F O R S A L E S M A N A G E R
P r e m i u m T e r m ( Y e a r )
1 0 T o 1 4 1 5 - 1 9
2 0
A b o v e
1 - 4 9 9 9 9 4 . 5 0 % 5 . 1 0 % 6 . 0 0 %
5 0 0 0 0 - 9 9 9 9 9 6 6 . 8 8
1 0 0 0 0 0 - 1 4 9 0 0 0 0 7 . 5 8 . 5 1 0
1 5 0 0 0 0 - 1 9 9 9 9 9 8 . 2 5 9 . 3 5 1 1
2 0 0 0 0 0 - a b o v e 9 1 0 . 2 1 2
S E C O N D & O N W A R D Y E A R S R A T E S
F O R S A L E S M A N A G E R
S R S O S M
I I Y e a r 1 0 . 0 0 % 2 . 0 0 % 1 . 0 0 %
O n w a r d 5 1 0 . 5 0 %
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COMMISSION PAYMENT PROCEDURE :-
Following are three methods used by SLIC for
payment of commission to agents:
Payment by cheques
Authority Card.
Payment by Post.
In first method, the payment is directly made to
the agent by cheques. In the second method, the
payment is made to other person authorized by
agent by signing the “Authorized Card” (See
Annex NO0.5) in the third method the
commission is paid by post to his postal address
on his direction.
PRIZE AND AWARD:-
The prize and award are given to field force who
are achieved the highest FYP at any time
announced by SLIC.
EMERGENCY ADVANCE:-
It is given to SO,SM on the previous year
earning on the renewal premium. For SR
previous 2 year earning become entitlement of
loan.
EID ADVANCE:-
Previous year total earning of SR,SO and SM
becomes entitlement.
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CONVEYANCE LOAN:
It is given to SO,SM only on the condition of
having 5 year service association with SLIC and
two guarantors. The loan can be taken up
Rs.40000.
HOUSE BUILDING LOAN:
To obtain to this loan minimum association with
SLIC is 15 years and pervious year renewal
premium becomes entitlement.
IMPREST SECTION:
Imprest is the additional privileges given to the
employees (Area Managers). Annually, the
Imprest Entitlement is made for the AM by
considering the previous progress in the
business. Different Circulars arrive from PO to
Bahawalpur Zone mentioning the different type
of privileges on different FYP targets. These
privileges are free petrol, telephone, electricity,
clerk wage,
stationary and other facil it ies etc.
POLICY HOLDER SERVICE DEPARTMENT
PHS is the abbivation of "Policy Holder's Service" department. As the name indicating that all the services for policy holder are performed here. We can also call
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these services, after sale sevices. It is the most busy department of SLIC in each zone. Every service process was taken very carefully in the last conference of SLIC. It was announced that every service would be completed within 15 days. Otherwise State Life pays restriction plenty to the policy holder. The head of PHS is also sitting in P.O, Karachi. His post is G.M, then each region contains D.G.M lastly the head of PHS deptt. in each zone is deputy manager.
Followings are the functions performed in PHS deptt.DEATH CLAIM
When a person dies, his relatives or heirs tell SLIC agent or directly to the zonal office. SLIC demands certain documents like1. Application for disease.2- NIC.3- Disease and nominators are attested.4- Death certificate from union council.5- Original documents (ORs).
Firstly deptt. manager or his colligue is appointed for the investigation of this case. He also checks FIR from the nearest Thana. If case is clear, then SLIC tries his best to give claim as soon as possible.
In case of accident, same process and way of investigation is performed. The place of investigation is also checked by the investigators seriously.SURRENDER
Another service of this deptt. is surrendering. If a policy holder wants to finish his policy due his cumpolsary need of money. Then he has two options. Firstly, he can take loan, from his own property. After requirement's completion he pays 13% interest and continues his policy. Secondly, if his need is not fulfilled with this amount then he can surrender his policy. But he can't gain all his amount because he is breaking the contract.
Followings are the required documents.1- Application.2- NIC & attestation.3- Original receipts.
After all these completions surrender value is based on your cash value.
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ALTERATIONWhen policy holder wants some changing in his term,
sum assured then this changing is called Alteration of policy.
e.g. A policy holder has a policy of sum assured 2,00,000 and he is not satisfied to this. He wants to increase it. This is called Alteration.
TERM CHANGING – A policy contains 20 years to be matured, but policy
holder wants to decrease it. He thinks that after 15 years he would need this amount. This is another type of Alteration.
Followings are the requirements for Alteration.1- Original receipts.2- Alteration fee = 25 Rs.3- Alteration performa.4- Form.5- Application.6- I.D. card.NOMINATION CHANGE
3rd kind of alteration is nomination change. First a policy holder nominated his wife but after some time he gave divorce to her wife and now he wants another person for nomination. FILE TRANSFER
If your policy record is in Multan zone and now you are in Bahawalpur. Then you can tranfer here by application.MATURITY CLAIM
When a policy goes to its maturity, it means that its term is completed. SLIC sends a letter to its policy holder.If documents, original receipts, all premiums are right, then a healthy amount with bonuses goes to policy holder's account. Otherwise if you had taken loan and could not return 13% interest and having certain cash value in your policy, then this loan plus interest of that period would be deducted. All maturity claims goes to your account.LOANING
Other facility of SLIC is loaning. You can get loan from your account. Most of the people are allowed 70% loan from their own accounts. In case of serious need 80%
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is allowed to be taken as loan. But with an emergency case and with the help of an authority you would be awarded 90%.
But it is beneficial for policy holders to take a minimum loan from their account. e.g - if you take 70% loan, then 30% will remain in your account and its cash value will remain take it inforce for more time. If you take 90% loan, then only 10% will remain in your account and it will cover less time to take policy inforced.
No deduction of Zakat from death claim. While Zakat is charged from both surrender and maturity claim.REVIVAL
Charging of late fee or extra fee is called Revival, if
the given premium date has been passed. Then till 30
days there is no extra fee, because these 30 days period
is called grace period. Then from 30 to 90 days when you
go to submit premium without late fee, then it may be
demande "DGH" (Declaration of Good Health) by the head
of this department. But from 90 days late fee will start. At
this time PS (Personal Statement) can also be demanded.
These all are the benefits of suspense accounts. But the
loss of suspense account is, party will never get the claim.
Because it is non-credit in account. Another term is
Special Revival, which means if you have forgotted your
policy after paying at least two premiums and then within
5 years it remains inforce, then policy holder has the
chance to renew it, e.g., he is unable to pay the remaining
premiums plus their late fee. Then he can renew it by the
starting of runnig year. In other words if you got your
policy in 97, then now it will skip to 2002.
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CONSTITUTION OF CLAIM COMMITTEE
The claims committee of principal office for taking
decisions on all the death & injured claims refers to the
principal office is reconstituted as follows.
1:- D.G.M (PHS) P.O. Conveyor.
2:- Manager (PHS) P.O Secretary.
3:- Manager (PHS) P.O Member.
4:- Manager (Oversees) Member.
5:- Manager (C&P) Division. Member.
PERSONAL & GENERAL SERVICE
DEPARTMENT (P&GS) The office & general matters are dealt in P&G
Department. This department has the sole
responsibil ity and authority of the disciplinary
action of the employees. Selection, recruitment,
termination of the employees is the main
functions of the P&G Department. This
department also deals in medical faci l ity to the
office employees, leaves and similar other general
services. The daily correspondence is dispatched
in this department. Following are the main section
of this department:
MEDICAL SECTION :
All this hospitalization expenses are beard by
SLIC provided that these are incurred in approved
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hospital. The expenses of medicine are
reimbursed. The reimbursement of medicine is not
al lowed to staff (having grade 1 to18) but they
are given Rs.600 p.a. in shape of salary as
medical al lowance.
RENT SECTION:
When sale Manager (SM) is promoted to Area
Manager (AM),he is categorized as A,B,C and he
has entitle to have his own office at his choice at
the expense of SLIC. A good location is selected
by the A.M. after selection of place, Zonal Head is
informed about the location, by application
written by A.M. this application is transferred to
P&GS Department for the analysis of location of
the office. The Zonal Rent Committee (ZRC)
annualizes this location. 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 the categories of
A,B,C of Am is Rs.2000, Rs.2000, & Rs.1000 P.M
respectively.
CAPITAL SECTION:
This section responsible for purchase, sale and
maintenance of furniture & fixture, equipment
etc. a Zonal Procurement Committee (ZPC) is
constituted for the purchase of assets. The assets
are purchased from the suitable supplier after
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critically analyzing the quotation offered by
different venders.
Each year assets are depreciated @10% p.a. the
entry for the purchased assets is made in the
Register for Fixed Assets. Each ear the closing
balance is intimated to PO Karachi.
STATIONARY SECTION:
This section maintains the record of stationary
such as paper, pencil , envelops, printed letters,
form, calculators, dustbin, etc. whenever any
department requires the stationary, the
concerned department fi l ls a Requisition Slip. The
stationary is issued to the concerned department
and it is recorded in the register.
LEAVE SECTION:
Following are the main two types of leaves:
Casual Leave
Medical Leave
20 days casual leaves are allowed to al l
employees in a year. The medical leave or
application leave is al lowed for 48 days in a year.
Unused leaves are accumulated and after two
years these leaves in excess of 180 das can be
encased. In case of death all leaves, not uti l ized,
can be encased.
PERSONAL SECTION:
All the employee matter such as appointed,
promotion, demotion, transfer and allowances are
dealt by personal section. Annual Confidential
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Report-ACR (see annex N. 10 for ACR) the
employees are prepared, 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 computer authority for this
appointment of officers is done by Principle office
(PO) Karachi or Regional Office. Selection
Committee constituted by Zonal Head conducts a
test and interview.
For promotion of the employees, there ACR’s are
necessary and minimum three years are required
to remain in one cadre. Each year he employees
are promoted by the criteria and instructions set
by PO Karachi. PO or Regional Office does
promotion of officers.
AGENCY DEPARTMENT Service provided by the SLIC is intangibles
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
plays an effective role in sell ing of tangibles
products (Insurance Plans). In order to maintain
the record of the field force agency department
was established. The main function of this
department includes recruitment, promotion, and
termination of the field force, al l ied and medical
faci l ity for f ield force. This department is also
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responsible for insurance and renewal of l icense
to the field force.
RECRUITMENT:
The Sales Representative (SR) is appointed by
SO/SM. The requirement and conditions for the
appointment of SR is as fol lows:
Minimum qualif ication is required metric.
Age at entry must be than 18 years.
Annual quota for SR is Rs. 10000.
Application for the insurance of l icense is
necessary and it is renewed after each 3
years.
An application Form, along with l icense fee Rs.
50, attested photocopies of documents and
Nomination Form is submitted to the agency
department. A code number is al lotted at the
submission of application to SR and he can start
working as agent of the SLIC of Pakistan.
PROMOTION:
SR is promoted, upon fulfi l lment of certain term
and condition and on achievement of business
targets, to SO. Similarly SO is promoted to SM
and SM to A.M. fol lowing is the criteria:
FROM SR TO SM:
Two years working as SR:
Must have secured minimum Rs. 75000 FY
during immediate preceding two years,
but in any one calendar year, the FYP
should be less than Rs. 25000.
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Must have at least 20 policies in force on
different l ives.
Must have a achieved a minimum Second
Year Persistency of 70% in the immediate
preceding year.
Must have achieved a minimum Renewal
Persistency of 90% in the immediate
proceeding year.
FROM SO TO SM:
Must have working of minimum 2 years
as SO.
Mush have secured minimum Rs.250000
FYP in the immediate proceeding two
calendar years, but the FYP in any one
calendar year must not be less than
Rs.60000.
Must have at least 80 policies in force
in his/her organization;
Must have minimum Second Year
Persistency of 70% in the immediate
proceeding Year;
Must have minimum renewal
persistency of 90% in the immediate
proceeding year;
Must have minimum 4 productive SR.
FROM SM TO AM:
Must have working at least for 3 years
as SM;
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Must have secured the following total
FYP for category A&B:
A= Rs.45,00,000
B= Rs.36,00,000
And last year FYP must not be than:
A= Rs. 20,00,000
B= Rs. 15,00,000
Number of policies in the last year must
not be less than:
A= Rs.200
B= Rs. 150
Must have minimum Second Year
Persistency of 70% in the immediate
proceeding year and minimum second
year persistency of 65% of the previous
year of the immediate preceding year;
Minimum 2 SO should be qualif ied to
sum;
Annual quota must have:
A= Rs. 30,00,000
B= Rs.18,00,000
TERMINATION & DEMOTION:
Any agent of SLIC, who behave negatively,
violates the rules & regulation or indulge fraud or
mal-practice, can be termination 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 l icense to work as agent for SLIC is issued by
the Controller of Insurance Karachi. At specific of
t ime, a l ist of the field force is transferred to
controller of Insurance Karachi for new and
renewal of l icense. The l ist of l icense fee is given
below:
SR (New License for
Ist Year)
Rs. 59
SR (Renewal of
License)
Rs. 70
SR (Renewal with
late fee)
Rs.
125
SR/SM (Renewal of
License)
Rs.15
0
SO/SM (Renewal with
late fee)
Rs.20
0
List of Field Force in Bahawalpur Zone
Field Cadre No. Agent
SR 571
SO 189
SM 73
AM 11
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HRD DEPARTMENTHRD is the abrevation of " Human Resource
Devolpment ". This dept. trained the field force to inhance
the people. It teaches throughout the Marketing channel
with their special courses.
Followings are the courses for field forces, because
this team is a front line of SLIC.
Courses Marketing
BTC ISR
BTC SO
ADP ISR
MOP SM , AM
MOSL SO , SM
MMS AM,SM
I have attended the BTC course. Following is the
detail.
Training and courses give the following benfits:-
1:- Professionality.
2:- Service Upgrading.
3:- Liklihood habits.
4:- Planning.
Target attaining:-
Time.
Income.
Place.
Following things are the key terms for a
marketor. Before going into a market.
ACTION
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A = Active. C = Confidence. T =
Thankful.
I = Intelligent. O = Organized. N =
Noble.
KASH CASH
K = Knowledge.
A = Attitude.
S = Skill.
H = Habit.
You can get all wishes with the help of
these terms and then you can cash everything. If you are
unable to hold it then this English " Cash " will change
into Urdu " Kash ".
Your basic target is SALE.
S = Smile.
A = Attitude.
L = Love.
E = Evaluation.
BUDGETING (PRACTICAL PLANNIG)
Monthly Expenditures. Forecasting.
House rent 3000 Utility bills 1000
Food , Dressing 3000
Transportation 1000
Customer dealing 1200
Other expenses 800
Total. 10,000.00
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To cover these expenses you have to income through
this forecasting.
MONTHLY INCOME FORECASTING
Income 10,000
Premium 25,000
Policies 10
Meeting 100
Name obtained 200
Working days 20
Meeting / day 5
The main purpose of the course is " To think in
advance " and this is the basic planning.
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INTERNAL AUDIT DEPARTMENT
This department plays a supervisory role
of al l of the all the other departments by checking
and verif ication of al l the working done by the
departments according to the rules and
regulations provided b PO Karachi t ime to time.
These rules and regulation are provided to al l the
Zone through Pakistan in shape of circular. These
circulars are attached in the book, which is called
“Key to PO Circular Volume”. All working of the
departments are verif ication according to this
book. In this way, the frauds, errors, and
omission are detected.
TYPE OF AUDIT:
Pre-Audit
Post-Audit
When the audit is done before making payments,
it is called pre-audit. Audit conducted after
making payments is called post Audit. Pre audit is
conducted for al l the big payments such as
purchase of assets, payment at maturity of policy,
payment on death claim etc. Post audit is
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conducted for al l-to-day expenses such as
traveling expenses, stationary etc .
CUSTOMERS OF STATE LIFE
1- EXTERNAL CUSTOMERS
External customers are those who have no link with
SLIC. They are the common people which are the main
target of sales force.
2- INTERNAL CUSTOMERS
Internal customers are infect those people who have
direct or indirect link with SLIC. These are employees of
the corporation and their relatives.
MARKETING PRODUCTS Table Name
01- Whole Life Assurance.
03- Endowment Assurance.
04- Progressive Premium.
05- Three Payment Plan.
06- Joint Life.
07- Child Protection.
09- Single Premium Endowment.
17- Optimal Maturity.
18- Rural Life.
19- Jeevan Sathi.
36- Shad Abad.
73- Sunehri Policy.
75- Child Education and Marriage(built in)
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76- Child Education and Marriage(Non built in).
N.D.SCHEME
Policy fee is not charged on these plans.
18,71,72,73,77.
If policy sum assumed is 300,000 or more 50 paisa is
rebate on basic rate.
There is a 8% rebate for staff employees on planes.
01 to 07.
51 to 57.
These all plans are finished from July 2002.
02,21,51,52,53,54,55,56,58,59,62.
01:- Whole Life Assurance
Age limit = 10-65 years.
Minimum premium.
This is for low income people.
Bonus rate is Maximum 50 pasia is rebate on factor
which starts from three lack sum assured.
e.g.
Age = 34 years.
Maturity = 85 years.
Premium paid = 51 years.
= 500,000
23.49 - 0.50 = 22.99
22.99 + 4 ATB = 26.99
26.99*500 = 11495 *100
Premium. = 115
Maturity Claim:-
Regular Bonus 56*5*500 = 140,000.
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102*47*500 = 234,600.
Terminated 30*20*500 = 300,000.
= 32,86,000.
Death Claim
S.A. = 500,000.
Accedental claim = 500,000.
Age at Accident = 55 years.
Regular Bonus = 500*5*56 = 140,000.
500*16*102 = 8,16,000.
Terminted:-
500*11*30 = 1,65,000.
=21,21,000.
AIB added 2,85,495
Rs.
03:- Endowment Assurance
Age term = 20-65 years.
Maturity age = 75 years.
It's benefit is that time duration is on your wish.
This policy has a single nominee.
Age = 37 years.
Term = 20 years.
FIB = 15 %
ADB = 1.25 %
59.86 Factor + 1.25 ADB = 61.11
61.11+100 Policy fee = 62.11 Premium.
04:- Progressive Premium
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Maturity Claim:-
S.A = 100,000
Regular Bonus = 100*5*48 = 24,000
100*15*94 = 1,41,000
Terminated
100*10*30 = 30,000
= 1,95,000.
1,00,000 will also be added.
This will become 2,95,000.
Special terminated Bonus:- 10*10*100 = 1,00,000
=3,05,000 Rs.
Death Claim:- If death 2nd year
= 1,00,000
Accedental Claim = 1,00,000
Regular Bonus = 48*1*100
= 2,04,800.
05:- Three Payment Plan
This is special for buisness man people.
Term = 18-30 years.
Terms:- 18,21,24,27,30 years.
Maturity will on every 6th year if term is 18 years.
e.g.
25% claim will be paid after 06 years.
25% claim will be paid after 12 years.
50% claim will be paid on maturity period.
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Best Use:- When you got 25% claim you can fix it in bank
scheme, after 10 years this amount will be 4 times.
Premium:- Age = 42 years
S.A = 50,000
Term = 21 years.
61.09*50 = 3054.5
3054.5 + 100 = 3154
` 07:- Child Protection
Child age = 6-15 years
Donar age = 20-50 years
Children have no alloted any suplimentary
contract before 5 years old. After 5 years age ADB can be
added.
If S.A is greater than 1,50,000 then under writer can
demand " Reject Medical Test ".
If Father Died .
Premium payment stops. Till maturity 10%
scholarship anuualy goes to
children. At maturity date claim plus bonuses will go to
children.
If Children Died .
If child died after 1st year of policy then 10% of S.A
+ 10% of Bonus will be. If after 2 years of policy then 20%
of S.A + 20% of bonus will go to father. After 10th
premium complete S.A + complete bonus will go in each
case.
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18:- Rural Life
Age = 20-55 years
Term = 15 or 20 years
In accidental case 3 times claim will paid.
In accidental case but with any claim will be paid.
The other facility for policy holder is that no late fee
will be charged within 8 months after premium paid
date.
This policy is free from policy fee.
Premium:- Term = 20 years
Age = 21 years
S.A = 1,00,000
59.12*100 = 5912
5912 + 100 = 6112
19:- Jeevan Sathi
Premium single
Protection double
If any one dies, the other partner gets claim. If
the other also dies, then the claim goes to the Hearis.
Isolated medical for both partners. Separated filling of
proposed forms. Each can take suplementory contract.
Table 19 = WP + TIR + 03
Equal age consideration.
Women age = 24 years - 2 = 22 years
Man's age = 34 years
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Difference
34 - 22 = 12 years
This difference will see in the 4 will deduct from the
elder age.
Medical will be demanded if FIB si more than 25%
Man = 34 years
Woman = 24 years
Term = 20 years
S.A = 1,50,000
ASB = 1.25 Rs
FIB = 15%
56.32 + 8.22 (15% FIB) = 64.54
64.54 + 1.25 (ADB) = 65.79
65.79*150 (S.A) = 9868.5
9868.5 + 100 (premium fee) = 9968.5
36:- Shad Abad
Age limit = 20-60 years
Term = 10,15,20,25
In case of matured death 2 times claim willl be paid. In
case of accidental death 4 times claim will be paid. If AIB
added then 5 times claim will be paid in case of death. FIB
& AIB can also be added with the wishes of underwriter.
T-36 = ADB + TIR + 03
Premium.
S.A = 2,00,000
Age = 25 years
Term = 20 years
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53.45*200 = 10,690
10,690 + 100 = 10,790
73:- Sunehri Policy
Bonus rate = 115/1000
It is same of long life, plan,saving and protection.
Age limit = 20-60 years
Age = 34 years
S.A = 1,00,000
He wants no increase in 6% then this will proceed
like other policies.
If he wants to renew 6% then medical will be
demanded. No policy fee, no rebate. Suplementory
contracts.FIB, ADB, TIR.
Contracts and benefit of suplementory contract starts
from 3rd premium.
75:- Child Education and Marriage
Every person can get this for his nephew, son etc. In case
of policy holder's death 24% FIB scholarship goes to
children. But birth certificate will be demandedat maturity
or death. In case of also child's death the claim goes to
hearis. Cash value can get no suplementory contract
added to children.
Term = 18,21,24
FIB = 24%
N'D Scheme
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For mental, abonormal, halfset people + aged people +
unfit people.
But man get through 03 or 05.
Age limit = 20-58 years
Term for 03 = 10,15,20
Table 05 Term = 18,21 years
No suplementory contract. Claim will only in case of
accendental death in first two years. If after 2nd year,
natural death happened. Then one year's claim back after
3rd premium, complete amount received. Nothing
should be required in this scheme.
BONUSES
Routine.
Terminal.
Special Terminal.
Interrum Bonus.
Regular ( Routine ) Bonuses:_
Time First Five Years After Five Years
<20 56 102
20> 48 94 01-Endowment.
15-19 35 81
10-14 20 60
20< 35 09
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15-19 25 59 02-Payment
plan
10-14 19 53
TERMINAL BONUSES
At the maturity time or at the death time if the policy
inforced till after 4 years. After the 10th premium,
terminal bonus starts. This bonus is 30 Rs. / 1000 at the
premium, which is maximum at 600 Rs. per thousand.
e.g.
t-03
S.A = 100,000
Term = 25 years
Premium = 5000
100 (S.A)*15(Yrs. remaining)*30(Rate) = 45000
SPECIAL TERMINAL BONSUES
In case of FIB year in 2002 at policy maturity,
this bonus will be given to you. This will be given to you
at each last 10 years premium with the rate of 10 / 1000
which is maximum.
200 / 1000
e.g.
t-03
S.A = 100,000
Term = 30 years
FIB
100(S.A)*20(Yrs. remaining)*20(Rate) = 2000
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INTERRUN BONUS
This is given as interrum bonus, which is given at
terminal bonus.
e.g.
Special bonus is given in 2002, but it does not goes
to policy holder and PH died. In this case the bonus which
is delievered in 2003, will also be given to policy holder.
e.g.
During 2002 a terminal bonus is given to Ubaid. But
the bonus certificate does not find to Ubaid, and such a
mistake happened. Then this will go to Ubaid's claim as
interrum bonus.
SPECIAL BONUS
Condition = Policy should be inforced when this
bonus is announced.
e.g.
premium of 94 will be paid in 95's premium date.
SUPPLEMENTARY CONTRACT
ADB.
AIB.
FIB.
TIR.
WP.
SWP.
SUPLEMENTORY CONTRACTS
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ADB
Double claim paid from 5-55 years. ADB become 4 times in
ShadBad automatically. In table 18 this is 3 times, but in
case of injury or death with agricultural tool this will paid
5 times. Non external or intetrnal injury effect the
demand of ADB claim. Notice of claim is attached to the
documents when this contract starts. This contract is
checked within 90 days of death. has the right to
examine the body at any date. Termination in case of
death claim, or if goes to sixty years age. If you want to
include it in case of revival then this will happen
according to the rules of. Risks which are excluded in this
contract are in murder, heat stroke, in arresting, games,
pragrency, any effect from alcohol drug etc.
AIB
In case of death, double claim will go to party. In
accident, if two main organs, two arms, two legs, two
eyes or one arm, leg or eye died then complete claim will
be charged and all the premium life and on maturity.
Same Assured + Bonuses of Premium paid. But if one
main organ destroys
e.g.
One arm or one leg demage then half of the claim will
be paid but no rebate in premium. In case of one eye
1/3 of S.A will recieved. Finger of Shahadat or thumb
destroy, then 1/4 of S.A will recieved, no rebate in
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premium. If there is any serious injury then 5/1000
recieved for 52 weeks. If injury is more than 15 days.
But after 52 weeks 100/1000 for 10 years will be
recieved.
Term = 20-55 years
FIB
It's limit starts from 10-50% and 10-25% . No medical
charge but after 25% FIB medically you will checked. In
case of death monthly scholarship paid.It's term is from
10-45 years. Age limit is from 20-50 years. Protection of
contract will remain at 65 years age. This contract
terminates on Expiry date, if the policy lapse, surrender
or on any policy anniversory at prior notice by the policy
holder. If your policy is on Revival then offcoursty it's
amount will be added.
TIR
Friend goes to Dubai, for two or three years and
gained a contract. That if your accident happened at any
place then it's equal amount goes to your account.
Term is from 10-25 years.
Age limit is from 20-60 years.
Maximum rate of TIR is 3 times. It's protection remains at
70 years age.
Because these contracts are of 2 or 3 years, so mostly
factory honours, driver people get this.
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SUPLEMENTORY CONTRACT RATES
Clerk, Professionals etc.
AIB = 4 Rs
ADB = 1.25 Rs
Buisness man
ADB = 1.5 Rs
AIB = 5 Rs
Former
ADB = 1.88 Rs
AIB = 6 Rs
Labour
ADB = 2.5 Rs
AIB = 6 + 2 = 8 Rs
FIB is on the wish of policy holder.
Followings are the plans which are off from July 2002.
02,21,51,52,53,54,55,56,58,59,62
SALARY AND GRADING
Grade Initial Pay Increment Max. Pay
1 1545 80 3456
2 1788 100 3868
3 1849 102 3991
4 2037 118 4515
5 2105 133 4898
6 2652 149 5781
7 3374 288 13454
8 4990 350 11990
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9 7200 490 15530
10 8970 610 18120
11 12630 640 22230
12 13660 680 23860
13 15920 710 26620
14 18420 900 30120.
SWOT ANALYSIS
Strength.
Weakness.
Opportunities.
Threats.
SWOT ANALYSIS“There is an old Spain saying that to be a
bullfighter you must first Lear to be a
bull”.
SWOT stand for strength, Weakness,
Opportunities and Threats. The main aim of this
analysis is to identify the extent to which the
current strategy of the organization and its more
specific changing taking place in the business
environment. The idea of SWOT analysis is to
DEPARTMENT OF MANAGEMENT SCIENCES IUB 61
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undertake a more structured analysis so as to
yield so as to yield f inding, which can contribute
the formulation of strategy.
STRENGTHS
SWOT Analysis of SLIC is as fol lows:
Field force Management
Good image
Excellent set up
Real estate division (investment
portfolio)
Training academies & training
centers
DEPARTMENT OF MANAGEMENT SCIENCES IUB 62
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Marketing division
Advertising & Sales promotion
Computerization
Market leader
Return (bonus to policyholder)
Government security
FIELD FORCE MANAGEMENT :
SLIC has ful-f ledge HRDD in most ZONAL Offices
organized by qualif ied trainers and equipped by
modern equipment to mange and train f ield force.
GOOD IMAGE:
DEPARTMENT OF MANAGEMENT SCIENCES IUB 63
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SLIC is an old insurance company operating in the
Pakistan and has created the good image and
good wil l in the eyes of general public. This is the
strength of SLIC.
EXCELLENT SETUP :
SLIC is a large Life Insurance Company in Pakistan
and have 27 Zonal Offices and 5 Regional Offices
throughout the country.
REAL ESTATE DIVISION (INVESTMENT
PROTFOLO ):
SLIC has well-equipped and computerized Real
Estate Division in principal office (PO) Karachi
supervised by highly qualif ied staff, engineers
and investment analysts.
TRAINING ACADEMIES & TRAINING
CENTERS :
SLIC has 3 training Academies at Karachi, Lahore
and Rawalpindi and 26 Training Centers in zonal
offices. In 1998, 1946 courses and seminars,
ranging from Basic Courses to advanced Programs
l ike ADP, MOP and MMS of LIMRA (USA) had
conducted.
MARKETING DIVISION:
This division is backbone of SLIC. During 1998,
25486 young and educated people were inducted
as SR in the sale force, this raising its strength to
256,814, inclusive of SO & SM.
ADVERTISING & SALES PROMOTION:
DEPARTMENT OF MANAGEMENT SCIENCES IUB 64
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During 1998, a new penal of four advertising
agencies was selected. Outdoor advertising such
as installation of Unipole Hoarding display of
commercials in PTV is done and other publicity
materials such as Calendars, Stickers, Eid Cards,
and Posters are produced to boost business
activities.
COMPUTERIZATION:
About 2/3 working is computerized in SLIC. The
plan to computerized total working is under
review.
RETURN (BONUS TO POLICYHOLDER):
SLIC provides different types of bonuses as
Reversionary, Terminal, Interim, One time, Golden
and Special Reversionary Bonus to the
policyholder.
GOVERNMENT SECURITY:
It is the main strength of SLIC. Due to this factor,
the image and good wil l for SLIC is further
enhanced:
OTHERS:
It is old and most experienced organization.
PO conducts marketing survey to analyze
environment and develop new plans.
Employees are fully devoted and highly paid
workers as compare to other organization.
It has highest paid up capital.
It is reinsured by Swiss Re (Insurance Company
Switzerland).
DEPARTMENT OF MANAGEMENT SCIENCES IUB 65
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WEAKNESSES
Incompetent f ield force
Internal setting & culture
Centralized Decision Making
Internal department inefficiency
Selection & recruitment
Feed back
INCOMENTENT FIELD FORCE:
In term of quantity, it is strength but in term of
quality it is weakness. Most workers are not
DEPARTMENT OF MANAGEMENT SCIENCES IUB 66
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highly educated. They are promoted by fulf i l l ing
targets.
INTERNAL SETTING & CULTURE :
Internal office setting and arrangement is not
satisfactory as compare to its competitors.
Dominant Culture needs further improvement but
sub culture (i .e HRDD, Group Insurance) of some
department is stationery. Yet there is need of
further improvement.
CENTRALIZED DECISION MARKETING:
Managerial decision-making is totally centralized
in the PO Karachi, Zonal Offices fol low the
instruction and rules & regulations provided by
PO. Sometimes decisions is taken by PO is not
strategic and adjustable in the local environment.
For prosperity & survival of the organization,
decentralization (to some extent) is necessary.
INTERNAL DEPARTMENT INEFFICIENCY :
Underwriting process (in NB Department) takes
longer time period, which irritates the
prospects.
Loan section takes 10 days to process.
Normally 1 to 2 months is required to surrender
the policy and take the Survival Benefit, which
is not justif ied.
SELECTION & RECRUITMENT :
SR are selected and recruited by SO & SM
irrespective of their education and unique
internal attributes.
DEPARTMENT OF MANAGEMENT SCIENCES IUB 67
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FEED BACK :
The Corporation does not have any effectives and
efficient feed back channel to disseminate sales
force suggestions to upper management. Further,
organization has no well organize system for feed
back between office employees and manager,
managers and Board of Directors.
OTHERS:
Frauds done by some deceives field workers
who deteriorate the good wil l & image of the
organization.
Ineffective downward and upward
communication channels.
OPPORTUNITIES
PER-CAPITA PREMIUM
In Pakistan per capita premium payment is 1.5
and $1.7 only for l ife & general insurance
respectively. There is an opportunity to enhance
this nominal rate. In Japan per capita premium for
l ife insurance is $3810.
POPULATION GROWTH RATE :
In Pakistan, population growth rate is
approximately 3%. It is a great opportunity for
insurance sector.
INSURED POPULATION:
DEPARTMENT OF MANAGEMENT SCIENCES IUB 68
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In Pakistan 2% to 3% population is insured while
rest of the population provides opportunity to l ife
insurances to enhance their business.
GOVERNMENT REGULATION :
Section 10-B of Pakistan Commercial and
Industrial Standing Ordinance 1968 provides the
compulsory insurance of al l the employees of the
organization (whether private or Govt.). So it is a
great opportunity to SLIC.
ENTERY BARRIERS
To enter in the insurance business he investment
is required. Further 40% of premium is
compulsory for the private insurances, to cede to
Government of Pakistan security purpose
creating the entry barrier.
THREATS
COMPETITORS:
The existence of local and government insures
such as EFU, CU, Metropolitan. ALICO etc. is
threat to the survival of SLIC.
POLITCAL INSTABILITY :
Political instabil ity looses the confidence of the
policyholders. Further rules and regulations of
government are subject to change creating threat
to insurance business.
DEPARTMENT OF MANAGEMENT SCIENCES IUB 69
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FEAR OF WAR
The relationships of Pakistan with India are not
satisfactory due to Kashmir dispute. There is
always a fear war creating the threat to
corporation and policyholders.
INVESTMENT CLIMATE:
Due to the polit ical instabil ity and government
changeover the investment cl imates are not
satisfactory in the country. So the return from
real estates and other activities is deteriorated.
Competors
ALICO
EFU
METRO POLETON
COMERCIAL LIFE
POSTAL LIFE
ADAM JEE
The main Competitors of SLIC are:
Eastern Federal Union (EFU)
Commercial Insurance Company
DEPARTMENT OF MANAGEMENT SCIENCES IUB 70
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Metropolitan Insurance Company
American Life Insurance Company
(ALICO)
SLIC has enjoyed a complete monopoly ti l l 1990
when the Govt. has decided to al low the private
insurers to operate in the Pakistan. After 1990
the market share of SLIC is declining. But yet SLIC
has enjoyed the market share in l ife insurance
business of 91.4 on the basis of total premium
written off in 1997.
The year of establishment of the l ife insurance
companies are as fol lows:
DEPARTMENT OF MANAGEMENT SCIENCES IUB
EFU 1992
CU July
1996
ALICO May
1995
Metropoli
tan
Februa
ry 1993
SLIC 1972
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EFU and CU have adopted the Unit Link System.
Whenever the policyholder takes the insurance
policy, he indirectly purchases the units of the
EFU and CU. The values if this unit is announced
daily in the newspaper.
The strategic analysis of SLIC is confined only 5 years starting from 1994 to 1998.The
main objective of this analysis to know the financial status and competitive position of
SLIC keeping in view different factors such as total business in force, life fund,
investment portfolio, total income, FYP etc. first, I start from premium Income of SLIC.
STATE LIFE INSURANCE CORPORATION OF PAKISTAN
SUMMARIZED INCOME STATEMENTFOR THE YEAR ENDED ON 31
DECEMBER-------------1997 1998 1999 2000 2001
Total IncomeFirst year premium 1,487,
409 1,293,
756 1,258,0
84 1,033,
522 1,121,
142 Renewal premium 4,363,
671 4,413,
159 4,311,4
67 4,537,
853 4,564,
562 Single premium
65 5
61 2,3
23 2,2
48
37 Group premium 1,412,
867 1,244,
368 1,250,9
41 1,101,
959 1,256,
481 Annunities 2,1
65 11,7
54 15,0
30 4,8
90 2,5
08 Interest, Dividend,Rents 5,791,
018 5,866,
708 8,372,3
00 7,791,
677 8,355,
685 Profit on sale of Investment 109,2
93 128,6
92 32,9
62 80,8
44 51,1
58 Profit on sale f assets 6
30 5
49 1,2
00 7
36 1,0
28 Miscallaneous income 9,9
34 15,9
23 41,3
15 38,4
72 8,3
59 Total Income 13,177,
052 12,975,
470 15,285,
622 14,592,
201 15,360,
960 Operating ExpensesClaims & Policies paid 4,341,
069 4,714,
853 4,904,0
83 5,136,
130 5,572,
197 Management Expenses 1,599,
135 1,381,
227 1,303,3
98 1,132,
029 1,213,
747
DEPARTMENT OF MANAGEMENT SCIENCES IUB 72
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Payment to Field workers 964,867
939,710
1,214,557
1,081,302
939,660
Rent for offices 101,729
1,325
137,893
141,985
134,382
Staff Gratuity & Pesion 57,349
867,635
92,727
57,222
53,921
Provision for bad debts 317
7,814
12,610
Depreciation 38,843
41,382
39,332
35,759
68,060
Other Expenses 373,271
504,454
359,737
401,441
272,476
Voluntery retirment Scheme 759, 501
Total Operating Expenses 7,476, 580
8,450, 586
8,059,5 41
8,745, 369
8,267, 053
Operating profit 5,700,472
4,524,884
7,226,081
5,846,832
7,093,907
Provision for Taxation 66,172
75,260
45,641
204,036
159,974
Federal Govt Share 206,2 01
155,7 75
242, 418
Total 272,3 73
75,2 60
201,4 16
204, 036
402, 392
Net profit 5,428, 099
4,449, 624
7,024,6 65
5,642, 796
6,691, 515
1997 1998 1999 2000 2001Net Profit margin 41% 34% 46% 39% 44%Operatiang profit margin 43% 35% 47% 40% 46%
ATIO ANALYSIS
Net Profit Margin
Net Profit/Total Income
DEPARTMENT OF MANAGEMENT SCIENCES IUB 73
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Year 1997 1998 1999 2000 2001Net Profit margin 41% 34% 46% 39% 44%
The net profit margin of the company is very good. It
clustering round 40% that is very good. The net profit
margin of the corporation dropped down to 34% in year
1998 from 41% in year 1997. In year 2001 that net profit
margin of the corporation is 44% that is 3% higher than the
profit ratio of 1997 i.e. 41%.
Operating Profit Margin
Operating Profit / Total Income
Year 1997 1998 1999 2000 2001Operating profit margin 43% 35% 47% 40% 46%
The operating profit margin has increased from 43% in year 1997 to 46% in year 2001. This thing shows that the management has taken some encouraging actions to reduce the operating expenses of the corporation.
Current RatioCurrent Assets / Current Liabilities
Year 1997 1998 1999 2000 2001Current Ratio 1224% 1066% 1160% 1399% 1300%
DEPARTMENT OF MANAGEMENT SCIENCES IUB 74
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The company has kept the majority of its sources in the current assets. The ratio of the current assets is increasing over the year. The ratio of current assets to current l iabi l it ies has increased from 1224% in year 1997 to 1300% in year 2001.
Debt RatioTotal Liabilities / Total Assets
Year 1997 1998 1999 2000200
1
As the company acquires funds from the general public it has huge amount of external sources. They have remained almost 99% throughout these year.
Investment to Total AssetsInvestments / Total Assets
Year 1997 1998 1999 2000 2001Investments to total assets 65% 65% 68% 59% 67%
The corporation has kept majority of its assets in the investment of various types. The portion of investment in the total assets of the company is increasing. It has fal len down to 68% in year 1999 but again increased to 67% in year 2001.
Loans to Total AssetsLoans / Total Assets
Year 1997 1998 1999 2000 2001Loans to Total Assets 7% 6% 6% 5% 5%
DEPARTMENT OF MANAGEMENT SCIENCES IUB
Debt Ratio 99% 99% 99% 99% 98%
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The portion of the loan to total assets has remained constant from 5% to 7% in these f ive year. In year 1997 it was 7% that has fal len down to 5% in 2001.
Local Investments to Total Assets
Local Investment / Total Assets
Year 1997 1998 1999 2000 2001Local Investment to total assets 8% 8% 7% 6% 6%
The portion of the local investment in total
assets has been decreasing over the years.
It has fallen from 8% in year 1997 to 6% in
year 2001.
Investment to Government Securities
Investment in Govt. Securities / Total Assets
Years 1997 1998 1999 2000 2001Investment in govt securities to assets 65% 67% 68% 58% 67%
The corporation has kept majority of its current assets in the government securit ies. The portion of the government securit ies in total assets has also remained constant around 65%. It has increased from 65% in year 1997 to 67% in year 2001.
STATE LIFE INSURANCE CORPORATION OF PAKISTAN
DEPARTMENT OF MANAGEMENT SCIENCES IUB 76
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SUMMARIZED BALANCE SHEET
AS ON 31 DECEMBER--------
PKR(000)1997 1998 1999 2000 2001
ASSETSCURRENT ASSETSCash 1,969,0
77 2,419,
961 1,476,
142 8,694,
277 3,211,
165 Stores & Spares ( stationery)
17,874
24,719
25,728
23,337
23,241
Income Tax Refundable 1,200,214
1,455,617
2,038,001
2,861,545
2,781,446
Sudary Debtors 480,260
482,410
443,830
1,292,532
885,952
Outstanding Premium 1,391,699
1,516,051
1,702,212
1,189,107
886,587
Interest, Dividends, and Rents
2,014,286
2,419,718
3,037,760
2,886,969
3,250,337
Amount Due from other persons
5,734
2,736
14,893
1,144
13,768
Balance Of Compensation 56,008
56,008
56,008
56,008
56,008
Agents Balances 64,896
55,339
55,283
54,133
42,167
InvestmentsGovt Securities 35,709,
618 40,477,
219 46,220,
194 42,526,
450 54,889,
017
TFCs 120,800
90,282
58,870
729,743
517,212
Certificate of Investments 1,000
1,000
1,000
1,000
Preferred Stocks 4,750
4,750
4,750
4,750
4,011
(-) Diminution in Value of Investments
47,2 96
929, 239
111, 648
177, 791
783, 083
Total Investments (net) 35,788, 872
39,644, 012
46,173, 166
43,084, 152
54,627, 157
Total Current Assets 42,988, 920
48,076, 571
55,023, 023
60,143, 204
65,777, 828
Non Current AssetsLoans 3,828,0
72 3,828,
072 3,828,
072 3,828,
072 3,828,
072
DEPARTMENT OF MANAGEMENT SCIENCES IUB 77
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Wapda Bonds 600,000
600,000
600,000
600,000
600,000
U.K Govt Securities 243,684
243,684
243,684
243,684
243,684
Bonds, Debentures, Stocks 10,000
10,000
10,000
10,000
10,000
Ordinary Stock In Pakistan 4,614,223
4,614,223
4,614,223
4,614,223
4,614,223
Ordinary Stock Outside Pakistan
63,628
51,397
51,397
51,397
51,397
Holding Subsidiaries Cos. 62,9 50
62, 950
62, 950
62, 950
62, 950
Total Non-Current Assets
9,422,5 57
9,410, 326
9,410, 326
9,410, 326
9,410, 326
FIXED ASSETSHourse Property (net) 2,430,9
61 2,910,
162 2,708,
779 2,664,
205 4,363,
420 Furniture, Fixture and Equipment(net)
168,663
164,141
1,044,121
1,265,236
1,835,781
Vehicles 23,081
13,218
5,479
1,086
86
Total Fixed Assets 2,622,7 05
3,087, 521
3,758, 379
3,930, 527
6,199, 287
Total Assets 55,034,182
60,574,418
68,191,728
73,484,057
81,387,441
EQUITIES & LIABILITIESCurrent LiabilitiesSundry Creditors 776,1
04 1,507,
821 1,468,
368 657,
471 494,
078 premium and Other Deposits
242,648
269,508
303,793
353,275
374,461
Agent's balances 232,264
183,357
101,784
262,630
279,165
Balance of compensation Payable
591
591
591
591
591
Amount Due to other persons
19,546
39,416
58,110
17,730
31,389
outstanding Claims 2,223,440
2,498,404
2,771,825
2,970,182
3,631,464
ProvisionsLoans 3,7
85 2,8
59 2,6
95 2,
242 1,
918 House Property 8
78 7
14 6
97
680
663 Other receivables 13,8 6,7 34, 34, 246,
DEPARTMENT OF MANAGEMENT SCIENCES IUB 78
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66 60 477 530 148 total provisions 18,5
29 10,
333 37,
869 37,
452 248,
729 Total current liabilities 3,513,1
22 4,509,
430 4,742,
340 4,299,
331 5,059,
877 LONG TERM LIABILITESBalance of Life Insurance FundWithin Pakistan 50,730,
167 55,126,
729 62,122,
449 67,713,
960 74,416,
031 Outside Pakistan 279,6
99 332,
846 361,
791 413,
076 402,
520 Provision for Gratuity 33,3
25 94,
597 118,
307 107,
029 131,
428 Total Long Term Liabilities
51,043, 191
55,554, 172
62,602, 547
68,234, 065
74,949, 979
EquityPaid Up capital 100,0
00 100,
000 350,
000 350,
000 750,
000 ReservesGeneral Reserve 18,8
08 18,
808 18,
808 18,
808 18,
808 Exchange Fluctuation Reserve
359,0 61
392, 008
478, 033
581, 853
608, 777
total reserves 377,869
410,816
496,841
600,661
627,585
Total Equity 477,8 69
510, 816
846, 841
950, 661
1,377, 585
Total Liabilities & Equities
55,034,182
60,574,418
68,191,728
73,484,057
81,387,441
1997 1998 1999 2000 2001Current Assets 1224% 1066% 1160% 1399% 1300%Debt Ratio 99% 99% 99% 99% 98%Investments to total assets
65% 65% 68% 59% 67%
Loans to Total Assets 7% 6% 6% 5% 5%
DEPARTMENT OF MANAGEMENT SCIENCES IUB 79
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Local Investment to total assets
8% 8% 7% 6% 6%
Investment in govt securities to assets
65% 67% 68% 58% 67%
RECOMMENDATIONS
FOR OFFICE FORCE
There is much number of office staff. There are five departments and eighty-five persons are working in each department.
The salary is low, so as the investment. The regular working hours are much and also the
overtime rate is low. Attachment and detachment are not on merit basis,
they should be on merit and recruitment officers give much facilities to their relatives and friends, e.g., SLIC provides an A.C and carpet to deputy manage's room but officers have given them to assistant manager.
Officers don't like to move the claim files and public have to move around the office many times.
Now it has been suggested that a person should just ask for the claim only once and get his receipt. Now after thirty days, late fee charges will get incremented as the days pass and corresponding officer will be responsible for that.
Officers claim about marketors that they have got much holidays and move about to their will. Then it is suggested that Saturday's holiday should be rounded.
Manual work takes much time so every office should be provided with a computer.
Officers have rude behaviour towards general public, this should be cared.
Officers have not got qualified doctors, these doctors have not any criteria to be fulfilled. Therefore many problems arise after death claims.
FOR MARKETETING FORCE
DEPARTMENT OF MANAGEMENT SCIENCES IUB 80
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Selection is not ideal. At least, minimum qualification for selection should be graduate.
There should framing courses after selection for marketors.They should not only be told the ways to improve their income but also improve their attitude and behaviour.
Attending the courses should be must. There should be four courses each year and attending the two courses should be must for everyone.
The criteria for promotion should not only based upon buisness but personal skills should also be considered.
Marketors have got their commision in the first premium therefore they are excited at first premium's payment but after that they doesn't pay attention towards the rest of policy's payment and organization has to bear the heavy loss. Therefore their pay should be based upon persistency and renewal.
Besides this every person is earning 9-15 thousand per month, therefore he should get full time job rather than part time.
There should be a fixed amount on a particular number of policies.
And another important fact:- Quality:- No matter that policy holders are less but they
should be of long duration. It may be that much people get insured because of their reference.
Quantity:- There should be a much number of policy holders because every person gets rid after the first time.
Marketors should guide about every aspect of claim that affects the policy, so that policy holder doesn't even think of surrender.
Sometimes marketors get all the amount of policy by fraud, therefore arrangments should be made that a policy holder himself gets his premium paid.
FOR STATE LIFE INSURANCE CORPORATION:-
The bills of area manager get wasted.
DEPARTMENT OF MANAGEMENT SCIENCES IUB 81
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The name "Life Insurance" is not appropriate because it doesn't only include life buisness. The correct name should be "Income Insurance".
Some departments haven't got pads. They aren't directly linked to zonal head. The problem creates when zonal head gets his illegal works done and there is no check and balance there. So every department should have its own pad to prevent this malfunction.
It is the Pakistan's biggest financial institution but till now it hasn't completed its own web site. So it should complete its web site to get people informed about its working.
Advertisement should be in those areas where people
know little about SLIC.
FUTURE PLANS The corporation aims at consolidating its buisness in
future years.
To give special attention to check inflationary
pressures on expense particularly salaries, utilities,
communications etc., by capitalizing on new buisness
growth, improving policy holders service and reducing
avoidable expenses.
To identify and utilize the resources in rural areas in
order to increase and mobilize savings from these
areas.
To streamline and expand training facilities.
To lay greater stress on real investments in suitable
property and ordinary shares, to ensure better return
to the policy holders.
To improve overseas buisness by opening branches in
Middle-East.
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GLOSSARYACTUARY:- Actuary is a person employed by the
insurance company who calcualtes risk involve in
insurance therefore also calculates the premium payable
by insurer.
ANNUITY:- An annuity is a periodic payment made by life
insurance company to an annuitant. The payment is made
by the company in return for premium which is paid either
in a lump or as a series of periodic payments.
BUDGET:- Estimate of future expenditures in relation of
the income.
CAPITAL MARKET:- A market where you can borrow or
lend money in long term basis.
INSURANCE:- Insurance is one of the device by which risk
may be reduced or eliminated in exchange for premium.
INSURER OR ASSURER:- The party which protects another
against the various risks.
INSURED OF ASSURED:- The person or party who is safe
guarded against the risk in exchange of premium.
INVESTMENT:- Assets, generally of a long term nature,
that are not used in normal operation of a buisness and
that managment does not intend to convert to cash within
the next year.
MONEY MARKET:- It is a market where you can borrow or
lend money in short-term buisness.
PREMIUM:- It is a periodic payment paid by the insured to
the insurer against the risk bearing.
DEPARTMENT OF MANAGEMENT SCIENCES IUB 83
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SAVING:- Excess of income against expenses.
SAVINGS:- Wealth gained through saving.
SKETCH OF REPORT
IntroductionInsurance CompaniesInsurance EvaluationInsurance in PakistanLife Insurance in PakistanState Life Insurance in PakistanState Life Insurance in Bwp.
BonusesRoutine BonusesTerminal BonusesSpecial BonusesInterim Bonuses
SWOT AnalysisStrengthsWeaknessOpportunitiesThreats
DepartmentsAgency DepartmentHRD DepartmentNew Business DepartmentPHS DepartmentP&GS DepartmentAudit DepartmentB&A Department
Supplementary ContractsADBAIBFIBTIRWPSWP
CalculationOvertimePersistency
Marketing Products01- Whole Life Assurance.
03- Endowment
Assurance.
04- Progressive Premium.05- Three Payment Plan.
06- Joint Life.
07- Child Protection.
09- Single Premium End.
17- Optimal Maturity.
18- Rural Life.
19- Jeevan Sathi.
36- Shad Abad.
73- Sunehri Policy.
75- Child Edu. & Marr.
CompetitorsALICO.EFUMetropolitanCommercialPostal LifeAdamjee
Performance AnalysisInvestment PortfolioIncome AnalysisOutgoLife Fund
Ratio AnalysisLiquidity RatioActivity RatioProfit RatioSolvency Ratio
DEPARTMENT OF MANAGEMENT SCIENCES IUB 84
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PremiumLate Fee.Loan Fee.
(built in)
76- (Non built in).
N.D.SCHEME
Internship Procedure Plan
sr.. #
head points of concidration hours
total no of
department
hours
1 Ch. M.Shubbir marketing management stretigies
9 Marketing
products(plans) 7supplimentry contracts 8Mk.channels 10
2 Mr.Ishfaq Calculations, loan,maturityclaims
10 PHS
deathcliams, surrenders 10survival,altration 10 30
3 Mr.Rafiq under writing 10 New busniss
policy case allotment 9 194 Mr.Imtiyaz Organizational stucture 9 Auditing
Histotry and introduction 10
DEPARTMENT OF MANAGEMENT SCIENCES IUB 85
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Division 9Auditing 8Competetors 7 43
5 Mr. Hashmi Basic training course 6 HRDBounuses 8benefits of life insurance 7Selling process 7Organizational stucture 6 35
6 Mr.Tufail Mission and objuctives 7 AgencyStrategies, agency department head
8
Future plans 9 247 Mr.Freed payroll, reconsilation 9 B&A
Comission,disbursment 8costing 10policy holders payments 7basic salary and grading 8 42
8 Mr Asad Office transfer.promotions 10 P&Gspurchasing ,advertizing 9Distribution,facilitation 9 28
Total # of hours = 246 hours
No of days =36(estimated)
No of weeks =6 weeks
DEPARTMENT OF MANAGEMENT SCIENCES IUB 86