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3.4.1 Accident Death & Indemnity Benefit (AIB)...............................................

3.4.2 Accidental Death Benefit (ADB).................................................................17
3.4.3 Family Income Benefit (FIB) ....................................................................18
3.4.4 Waiver of Premium (WP)............................................................................18
3.4.5 Special Waiver of Premium (SWP)............................................................19
3.4.6 Term Insurance (TI).....................................................................................19
3.4.7 Refund of Premium Rider (RPR)..............................................................19
7.4 SWOT Analysis of SLIC .......................................................................................50
7.4.2 Weakness.........................................................................................................51
7.4.3 Opportunity......................................................................................................52
7.4.4 Threats.............................................................................................................53

Chapter No 1

Introduction To The Report

1.1- Background of the Report

In today’s life Insurance has taken place as a need of human life because no part of our

life remains untouched by the Insurance. State Life Insurance Corporation providing

services to the people of all ages and stages. The main objective SLIC is the welfare of

the people of the country. Government nationalize State Life Insurance Corporation at

March 18, 1973 under the nationalization order1972. State life insurance corporation

play a very important role in every day lives of the people and also contributing a lot to

the economy of the country by providing the government a lot of fund.

1.1 Purpose of Study

The purpose of the study possesses objectives which are as follows.

1. This study has given us chance to learn something new practically and this is

also the partial requirement of the degree of MBA.

2. This study has given us chance to get the practical experience in the large

organization, and this internship also endows us the knowledge of different

departments and their working in the organization.

3. This study is very beneficial for us, it provide us an opportunity to acquaint

herself to the actual work, place and writing of its project requires her to use

all the skills, abilities during the course of study. It makes us more practical,

confident and professional.

1.2 Methodology

Methodology means way of collecting the data of report writing. There are two methods

to conduct research. First methodology of research is primary data and other is secondary

data base research. In this report I have methodology of primary data and secondary data.

1.2.1 Primary data

a) By meeting/asking questions from different personal of different departments. Mr.

Aftab Ahmed Khan, Deputy Manager of P&GS Department was the main source

of getting information.

b) Practically working, carefully watching the working procedure of the


c) Visiting different departments of the organization.

1.2.2 Secondary Data

a) Study of written martial of SLIC.

b) Study of different books of insurance, booklets, broachers.

c) Study the Annual Report of SLIC.

d) Visiting the website of SLIC

1.3 Limitations

During my internship training I had face to many problems/limitations which were

some times really discourage me to collect the basic and important information to make a

strong and very good report on SLIC.

Despite of the following limitation I tried my best and honest effort to collect the data and

interpreted in this report:-

i. Due to lack of time it is very difficult to get all information of departments of


ii. There were no special arrangements for internees. Thanks to Mr. Aftab Khan who

guided me and remained cooperative at all the time.

iii. Officers had not enough time to regularly help us.

Introduction to Insurance

1.4 Defining Insurance

“Financial protection against loss or harm”

Insurance, in law and economics, is a form of risk management primarily used to hedge

against the risk of a contingent loss. Insurance is defined as the equitable transfer of the

risk of a loss, from one entity to another, in exchange for a premium, and can be thought

of as a guaranteed small loss to prevent a large, possibly devastating loss. An insurer is a

company selling the insurance; an insured is the person or entity buying the insurance.

The insurance rate is a factor used to determine the amount to be charged for a certain

amount of insurance coverage, called the premium. Risk management, the practice of

appraising and controlling risk, has evolved as a discrete field of study and practice.

1.4 Contract of Insurance

The insurance contract is a contract whereby the insurer will pay the insured (the person

whom benefits would be paid to, or on the behalf of), if certain defined events occur.

Subject to the "fortuity principle", the event must be uncertain. The uncertainty can be

either as to when the event will happen (i.e. in a life insurance policy, the time of the

insured's death is uncertain) or as to if it will happen at all (i.e. a fire insurance policy).

• Insurance contracts are generally considered contracts of adhesion because the

insurer draws up the contract and the insured has little or no ability to make

material changes to it. This is interpreted to mean that the insurer bears the

burden if there is any ambiguity in any terms of the contract.

• Insurance contracts are aleatory in that the amounts exchanged by the insured

and insurer are unequal and depend upon uncertain future events.

• Insurance contracts are unilateral, meaning that only the insurer makes

legally enforceable promises in the contract. The insured is not required to pay

the premiums, but the insurer is required to pay the benefits under the contract

if the insured has paid the premiums and met certain other basic provisions.

• Insurance contracts are governed by the principle of utmost good faith which

requires both parties of the insurance contact to deal in good faith and in

particular it imparts on the insured a duty to disclose all material facts which

relate to the risk to be covered. This contrasts with the legal doctrine that

covers most other types of contracts, caveat emptor.

1.5 Reasons for Insurance

Sometimes in life it is not possible to avoid the losses. For example People may become

ill. They may die of illness or accidents or their homes or other property may undergo

damage or theft. So in all these cases and they have to face the loss of income or savings.

So insurance is a manner of financially insuring that if such an incident comes about then

the loss does not affect the present well being of the person.

1.6 Doctrians Of Insurance

1. There should be a certain definite loss taken place at a known time, in a known place

and from a known cause. Therefore the time, place and the cause of loss should be clear


2. The incident that represent the cause of the claim should be accidental or beyond the

control of the beneficiary

3. The size of the loss must be significant from the perspective of the insured. Insurance

premiums should cover both the estimated cost of losses, plus the cost of policy,

regulating the losses, and providing the principal required to logically assure that the

insurer would be able to reimburse claims.

4. The amount of premium should be affordable.

5. The possibility of loss and the cost of compensation should be calculable or


1.7 Types of Incurance

Below are some kinds of insurances.

1.7.1 Life Insurance

Life insurance policy insures the life of the insured. The insurance company is legally

bound to provide a monetary benefit to a decedent's family or the beneficiary after the

death of the policyholder. The proceeds are paid to the beneficiary either in a lump sum

amount or an annuity

1.7.2 Medical Insurance

Medical insurance is also called med claim. Under this policy the insurance policy pays
the amount to the insured for his health purpose. This amount covers the cost of medical

1.7.3 Disability Insurance.

There is two types of disability insurance. One is simple disability insurance and the

other is total disability insurance. In case of simple disability insurance, a financial

support on monthly basis is provided by the insurer to the policy holder if he is unable to

work due to an injury or an illness. But permanent disability insurance provides the

reimbursement if a person becomes permanently disabled.

1.8 General Insurance

It includes automobiles insurance, business insurance, property insurance etc.

i) Automobile insurance
In UK this insurance is called motor insurance. It compensates the loss or damage
occurred to the vehicle. But in United States auto insurance policy is essential to legally
operate a vehicle on public roads.

ii) Business insurance

Business insurance protects the businesses against risks of losses and damages and
compensates in case of loss

iii) Property insurance

This type of insurance protects the property against the risks like fire, theft etc. This
category also includes fire insurance, flood insurance, earthquake insurance etc

iv) Fire Insurance

It is an insurance covering the damage to the property caused by fire.

v) Flood Insurance

This type of insurance pays the policy holder in case of any loss or damage to

the property due to flood. It protects the property against the flooding.

1.9 Policy Terms

Insurance policies also an amount at which coverage ends, known as the policy limit.

Most types of insurance specify the limit as an amount written in the contract.

1.10 Premium

An insurance company sets a policy’s premium by multiplying a rate for each unit of

insurance coverage by the total amount of coverage being purchased. Most people pay

insurance premium once or twice a year. Other people choose to make automatic monthly

payments to their insurance company for a bank account.

1.11 Claims, Benefits and Dividends

Insurance contracts always contain a condition that the insured must provide a proof of

loss in order to b paid.

Insured individuals who have suffered losses and want to receive payments must notify

their insurance company through a process called claim. Insurance contracts always

contain a condition that the insured must provide a proof of loss in order to pay.

1.12 Buying Insurance

People have many choices while buying insurance policies. They commonly chose an

insurance provider based on several criteria. Some of the most important of these include:

1. The financial stability of the insurance company.

2. The price of policies.
3. Detail coverage and service.

Only a financial sound company can fulfill its promise to pay in all circumstances.
Company with proven records of stability can provide insurance security.

Chapter No 2

Introduction to State Life Insurance Corporation of Pakistan (SLIC)

2.1 Establishment of SLIC

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

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
The basic structure of the Corporation consists of Four Regional Offices, Twenty-Six

Zonal Offices, a few Sub-Zonal Offices, 111 Sector Offices, and a network of 461 Area

Offices across the country for Individual Life Insurance; Four Zonal Offices and 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 Policyholder’s 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

2.2 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 etc. The major achievements of State Life are as under:

i. On the commencement of the operations, the Corporation took a very important
step by effecting reduction up to 33% in the premiums on the past and potential Life
Policies for the benefit of the Policyholders.
ii. State Life is profitable organization and it paid Rs.1.729 billion as dividend to the

Government of Pakistan since its inception in 1972.

iii. State Life has played very vital role in the economy by providing employment to

the people of the country as permanent employees and as part of its marketing force

and by investing the huge funds in different sectors of the economy. The Investment

Portfolio of State Life as at 31.12.2005 stands at Rs.124.983 billions.

iv. Investment portfolio also includes investment in Real Estate which stands at a book
value of Rs.2.309 billion as at 31.12.2005 whereas it fair value is around Rs.17.625
billion in the same period.
v. The Paid up Capital increased from Rs.10 million in 1972 to Rs.900 million.

vi. The Premium income increased from Rs.0.317 billion in 1972 to 13.820 billion in

2005. Similarly Investment income including rental income increased from Rs.0.81

billion in 1972 to 13.106 billion in 2005.

vii. vii. Total statutory fund of State Life stands at Rs.122.775 billion in 2005 as against

Rs.1.494 billion in 1972.

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, 2005 the
total number of policies enforce under individual life were 2.044 million and number of
lives covered under group life insurance were 3.731 million.

2.3 Objectives of SLIC

 To run life insurance business on sound line.

 To provide more efficient service to the policyholders.

 To maximum 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 he wider interest of the community.

2.4 Mission

To remain the leading insurer in the country by extending the benefits if insurance to all

sections of society and meeting our commitments to our policy holders and the nation.

2.5 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.

2.6 Basic structure of State Life

The basic structure of the State Life Insurance Corporation consists of Zonal Offices in

all-important towns, Regional Offices and a Principal Office. The Zonal Offices deal

exclusively with the sales and marketing of policies underwriting of Life Insurance

Policies and the policyholder services. Regional Offices (South, North, Central and

Multan) each headed by Regional Chief who supervises business activities of the zones in

their Region effectively and the Principal Office, based at Karachi, is responsible for

activities such as Investment, Advertising, Sales Promotion, Real Estate, Actuarial and

International Operations etc.

The Chief Executive of the Corporation is Chairman, who is presently assisted by three

Executive Directors. State life is effectively providing life insurance cover to cater to

individual needs of the country’s peoples through an organized and professionally trained

field force comprising several thousand field workers and field supervisors. The policies

issued by the state life are backed by the life fund exceeding Rs 94 billion at the end of

April 2003. In addition, the government of Pakistan guarantees all individual life

insurance policies. State life’s performance both in individual and group and pension, has

been characterized by exemplary growth, brought about by the concerned efforts of its

dedicated employees and members for its dynamic field force, under the guidance of a

top management comprising men with a vision and wisdom. State life offers a large

number of plans for the benefits of Pakistani families.

2.7 Product of SLIC

Some of the popular plans are jeevansathi, shadbad, child education and marriage plan,
child protection policy, three-payment plan, endowment plan, sunehri policy, and shehnai
policy. The valiant field force makes such plans, which meets their needs most favorably.

Chapter No 3

Types of Insurance

3.1 Branches of Insurance

i. General Insurance (it is concerned with other than life)

ii. Life Insurance ( it is concerned with human being)

3.2 Modes of Insurance

i. Whole Life Insurance

ii. Endowment Assurance

iii. Term Insurance (General Insurance)

3.2.1 Whole Life Insurance

Whole life insurance plan is a unique combination of protection and savings. This can be

purchased at a very economical premium payable annually or half yearly, quarterly or

monthly installements. Death at any time before age 85 years terminates payments of

premium and the sum insured (plus bonuses, if any) become payable.

Policies under this plan are available on “With Profits” and “Without Profits” basis

3.2.2 Endowment Assurance

Endowment assurance is the safest and surest method of guaranteed cash provision at a

specified or at death. It means the requirement of the family in various shapes byway of

financial help as at retirement, amount for the education of children or capital for

business. Endowment assurance policies are available both on “With & Without Profit”


3.2.3 Term Insurance

It is a popular in America because of its short payments and big claim benefits and used
in general as well as life insurance, it is conditional contract and for particular period. It
pays claim during the contractual period, after expiry of that period there is nothing to be
paid for claim.

3.2.4 Child protection Policy

Child protection policies are issued jointly on the lives of the child and the father. If the

father is not alive or his life is not insurable, the mother will be allowed to be the payer

prospers i.e. policyholder, subject to any special conditions applicable to female lives. No

other relative will be allowed to be a payer. If the payer and the child both survive, the

term of the policy the sum assured along with accrued bonuses (if any), become payable.

3.3.2 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 upto retirement.

3.3.1 Benefits of Group Endowment Insurance Scheme

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.

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

retirement benefits.

i. 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.

ii. 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.

iii. Surrender Value

The policy acquires Surrender Value in respect of a member after insurance cover

has been enforce for at least two years on that member and no premiums are in


iv. 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.

v. 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 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.

3.3.2 Other Policies of SLIC

• Jeewan Sathi
• Three Payment Plan
• Shadabad Plan

• Personel Pension Scheme
• Sunehry policy

3.4 Supplementary Contract/Riders

Supplementary contracts are those contracts which make the insurance more attractive.

They provide certain incentives on certain situations. They make the plan attractive in

sense that if some one is purchasing supplementary contracts with a policy then he will

be awarded the officers of the supplementary contracts too along with policy or insurance


State Life 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)

• Refund of Premium Rider (RPR)

3.4.1 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 proposed for

standard lives whose age should be between 18 to 55 years.

3.4.2 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


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.

3.4.3 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.

3.4.4 Waiver of Premium (WP)

This supplementary cover provides for waiver of due premiums in the event of the life

insured’s 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 incase

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


3.4.5 Special Waiver of Premium (SWP)

This supplementary cover will provide for waiver of premiums under the policy incase of

the life insured’s 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

incase 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.

3.4.6 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. Incase 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

3.4.7 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.

Chapter No 4
Chapter No 5

SLIC Rawalpindi

5.1 Introduction

State Life Insurance Corporation, Rawalpindi Zone was established in 1975. At present it

is headed by a Zonal Chief and assisted by Department Heads of the different

Departments. The total strength of the Zone comprises of 280 staff members and 80

officers. It is located in their own building (i.e. State Life building), Mall Road,


5.2 Functional Areas

5.2.1 Budget / Journal Ledger Section

With Mr. Zafar Iqbal (Executive Officer B & A)

Every zone has its own budget which comes from the head office. The zonal head and

zonal accountant with respective regional chief and regional accountant send a proposal

to the head office; they critically analyze it and then decide. First calculation is made

here, and then sent to head office.

Process of Budget

• Budget proposal
• Discuss with Executive Directors and Chairman
• Submitted to The Board of Director for proposal.
Budgeted amount is equally distributed in four quarters.

Big zones are rated on total premium while small zones are rated on first year premium


Budgeted amount is written in a register and expenses are reduced gradually from it,

commission is not included in expenses. It is a variable expense. In budget only fixed

expenses should be included like salary etc.

When an officer is transferred to any other zone or center, his budget will also be

transferred to that zone or center.

How the budget is allocated to each department within a zone:

Zonal Head calls a meeting of all departmental incharge. They all discuss the budget

amount. Then budget is allocated to each department according to their needs and


If budget is in deficit, then an additional budget is demanded. The zones should give

justification for additional budget. It happens when unexpected expenses occur like for

AC plant or Compressor burnt etc.

Expenses of one quarter should be carried over to next quarter. However, saving of one

quarter may be counted for the next quarter.

Chief Accountant and Regional Accountant should check the actual expenses on their

visits to zone.

5.2.2 Journal Ledger

Every department feeds its daily work in the computer. At the end of the month
computer summarizes it.
Cash premium in collection books
Cash paid in cash books.
Adjustment in journal ledger.

After preparing the net result they make quarterly trial balance at Zonal level. They
cannot prepare Balance Sheet because Head Office prepares it.
Format of Trial Balance

Parts Particulars Debit Credit

I Assets -

II Liabilities -

III Income -

IV Expenditure -
Total - -

• Depreciation is done on the straight line method.

• Depreciation of electric fitting.
• Depreciation of furniture & office equipments
• Depreciation of vehicles.
• Depreciation of computers.

5.3.1 Payroll Section

With Mr. Mehmood Akhter

This section deals with different allowances and loans which are offered to the
employees. Two employees are working in this section.
Allowances for officers: It includes
1. Conveyance Allowance

A. The conveyance allowance has been enhanced to Rs.850 per month.

B. The employees who own or possess cars, registered in their name and which are under
their use would be paid car allowance at the rate of Rs.1150 per month; it also includes
car maintenance allowance.
2. House Rent

The officers would be paid house rent allowance @40 of their basic pays.

1. Utility Allowances

Utility allowance for an officer is 10 % of his basic pay.

Allowances for staff:

1. House Rent:
The house rent allowance paid to the staff is 18 % of their basic pays.
2. Conveyance Allowance:
The staffs that possess motorcycle are paid Rs.800 per month, and those who
does not possess are paid Rs. 675 per month.
3. Tea Allowance:

Tea allowance is a fixed amount of Rs.535 paid to each staff member monthly.

4. Newspaper Allowance:

This is also a fixed amount of Rs. 300.

5. Utility Allowance:

It is also a fixed amount of Rs.675.

6. Education Allowance

The children education relief/ education allowance should be paid to an employ at a

uniform rate of Rs. 435 per month per child to all children either school or college

going or receiving religious education, for up to a maximum of four children and

subject to a maximum of Rs. 1740 per month.

7. Medical Allowance
A. Rs.1000 per month for married.
B. Rs. 725 per month for unmarried.
8. Technical Allowance:

Technical allowance to the telephone / telex / fax operators, franking machine /

adrenal operators, photo state machine operators, lift operators Rs. 175 per month.

9. Cash Handle Allowance

This allowance is for employees who hold cash handle seats revenue stamps policy

stamps and cash counter. This allowance to cash counter is Rs. 800 per month, and for

the others it varies from Rs. 175 to Rs. 800 per month.


Different kinds of loans are given to employees of each level.

1. Two months salary advance loan

• This is gross salary.

• This is interest free loan.

• This loan would be payable in 20 installments, i.e. deducted from the salary

over 20 months.

For officers the maximum amount is ten (10) month gross salary advance, and the rules

and regulations are same for both officers and staff.

2. CPF Loans:
This is contributed provident fund loan. It has two types.

1. CPF 1:
• The maximum amount is three basic pays.
• This is also interest free.
• Deducted over 20 months.
2. CPF 2:
• The maximum amount is 12 basic pay or 90 % of CPF whichever is less.
• This is also interest free loan
• Deducted in 50 installments.
3. House Rent Advance:
• This loan is only for staff.
• The maximum amount is six current basic pays.
• Having 10 % interest.

• Deducted in 18 months.
• No deduction in the month of Eid.
4. Conveyance Loan:
• The maximum amount for staff is Rs. 55000, which is known as motorcycle
• 10 % interested is charged.
• Deducted over 40 months.
• No deduction in the month of Eid.
• Interest will be charged for the months of Eids, so interest is calculated for 48
• For officers the maximum amount is Rs 100000, which is known as car loan.
• Rules and regulations are same as above.
5. House Building Loan:

• The maximum amount varies from level to level, because it depends mostly
on salary.
• For the maximum amount they use this formula;
• 45 % of the salary x 1000 / 8.85
• Charges 10 % interest.
• No deduction in the first year.
• This loan should be given to the employ in three installments.
In the payroll section they make calculations for all these allowances and loans and at the

end they prepared vouchers. All these things should be adjusted in journal voucher.

They use two vouchers; one is known as “Debit Voucher” (DV) and the other is journal

voucher (JV)

In the books of account the Dr the voucher and Cr the amount.

5.4 Policy Holder Services (PHS) Deptt.

With Malik Adnan and Dr Ishaq Deptt. Manager PHS.

Policyholder service is one of the most important departments in stat life insurance.

Better services to policyholders are of course, necessary and fundamental for carrying

good reputation among policyholders, which help in retaining business and increasing

new business.

Therefore policyholder’s service, counters have been establishing in majority of the zonal

offices to provide one window services to the valued policy holders.

This department is divided into following sections:

• Claim Section
• Surrender Section
• Loan Section
• Alteration Section.
• Suspense Account Section.
• Lapse & Revival Section

Each and every section of this department plays an important role and they provide

different services to policyholders.

5.4.1 Claim Section.

This section is always busy in entertaining claims of the policyholders. It has its own

investigators and they investigate all claims and then recommend that a claim amount

may be given to the nominees of the claimants or not. They also look into all such

maturity claims and those policies which fall, mature all payments and the claim section

of the policyholder services (PHS) give houses.

Claims are of Two Types:

• Death Claim
• Maturity

Death claims are further divided into two categories. Early death claim and non-early

death claims.

Death within the first two years is known as early death and after that it is non-early

death claim.

In case of early death claim they do a comprehensive inquiry. This inquiry may be from

the general public, hospital. Police station etc. then they make a report.

In case of muscularly death claim usually inquiry is done. Just look to the documentary

requirements, but if there is a chance of fraud, than inquiry will take place.

In case of suicide within the first 13 months. They just pay the premium amount which is

paid in installments.


• In case of death the nominees should make death certificate for the policy holder.
It may be gross the hospital, Nazim, Political Agent, etc.
• Then they issue 4 forms i.e. A, B, C, D. Form ‘A’ will be filled by the nominee.
Form ‘B’ is for Attended Doctor, Form ‘C’, A person from village like Khan, and
Malik etc. Form ‘D’ if a policy holder is govt. employ, than this form should be
All these forms should be attested.

If the amount is less than 300,000 then they call a meeting of zonal claim committee

(ZCC) and this committee makes decision. If amount is more than 300,000 then they

forward all documents to regional claim committee (RCC Islamabad).

And if amount is more than 500,000 then this is the case of central claim committee after

approving gram ZCC the claim file again to claim section, have they issue cheques and

make vouchers thus payment is made.

In case of AIB (Accidental Indemnity Benefits) two extra forms will be issued, one will

be filled from the policy holder and the other by the doctor. The policy holder should

write about his accident.

5.4.2 Surrender Section.

This is also an important section of the PHS. All those do not want to continue policy due

to some financial or any other problem request and send their applications to PHS

surrender section. Then the staff of this section scrutinizes those applications and issue

surrender discharge vouchers of payment to the clients.

After receiving vouchers the account section issues cheques to the clients. It also issues

bones certificates to the policy holders and keep their record in computers. Very technical

and professional staff has been recruited in this section.


• First the surrender section receives application from the policy holder’s a long

with other required documents like NIC etc.

• Than this section issues surrender discharge vouchers, they calculate the cash

value and mentioned in this voucher, the policy he written and this voucher

should also he signed by the policy holder.

• Then they send all these documents to audit department after making the audit,
the audit department again sends its to surrender section (PHS).
• If the amount is more than Rs. 10,000 then it is referred to account department,

they issues cheques, these cheques again come to (PHS) surrender section and

they give it to policy holders.

• If amount is less than Rs. 10,000 then there is no need to send all the documents
to account department PHS directly issues cheques to the clients.

5.4.3 Loan Section.

Loan section is also very important and bllsy in calculating and issuing loans to the

policy holders on their policies.

All such policies that complete three years acquire surrender value. Loan is granted on

every policy according to the surrender value of the policy and the rate is 80% of

surrender value.

The rate of interest on this loan is 14%.

It gives the policy holder an extra benefit to get loans and then repay their outstanding

amount to the corporation.

While the risk coverage of the policy holder is infact with in the specified time and due of

next premium the policy.

5.4.4 Alteration Section.

The alternation section is another important section of PHS. All such policies, which

require any alternation for example. Change of nominee, change of address, change of

terms, change of mode of premium and change of any other thing in the policy directs

their applications to the PHS. Authority after altering the required things in the policy

sends their policy documents to the concerned policy holder.

All these sections of PHS are interring links with other sections and professional staff

with trained officers is busy in providing services to the clients.

5.4.5 Suspense Account Section.

This section is an important section my giving an application to the manager PHS can

enforce all such policies, which due lapsed. The under writers of the PHS department

scrutinizes the applications and then revive and reinforce lapse policies, there is any

requirement in the policy the premium is placed in suspense. Account and a provisional

receipt is issued to the client. A policy holder service is the heart of state life insurance

corporation. All record of the policies is kept with the PHS department and all legal and

official’s letters are written and send by this department.

The code which is use for suspense account is 571.

5.5 Agency Department

With Mr. Tariq sayed head of the Department and Mr. Ayub khan.
September 8 to September 10, 2004.

It is an important department of state life insurance Corporation. It keeps the record of all

the field staff in the zonal office, sector offices issues code numbers to field workers and

maintain their all business record. It also deals with licensing authority and all licenses of

the field staff are send and received through this department. This department is

controlled by the zonal head and run through a manager with the help of other supporting

staff. It also keeps the record of promotion of the field workers and other related matters

of the field force.

The sale representatives (S.R) play a key role. Consequently upon his selection, the S.R
received some basic training in sale management marketing, and on the job training the
S.R works under the supervision and guidance of sale officer. After two years service as
sale representative he is eligible for promotion, if fulfill other condition necessary for
Requirements for SR

Minimum qualification for SR is metric.

Minimum requirement is 12 policies in one year.
Rs 50,000 should be achieved in one year.
Commission rates for SR

The commission rates depend on their total business and the amount for which they sold

policies in one year.

Business amount (Rs) commission (Rs)

50,000 to 60,000 75,000
60,000 to 150,000 100,000
150,000 to 250,000 150,000
Above 250,000 250,000

Conditions for Promotion

A). From Sales representative to Sales officer

i) Must have secured minimum Rs 75000/- FYP during immediate preceding two
Calendar year, but in any one calendar year, the FYP should not be less than
Rs 25000/-
ii) Must have at least 20 policies in force on different lives.
iii) Must have achieved a minimum second year persistency of 70% in the
immediate preceding year-
iv) Must have achieved a minimum renewal persistency of 70% in the immediate

preceding year.

Commission rates for sale officer (SO)

Business amount (Rs) commission (Rs)

200,000 to 400,000 250,000
400,000 to 600,000 300,000
600,000 to 800,000 400,000
Above 800,000 500,000

B) From Sales officer. To Sales manager

i) Must have secured minimum Rs 250000/- FYP in the immediate

preceding 2 calendar years, but the FYP in any one year must not be less
than Rs 60000/-.

ii) Must have minimum second year persistency of 70% in the
immediate preceding year.
iii) Must have at least 8 policies in force in his organization.
iv) Must have minimum renewal persistency of 90% in the immediate
preceding year.
Commission rates for sale manager

Business amount (Rs) commission (Rs)

400,000 to 600,000 350,000
600,000 to 1,000,000 500,000
Above 1,000,000 600,000

5.6 Payment Section

With Sir, Manzoor senior officer assistant account department (payment section) Aug 3-

4, 2004.

The payment is mode in two forms.

i. Payment in cash
ii. Payment in cheque
Payment is made to the following persons.

Policy Holders
In case of
• Surrender
• Maturity
• Policy loan
• Death claim
3. Employees

• Salaries
• Loans
• GDV payment
GDV stands for General Disbursement Vouchers which includes payment to

• Employees
• Purchases
• Area manager

Payment Procedure

For each payment first a voucher is prepared or maintained. There are four types of

vouchers i.e. for each claim there is a different voucher. Each voucher has its own and

different color. It includes;

• Surrender voucher
• Loan voucher
• Death claim voucher
• Maturity voucher

Voucher is made by concerned department like Surrender, Death Claim and Maturity etc.

After this these vouchers are sent to budget department that either the budget is sufficient

enough for these payments or not.

From budget department these vouchers come to audit department. They make the audit

of all the vouchers and other related documents.

After approving from audit department these vouchers comes to payment section.

Usually payments are made in cheques, they make cheque first then the cheque is sign by

this (payment department) and then these cheques are forward to concerned department

for 2nd sign.

The vouchers remains in the concerned department for the purposes of punching and
cheques are issued.
Entry for payment in the books of Accounts:
Here the vouchers are debited and cheques are credited, like
Voucher ____
Cheque ____

Chapter No 6
6.1 Financial Analysis

Financial analyses provide a meaningful comparison of a company to its industry, ratios

are constructed to judge comparative performance. Financial ratios, serve the similar

purpose, but one must know what is being measured to construct a ratio and to

understand the significance of the resultant number.

6.2 Financial / Ratio Analysis

A ratio is a quantitative relation between two magnitudes of the same kind. In ratio

analysis, the financial ratios of the firm are compared to that of its competitors. This

comparison allows the firm to detect major operating differences, which, if corrected,

will increase its efficiency. Another very popular method of ratio analysis is to compare

the firm’s financial ratio to industry averages.

Before discussing financial ratios, three cautions are in order:

i. A single ratio does not generally provide sufficient information to judge the

overall performance of the firm. Only when a group of ratios is used, a reasonable

judgment concerning firm’s overall financial state can be made.

ii. An analyst, when comparing financial statement, would ensure that predetermined

uniform standards are used for this purpose.

iii. It must be ensured that the data used in calculating financial ratios have been

developed in the same manner and are sound are reliable.

There is no doubt that financial ratios are a useful guide for managerial decision making

but these are not exact and definite. Ratios only suggest the questions that need to be

answered and provide no answers.

SLIC is a servicing concern and its financial analyses are as follows in order to know

how the corporation is progressing. Because definition alone, carry little meaning to

analyzing or dissecting the financial performance of the organization.

In this chapter, light is thrown on the financial ratios of SLIC in order to determine its

financial position. See the different ratios calculated for the last two years and comment

on them.

6.3 Liquidity Ratio

These ratios are used to measure a firm ability to met short-term obligation. They

compare short-term obligations to short term (or current) resources available to meet

these obligations. From these ratios, much insight can be obtained into the present cash

solvency of the firm’s ability to remain solvent in the event of adversity.

6.3.1 Current Ratio

Current ratio can be obtained by dividing current assets on total current liabilities. In

simple words current ratio means that the current assets are sufficient for current

liabilities or not. If the result is 1, then it means it can satisfactory meet its financial

obligation but it should be tried to improve it, mathematically it can be written as.

Current ratio = Current Assets

Current liabilities Current Ratio
Table No : Current Ratio
2006 0.85 0.82
2007 0.79 0.8
Analysis: 2006 2007

Current ratio of State life insurance Corporation for the year 2002-2003 shows that there

is a gradual decrease in the ratio. It means that there is problem with the current assets,

while the ratio is also lower because of a slower increase in current liabilities as well. As

we know that the current ratio show the liquidity position of an organization, that how

much they can pay their current liabilities. In 2003 its capability of paying their current

liabilities decrees. So they should utilize their current assets in efficient way and should

reduce their current liability. By reducing their current liabilities they will be able to have

less to pay and more to invest some where else.

6.3.2 Acid test (Or Quick) Ratio

Quick ratio is calculated by current assets minus inventories divided by current liabilities.
It shows a firm ability to meet current liabilities with its most liquid (quick) assets.
Quick ratio = Current Assets – Inventory / Current Liabilities
This ratio also like current ratio show the liquidity position of organization. This ratio is

the same as the current ratio except that it excludes inventories. This ratio show the

company ability of paying their current liability out of their most liquid asset. Thus, this

ratio provides a more penetrating measure of liquidity then does the current ratio.

Table No: Quick Ratio

YEARS Quick RatioRatio Value

2006 0.79
2007 0.78 0.74
2006 2007


Quick ratio shows the efficiency of a firm that how much it could pay their current
liabilities out of its most liquid assets. So for the year 2002-2003 Quick ratio of state life
insurance corporation indicate that its ability to pay current liability out of most current
asset decrease. The reason is, decrease in current assets on one hand and inventory are
not included on the other hand. Decrease in ratio also indicate that if the corporation can
not pay their current liabilities out of their most liquid assets, payment of long term will
be more difficult. Meaning that there is some problem with cash account. So they have to
take care of their current assets and they should have handsome amount at the end to get
red of their current liabilities in time.
6.4 Debt Ratio
These ratios show that up to what extant a firm is financed by debt and to which extent
the firm is using borrowed money.
This includes
i. Debt to Total Asset ratio
ii. Debt to Equity ratio
6.4.1 Debt to Equity Ratio

The debt to equity ratio is compared by simply dividing the total debt of the firm by its
shareholders equity. If this ratio is high then it is negative sign, mean that borrowed
money is more then equity. This ratio should be low.
Debt to equity ratio = Total debt / Shareholders’ Equit
Table No: Debt to Equity Ratio \

Years Ratio Value
2006 86.1
2007 98.1

Debt to Equity Ratio

Values 90
2006 2007


Debt to Equity ratio shows the extent to which the firm is financed by creditors and

shareholders. Debt to Equity ratio of state life insurance corporation for the year 2002-

2003 shows that the corporation is financed by creditors to larger extent. According to

principles of analysis the lower the debt to equity ratio the better it is for the organization,

because by increase credit the liability of business will also increase which will create

problems in payment of liability for the corporation. The ratio move up over the two

years showing that the organization is financed by creditors but at the same time showing

their efficiency as well. Because the people are investing in insurance policies of sate life.

6.4.2 Debt-to-Total-assets Ratio

The debt to total assets ratio is derived by dividing a firm’s total debt by its total assets.

Debt to total assets = Total debt / Total assets

This ratio show the debt and asset position of a corporation, mean that how much the

corporation have shareholder’s equity and how much they have credit. If this ratio is low

then it mean that shareholder’s equity is more then credit and financial position will be


Table No: Debt to Asset Ratio

Years Ratio
2006 0.99

2007 0.99


Debt to total assets ratio of the firm show that up to what extant the assets of a firm is

financed by equity and how much is financed by debt. For the year 2002- 2003 debt to

total assets ratio of state life insurance show that the ratio for both year is same, so it

mean that for both the year SLIC financed their assets with same proportion, because

ratio for both years is the same. It means that state life insurance assets are financed with

the same proportion by both creditors and shareholders.

6.5 Activity Ratio

Activity ratio, also known as efficiency or turn over ratio, it measures that how

effectively a firm is using its assets.

6.5.1- Receivable Turn over Ratio

This ratio show the efficiency of the firm that how much efficiently a firm create

receivable and how much successfully the firm collect its receivable.

This ratio is calculated by dividing receivables on annual sales.

Receivables turn over ratio = Sales


This ratio tell us that the number of times account receivables has been turned over
(turned into cash) during the year. The higher the receivables turnover ratio, the shorter
the time between the typical sales and cash collection taking place.
Table No: Receivable Turnover Ratio

Years Ratio Value

2006 0.37
2007 0.2

Receviable Turnover Ratio

Values 0.2
2006 2007

Receivable turn over ratio show the efficiency of an organization in collecting its
receivables. Receivable turnover ratio of SLIC for the year 2002- 2003 show that,
efficiency of collecting receivable is decrease. Though there is a slight decrease but it
may lead to delay payments, which may harm their image as compare to competitors.
They should increase this ratio in order to increase collection of receivable. This will
help them to pay their liability on time and built their image
6.6 Profitability Ratios

Profitability ratio are the ratio through which we can find the ability of the firm to earn an
adequate return on sales, total assets and invested capital, profitability ratio also give help
in controlling cost of an organization. Problems related to profitability can also be
explained through these ratio.
Profitability ratios are important for all parties that are concerned with that company
because if company earn profit , it will earn Good Will and people will invest in that
6.6.1 Gross Profit Margin
This ratio shows gross profit as percentage of net sales. This can be computed by dividing
gross profit on net sales.

Gross profit margin =Gross Profit x 100

Net Sales
Gross profit margin is affected by cost of goods sold. If cost of goods is controlled and
minimized, gross profit will be higher and ratio will be high which show a positive sign.
This ratio tells the profit of the firm relation on sales, after deduction of the cost of
producing goods. It is a measure of the efficiency of the firm’s operation, as well as an
indication of how products are priced.
Table No: Gross Profit Margin Ratio

Years Ratio
2006 1.16
2007 1.40

Gross profit margin ratio show the profit of the organization after deducting the cost of

good sold. Gross profit margin ratio of state life insurance for the years 2002-2003 show

that they have a reasonable increase in ratio, it mean that profit of the organization for the

year 2003 has increased as compared to 2002. So this is a positive sign .They will be able

to pay their liability in time and they can invest the remaining amount to generate more

profit. And can also pay for other expenses as will.

6.6.2 Net Profit Margin
A more specific measure of sales profitability is the net profit margin.

Net profit margin = Net Income after taxes * 100 / Net Sales

In this ratio is derived by dividing net income after taxes by total sale. So it is more

specific. It tells a firm’s net income per Rupee of sales.

Table No: Net Profit Margin Ratio

Net Profit Margin
Years Ratio Value Values 3
2006 2.12 1
2007 5.9 0
2006 2007

Net profit margin ratio shows the ability of the organization how much it generate net
income after the overall business activities. Net profit margin ratio of state life insurance
for the years 2002-2003 show that SLIC generate quit favorable net income after the year
end activities. Maximum net income for state life insurance mean, that SLIC will be able
to pay to their policyholders in time. Organization can spent large amount on marketing
and promotional activities. On the other hand in current arena of competition they can
have modern and new tools and equipments to provide every type of services to the
6.6.3- Return on Investment
The second group of profitability ratios are about profits on investment. One of these

ratio is to find the rate of return on investment (ROI), or return on assets.

This ratio measures the profitability of assets regardless of the Capital structure.


ROI = Net Income after Taxes

Total assets

An important test of management abilities that how much they can earn on funds supplied

from all sources.

Table No: Return on Investment

Years Ratio Value

2006 0.002
2007 0.002

Return on Investment
Values 0.001
2006 2007


Return on investment show the how much an organization get return on what ever they
had invested. Return on investment ratio of state life insurance for the years 2002-2003
show that it has same return on investment in both the year. It means that either the
investment proportion is the same or the increase in return is consistent. So the

management should give importance return on investment, because higher return on
investment will ultimately increase their net profit. Higher return on their investment is
the key to their over all net profit. Specially their investment in capital assets must be
consider the most because the return on such investment is longer and high as well.
Moreover the management of state life insurance should focus on such projects which
can give high and fast return.

6.6.4- Return on Equity

Return on equity indicates that how much an organization can earn on equity. Return on

equity compares net profit after taxes to the equity that shareholders have invested in the


ROE = Net Income after Taxes x 100

Shareholder’s Equity
This ratio tells the earning power on shareholders’ book value investment and is

frequently used. A high return on equity often reflects the firm’s effective management.

Table no: Return on Equity

Years Ratio
2006 0.19
2007 0.21


Return on equity ratio show that how much an organization can get return through the

investment of equity. Return on equity ratio of state life insurance for the years 2002-

2003 show that they are getting back a favorable return upon the investment of their

equity in 2003 as compared 2002. It is a positive sign for state life insurance corporation

because on one hand the shareholders will can get maximum return and on other hand it

will also add to net profit of corporation. But care should be taken because more equity

investment will increase equity and will increase liability of the organization.

Chapter No 7

7.1 PEST Analysis of SLIC:

7.1.1 Political Factors:

The political environment of Punjab is quite stable since the take over of the last

Government. Though some factors are always trying to pollute the social and political

environment of this province, Government has taken very positive initiatives in this

context and people fell no hesitance to invest their money in insurance packages. As the

nature reveals, insurance has always been a social and ethical code of business. So State

Life Insurance Corporation has a favorable political environment for investment and

business activities. On the other hand government policies that regulate the overall

business have no harm to their activities.

7.1.2 Economical Factors

The economical environment too is almost in the favor of businesses prevailing in the

province. Same is the case with State Life Insurance Corporation, because it is along

term high return project. The employment rate is at an increasing trend because most of

the people are coming towards their own businesses which lead to employment

generation and indirect technology base environment. Than these factors as a whole

contribute to a higher per capita income. Due to positive and friendly economic factors

their vast set-up and business regulations people feel free to invest their savings for a

long-term and safe return.

7.1.3 Socio cultural Factors

Socio cultural factors play an important role in the smooth running of business. As a fact

the dominant religion of Punjab

is a peaceful religion “Islam”. People of this province have great devotion towards the

principles and teaching of Islam. Due to these reasons a specific group of people are

against the Insurance policies, which affect the business of SLIC to a greater extent. In

such circumstances word of mouth and the social set-up matter a lot. But at the same

time the people of Punjab are also not in favor of foreign products and foreign

organizations, which is a positive sign for State Life Insurance Corporation of Pakistan.

7.1.4 Technological Factors

In terms of technological advancement state life insurance corporation is behind its

competitors in the race of insurance business. Few insurance corporations coming to this

field with a new and modern technology has got a reasonable market share in a short span

of life. But now state life insurance corporation is launching online business. With this

facility people can get every type of information about SLIC. Their packages, rates and

also can apply for online policies. This service will provide a new ways and segments,

where State Life Insurance Corporation can compete on strong grounds.

7.2 Value Chain Analysis

Broadly value chain analysis is divided into two categories.

Primary Activities

Support Activities

7.2.1- Primary Activities

As a sequence of value chain analysis the primary activities of SLIC goes like this. At

the beginning stage when a customer applies for a policy, the first potential customer has

a great importance to State Life Insurance Corporation. That’s why the documents are

submitted in new business department with in no time. When the codes and policy

number are allotted to the policy holder, then the final information, are further processed

to the customer. All the relevant information regarding his policy, terms and conditions

and the duration are made available to the customer.

After this the most important stage is to create awareness regarding the new packages and

incentives among the potential and targeted customers. For this purpose SLIC has

recruited well trained and qualified staff, so that to have a fair number of customers on

their behalf. Beside these activities state life insurance corporation has left no stone

unturned to provide every type of service with their possible efforts. So in short the chain

starting from a customer applying for a new policy till he gets all the relevant details and

services he needs is a smooth and without any difficulties and interruption.

7.2.2- Support Activities

State Life Insurance Corporation has a skilled, qualified and highly motivated staff to

complete every task in a short span of time and with maximum results. In the range of

these activities of first stage SLIC emphasis on the purchase of new services and other

accessories to be efficient in the arena of competition. Then come the technology and

modern equipment to provide all the services to their customers at their doorstep. In this

context “Online Insurance” will have new horizons to their business. The third step is

human resource management. Human resource or employees are the vital and valuable

asset of an organization. That’s way SLIC pays its full attention at every moment to train

their employees and prepare them for every type of up-coming challenges.

As a last stage of the chain SLIC staff is always busy to have best and implement able

corporate decisions at all levels. Beside this the planning activities too play an important

role, so also focused a lot on.

As a concluding sentence the value chain of SLIC presents a clear picture of their

efficiency, that’s why they are still in the market with a competitive image.\

7.3 Critical Analysis of Corporation

The management of the corporation is too much centralized and all the policies making

decisions are entrusted with the Board of Director.

The field staff an assets to the corporation have no role in policy-making activities of the

corporation. The sale representative, an important element in sale and promotion have

little training opportunities and their period of training is too much short and it is difficult

for them with little knowledge to prove better results.

The trade union is too much strong and there is little scope for outsider to enter into the

corporation revise with their good potential and capabilities, particularly in grade 1-8.

The record is centralized in some of the matter for instance, the pension of the employees

are dealt in principal office which sometime causes unwanted delays.

The corporation pays bonus to their employees from grade 1-8, but the managerial cadre

is ignored, although they are also partners in the business and development of the


7.3.1 Training

Training play a basic role in the development of manpower, the corporation impart

training to their staff under two agencies held manpower Division (2) field training

division, but a training institute on the pattern of banks dose not exit, which need of the

time. An institute of insurance education must be established for more ling facilities to

the field staff.

The advertisement is too much centralized and only one media (Television) Utilized; the

services of press, magazine and newspapers should be utilized.

Although the corporation has made some contribution in insurance business in rural

areas, but the progress is not too much eventual, a major portion of rural areas have no

knowledge of the insurance, nor the insurance sense. This segment of the society should

not be ignored.

7.3.2 Policy Limits

The minimum amount for policy is Rs 20,000/- which is beyond the approach of a major

portion of the population. This ceiling should be minimized to the nearest figure as


7.4 SWOT Analysis of SLIC

It is an important tools to analysis the overall situation in which an organization is

conducting its affair. Each issue remains relevant and useful for corporate strategy


7.4.1- Strength
i. Adequate financial resources

SLIC has adequate financial resource this is strength of SLIC. because it can invest in

different project and can earn more, financially they have no problem.

ii. Better advertising campaigns

As SLIC is market leader, and big organization so it can lunch a better advertisement

campaign through any kind of media.

Adequate human resources

As SLIC is a large organization, and there are large number of people who are

working . So they have adequate human resource, and they can meet any challenge

relate to human resource.

iii. Capable top management

As they follow strict rule for promotion, so the top management of SLIC in a very

much competent experience. so their decision give benefit to organization.

iv. Competitive skills of employees

Employee of SLIC are very much competitive and very much skillful they know very

will the corporation activities, which increase the efficiency of an organization.

v. Good will

As SLIC is a old organization, so it develops a Goodwill, so policyholder built trust

on it, and people want to invest in it.

vi. Government security

As SLIC is government organization, so there is also government support to

organization which also increase their, stability and Goodwill.

7.4.2 Weakness
i. Turnover of field force

As field worker are commission based, so turn over in SLIC high because those who

fail to bring business, leave the organization.

ii. Increasing rate of surrender

Because of economic condition, when the saving of people lower they cant continue

their policy. so they surrender the policy, and this is one of the important weakness of


iii. Economic conditions

Economic condition of Pakistan is not so good, due to which people has lass saving,

so when saving will be lass they cant be able start a policy.

iv. Less awareness of mass

A large part of population are leaving in rural areas, and people of that area is not

aware about life insurance.

v. Weak marketing efforts

As SLIC is market leader, and there is no other close competitor, so they not give

proper attention to marketing activities.

7.4.3 Opportunity
i. Growth of financial sector in Pakistan

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.

ii. Diversification

As SLIC is providing services in just only in life insurance, it can also start general

insurance, like the insurance of property etc.

iii. Favorable government policies

As SLIC is a government organization, so all policies of government is in the favor of


iv. Innovation

SLIC also bring so many innovation in their present product, like they decrease the

maturity duration of policy or can decrease sun assured of policy etc.

7.4.4 Threats
New competitors

With the passage of time so many organization are coming to insurance business, so

there will be tuff competition for SLIC to face in future.

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.

Changing customer needs

As customer’s needs are changing, like if they have saving they might use in some

other business in stated investing in SLIC.

The state life Insurance Corporation has a monopoly in the life insurance business. The
only one competitor is postal life insurance. But as whole the market is monopolized by
SLIC and market share of SLIC is about 80%.
For the promotion development of the business of the corporation the following
suggestions and recommendation is given:
i. As the union in SLIC is very strong, so many time it interfere in the working of

SLIC specially in the recruiting low level employees from grade 1 to 8. Because

employees of these grade are appointed according to wishes of union. This often

leads to recruitment of incompetent people, which may affect the efficiency of

SLIC. So the role union should be minimized.

ii. Recruitment problem also face by SLIC at manager’s level. For the manager level

posts relevant qualified people should be appointed e.g. MBA’s will be suitable

for such type of job, but they also appointed lawyer which is totally irrelevant for

the job they perform.

iii. There is also found the lack of proper and channelized communication among the
different deportment of SLIC. The communication should be properly
channelized and should not be so much complicated.
iv. As it is accepted that field workers are very essential factor in bringing business.

So turn over of sale force is other sever problem of SLIC. To reduce turn over and

retain experience and competent field workers their commission rate should be

increase, in order to motivate them for better performance.

v. SLIC also adopted a procedure for promotion of their employees in which

includes their performance and passing of FLMI test. This is conducted by an
American institute, it consist of 10 papers, and cost of each paper is from Rs.
5000 to 6000. So this is very expensive test. And this may effect a person who is
competent but can’t offered this expenses. So SLIC should reduce this cost or
should help the competent employees in monitory terms.
vi. As the field workers are commission based so they are not considered the

permanent employees of the organization, there for they have no role in policy

making while they face the real problem on ground, so they must include

members of field force when they making policy for them.

vii. So many policy holders are facing problems and depositing their premium,

especially people of rural area. Because most of the cash counter are situated in

district cities which are far away from the side area of district. So SLIC should

open cash counter in side areas also, this will make the people to deposit their

premium easily.

viii. Surrender of policy means the end of policy. So many people surrender their

policy because of less saving they can’t deposit their premium. So to stop the

surrender of policy the SLIC should increase the time period for revival of policy.

This will give extra time to policy holder to continue their policy if they want.

ix. Lapses in policies should also be reduce, And this can be done by continuous

motivating of policyholder to deposit their premium regularly. This will also help

them to attain persistency.

x. State life insurance has more than 52 building through out the country. And most
of the position of the building has given on rent. But when there is recession in
economy most of the companies leave the offices in state life building because of
its high rent, which leads to reduction in net income. So the state life should
facilitate the rent of offices according economic condition.


It is concluded from the report and other documents which were consulted for the

completion of this repot, that State Life Insurance Corporation is one of the leading

corporations of the country. It has provided a life Security Protection to about 5.00

million person of the country. Apart from this it provides self finance jobs to thousands of

the countrymen, and mobilized the country economic and financial resources, and also

contributes a lot to Government in terms of providing funds. We hope that the

corporation will play its important role in the development of National Economy.


i. Annual Report for the year 2002,State Life Insurance Corporation.

P # 22,23,28, 54,55.

ii. Annual Report for the year 2003, State Life Insurance Corporation.

P # 8,9,10,11,20,21,26,27,29

iii. James C Van Horne, Fundamental of Financial Management, Edition, Prentice-

Hall International, Inc. P # 128 – 144.

iv. Tahaffuz “An In-house magazine” State Life Insurance Corporation of Pakistan,

2002, P # 5,6.

v. Tahaffuz “An In-house magazine” State Life Insurance Corporation of Pakistan,

vi. 2003, P # 8,9,10.