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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 nationalizes State Life Insurance
Corporation at March 18, 1973 under the nationalization order1972. State Life Insurance
Corporation plays a very important role in everyday lives of the people and also
contributing a lot to the economy of the country by providing the government a lot of
fund.

The purpose of this internship possesses objectives like this study has given me
chance to learn something new practically and this is also the partial requirement of the
degree of BBA (Hons). This internship has given me chance to get the practical
experience in this large organization, and this internship also endows me the knowledge
of different departments and their working in the organization. Internship at SLIC is very
beneficial for me, it provides me an opportunity to acquaint myself to the actual work,
and place and writing of its project requires me to use all the skills, abilities during the
internship. It makes me more practical, confident and professional.

SLIC has the privilege of having the largest distribution network. Corporation has
a continued training and development program to have a strong and trained field force
and always makes endeavors by creating new employment opportunities for youths to
join the corporation's field force by arranging seminars, workshops and by imparting
training and conducting special courses. The primary purpose of the SLIC is to provide
quality service to the policyholders of the Corporation. In this regard, measures were
taken at all the zonal offices to improve the services such as prompt settlement of claims
and handling of complaints of policyholders or their successors on priority basis. These
steps not only have increased the level of customer satisfaction but have also contributed
towards the retention of our existing policyholders.

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Apart from above, various computer programs and soft modules are continuously
being introduced for the Zonal/Regional management to eliminate unnecessary paper
work, thus reducing the time span required for providing such services. In 2009, a
strategic decision was taken to obtain Insurer Financial Strength (IFS) rating for SLIC.
This task was assigned to the Pakistan Credit Rating Agency (PACRA). It is a matter of
satisfaction for SLIC that it has been assigned Insurer Financial Strength (IFS) rating of
³AAA´. The rating denotes SLIC's exceptionally strong capacity to meet policyholder
and contract obligations. The rating reflects SLIC¶s leading position in life insurance
business in Pakistan, its extensive distribution network, good management quality,
comprehensive information system and growing business volumes. A rating of ³AAA´ is
the highest possible for an insurer to achieve and SLIC stands alone in the life insurance
industry to have been assigned this rating.

I try my level best to include all the aspects of SLIC in this internship report. I add
the introduction of insurance sector than briefly explain the SLIC¶s achievements, their
objectives, quality control measures as well as the basic structure of SLIC. Then I put the
data related to Multan Zone. I include the various types of policies that are offered by this
zone to their potential customers. Briefly present the working of all departments that are
highly committed to their work and always try to give their best in the favor of
corporation. I also include the managerial policies of SLIC that shows the way to success.
Then comes to financial analysis of SLIC that shows the financial positions of
corporation and also tells about the growth regarding income profitability. SWOT and
PEST analysis provide a chance to see the corporation¶s activities in critical aspects.
Every business has some strength over its competitors, weaknesses to have a chance of
improvement, opportunities to grow their business to excellence and threats to overcome
on it strongly. Than political, economical, social and technological factors also influence
every type of business. So what I learn from this internship, what are the points to
improve the internship program and what should I do to lead the SLIC as a manager; all
the parts are included in this report comprehensively.

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³Financial 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.

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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).

c 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.

c 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.

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c 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.

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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.

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c 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 enough.
c The incident that represents the cause of the claim should be accidental or beyond
the control of the beneficiary.
c 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.
c The amount of premium should be affordable.
c The possibility of loss and the cost of compensation should be calculable or
estimable.


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Below are two main kinds of insurances.

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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.

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



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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.

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

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

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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.

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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

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insurance premium once or twice a year. Other people choose to make automatic monthly
payments to their insurance company for a bank account.

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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.


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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:
c The financial stability of the insurance company.
c The price of policies.
c Êetail 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.

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The insurance industry in Pakistan, which should be described as a business rather
than an industry ± has shown some rapid progress in recent years. When Pakistan was
established in 1947, there were 77 insurance companies in all. Today there are 52. In
1947, 70 of those 77 companies were foreign companies and/or their branches. Today
there are 10. The seven local companies have 47 years later become 42, and might have
been more had 32 of them not been nationalized on March 18, 1972, when their life
insurance business was brought into the public sector.

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Today, Pakistan has 52 companies conducting general business. They offer


primarily Fire, Marine, Motor and Accident cover. The composition of general insurance
business is Understandable, considering the lack of sophistication of our domestic
environment.

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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 ³A´, ³B´ and ³C´ Beema Units. However, later these

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Beema Units were merged and effective November 1, 1972 the Management of the Life
Insurance Business was consolidated and entrusted to the State Life Insurance
Corporation of Pakistan.

State Life Insurance Corporation of Pakistan is headed by a Chairman and


assisted by the Executive Êirectors appointed by Federal Government. Up to July 2000
the Corporation was run by Board of Êirectors constituted under Life Insurance
(Nationalization) Order 1972. In July 2000, under Insurance Ordinance 2000, the Federal
Government reconstituted the Board of Êirectors of State Life which runs the affair of
this Corporation.

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.

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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:

c 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.

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c State Life is profitable organization and it paid Rs.1.729 billion as dividend to the
Government of Pakistan since its inception in 1972.
c 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 31.12.2009 stands at Rs. millions.
c Investment portfolio also includes investment in Real Estate which stands at a
book value of Rs.c D  c million as at 31.12.2009 whereas it fair value is around
Rs.100 million in the same period.
c The Paid up Capital increased from Rs.10 million in 1972 to Rs.900 million.
c The Premium income increased from Rs.0.317 billion in 1972 to 13.820 billion in
2009. Similarly Investment income including rental income increased from
Rs.0.81 billion in 1972 to 13.106 billion in 2009.
c Total statutory fund of State Life stands at Rs.211.658 billion in 2009 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 Êecember,
2009 the total number of policies enforce under individual life were 4.044 million and
number of lives covered under group life insurance were 5.731 million.

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c To run life insurance business on sound line.
c To provide more efficient service to the policyholders.
c To maximum the return to the policyholders by economizing on expenses and
increasing the yield on investment.
c To make life insurance a more effective means of mobilizing national savings.
c 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.
c To use the policyholders¶ fund in the wider interest of the community.

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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.

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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.




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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 Êirectors. 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.

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IL: INÊIVIÊUAL LIFE BUSINESS
GL: GROUP LIFE BUSINESS
RE: REAL ESTATE BUSINESS

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1.c Whole Life Insurance
2.c Term Insurance (General Insurance)
3.c Endowment Insurance

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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 installments. Êeath at any time before age 85 years terminates
payments of premium and the sum insured (plus bonuses, if any) become payable.

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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.

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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.

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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 ³With &
Without Profit´ basis.

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Group Endowment Scheme is a unique saving and protection scheme through
which the employees of an employer can enjoy insurance protection throughout their
service and also get a lump sum cash amount upon their retirement if they survive up to
retirement.

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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.

c !"#$%&!%$'$(&%$")***The endowment insurance is issued on a with profits basis.


The same bonus rate is applicable as for the corresponding individual endowment
insurance policies.
c !+,$-, &%+.***The same premium rates are applicable as for individual
endowment policy but with the added attraction that in group form some volume
discounts are also applicable depending upon the size of the annual premium.
c p"&)&'$/$%0***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.

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c Jeewan Sathi
c Shadabad Plan
c Personal Pension Scheme
c Sunehry policy
c Three Payment Plan

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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 someone is purchasing supplementary contracts with a policy
then he will be awarded the officers of the supplementary contracts too along with policy
or insurance plans.

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.

c Accidental Êeath & Indemnity Benefit (AIB)


c Accidental Êeath Benefit (AÊB)
c Family Income Benefit (FIB)
c Waiver of Premium (WP)
c Special Waiver of Premium (SWP)
c Term Insurance (TI)
c Refund of Premium Rider (RPR)

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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

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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.

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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. AÊB is highly recommended for individuals who travel daily
through road transport.

The cover is available to lives between 5 and 55 years of ages. Maximum term of
this supplementary benefit is not allowed to exceed the premium paying term of the basic
policy, or 60 years of age of the life proposed whichever is earlier.

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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.

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This supplementary cover provides for waiver of due premiums in the event of the
life insured¶s Total and Permanent Êisability caused by accident as defined in the
contract. With the help of WP, the life insured gets relieved of vagaries of paying
premiums in case of his or her being incapacitated as a result of accident. The rate of

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premium for standard risk will be Rs 0.50 to 1.00 per thousand of sum insured depending
upon the age of life insured.

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

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In the event of death of the life insured during term of TI supplementary cover,
the sum insured will be payable in addition to the benefits payable under the basic policy.
Suppose, Mr. A, covered under a policy of Rs 1,000,000, and also attaches TI
supplementary cover with his policy. In case of his death during term of TI, a sum equal
to Rs 1,000,000 will be payable under this supplementary cover. This will be in addition
to the benefits payable under main policy.

This supplementary cover is an excellent opportunity for individuals who want to


enhance coverage of their policy substantially on payment of a meager amount of
premium. TI is available to lives between 18 and 55 years of age.

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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.

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There are five or six zones in each region. The Multan Region controls the five
zones. These are:

1.c Multan
2.c Sahiwal
3.c Rahim Yar Khan
4.c Êera Ghazi Khan
5.c Bahawal Pur

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State Life Insurance Corporation (SLIC) has divided its whole setup into twelve
departments. The organization setup is same in Zonal Offices, Regional Offices and
Principles Office. All the Regional and Zonal departments are directed from the Principle
Office. The twelve Êepartments are currently performing services in SLIC. There are two
Êepartments which are working only in Principle Office at Karachi. State life Insurance
Corporation of Multan Zone has following departments;

1.c NB (New Business)


2.c Legal Affairs
3.c PHS (Policy Holder Service)
4.c IA&C (Internal Audit and compliance)
5.c REÊ (Real Estate Êepartment)
6.c G&P (Group & Pension)
7.c FMÊ (Field Manpower Êevelopment)
8.c P&GS (Personnel And General Services)
9.c Agency Administration
10.cIT (Information Technology)
11.cF&A (Finance & Accounts)

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New Business (NB) is considered the soul of Insurance companies. Profitability
and survival of the business depends on the NB.

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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. 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
mailing the policy document to the policyholder. It has various section to perform the
different task relating to the acceptance or rejection of risks for life insurance, the
proposal are received and initially is checked in all respects i.e. completion of all columns
and then processed by the underwriters depending upon whether they have been
introduced under the medical or non-medical scheme. The risk is assessed keeping in
view the following factors:

c Personal data, occupation, physical and social features, health, family history of
the prospect.
c Moral hazard, source of income, nomination, relationship between the nominee
and the prospect.
c Previous life insurance history of the prospect if any.
c Field officer¶s or sale representatives confidential report included in the proposal
form.
c Financial underwriting i.e. source of income, its legality and proof, relationship
between the prospect¶s income and sum assure.

In case of non-medical scheme, the prospects own statement and filed 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

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with loading, calling additional evidences relating to health or financial 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 like 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 life
institution.

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The precise working of NB department is as follows:

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In order to fulfill the recognition of the insurance policy, NB department allocates


a number t each insurance policy for future references. NB department verifies whether
the client is a new customer or a past customer.

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Underwriting is the process through which the underwriter assesses the risk
associated with the Insurance Proposal. Underwriter verifies the personal information
provided in the Proposal form. If he feels that client should have a medical checkup then
SLIC has its own penal of doctors to provide medical assistance.

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After underwriting the premium of Sum Assured is calculated in Policy Brief


Sheet 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.

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After premium calculation the insurance and revenue stamps are embossed on the
policy bond and the policy d documents is sent to client one copy of policy document is
sent of (PHS) department of record purpose.

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c Taking of Authentic Age Proof.


c Verification on Nominee Relation with Policyholder
c Analyzing of health and financial status of Prosper.
c Verification of stated information on Proposal Form.
c Requirement of Medical Reports and Tests.
c Analyses of Medical Reports and Tests.
c Analysis of health history and family background.
c Others requirements.

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The in charge of the legal affairs department is Mr. Aale Hassan Zaidi, legal affair
department is a department of State life which covers all its legal affairs, all the court
proceedings, legal complaints, legal documents, legal cases been filed through this
department, if a person file a case against the State life than the court will issue notice to
both parties, the notice issued to state life will be sent to zonal head and the zonal head
will forward it to legal affairs department for further proceedings, it covers,

c Legal cases filed by any person against the zonal office been dealt by the legal
affair department of that zone, and the provincial capital¶s session judge hears this
case,

c Complaints filed against the fieldworker in case of fraud or any other illegal
activity, are also dealt in this department.

c In case of complaint field worker inquiry been done by calling both parties and a
report on this inquiry been prepared and sent to the zonal head for further decision
to be taken.

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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:

Dc Claim Section


c Surrender Section
c Loan Section
c Alteration Section
c Suspense Account Section
c Lapse & Revival Section

Each and every section of this department plays an important role and they
provide different services to policyholders.

Dc pM 

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:

c Êeath Claim
c Maturity

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

    c
c
cccccccccccccccccc‘  
          c

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.

 M  M

c In case of death the nominees should make death certificate for the policy
holder. It may be gross the hospital, Nazim, Political Agent, etc.
c Then they issue 4 forms i.e. A, B, C, Ê. Form µA¶ will be filled by the
nominee. Form µB¶ is for Attended Êoctor, Form µC¶, a person from village
like Khan, and Malik etc. Form µÊ¶ if a policy holder is govt. employ, than
this form should be filled. 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 Multan). And if
amount is more than 500,000 then this is the case of central claim committee after
approving from 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.

c  M M M 

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 keeps their record in computers. Very technical and professional staff
has been recruited in this section.

    c
c
cccccccccccccccccc‘  
          c



 M  M

c First the surrender section receives application from the policy holder¶s along
with other required documents like NIC etc.
c 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 be signed by the policy holder.
c Then they send all these documents to audit department after making the audit,
the audit department again sends it¶s to surrender section (PHS).
c 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.
c 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.
c
c p  M 

Loan section is also play a very important role 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 in fact within
the specified time and due of next premium the policy.

c pM  M 



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

    c
c
cccccccccccccccccc‘  
          c

PHS are interring links with other sections and professional staff with trained officers is
busy in providing services to the clients.

c M M  M 

This section is an important section that 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 are 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.

c  M p   p M

   

This department plays a supervisory role of all the other departments by checking
and verification of all the working done by the departments according to the rules and
regulations provided by PO Karachi time to time. These rules and regulation are
provided to all the Zones throughout Pakistan in shape of circular. These circulars are
attached in the book, which is called ³Key to PO Circular Volume´. All working of the
departments are verified according to this book. In this way, the frauds, errors, and
omissions are detected

Audit means right amount of payment to the right person at right time. The Audit
department plays a supervisory role of all the other departments by checking and
verification of all the working done by the departments according to the rules and
regulations provided by PO Karachi time to time. These rules and regulation are
provided to all the Zones throughout Pakistan in shape of circular. These circulars are
attached in the book, which is called ³Key to PO Circular Volume´. All working of the
departments are verified according to this book. In this way, the frauds, errors, and
omissions are detected.

    c
c
cccccccccccccccccc‘  
          c


M  

Following are the two types of audit:

c Pre- Audit
c Post-Audit

 M* 

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 all the big payments such as purchase of assets, payment at maturity of
policy, payment on death claim etc. post audit is conducted for all day-to-day expenses
such as traveling expenses, stationery etc.

 M   

c File is received from the concerned department.


c To find the errors, Audit Êepartment read the file thoroughly.
c If there is no error in the file, then they send it to the concerned department for the
preparation of payment voucher.
c Payment voucher is checked by the Audit Êepartment.
c If there is no error in the payment voucher, then cheque is prepared by the B&A
Êepartment.
c Then this cheque is given to the concerned person.

M    M M 

Audit Êepartment divides its whole structure into small section. These are:

c Loan
c Surrender
c Êeath
c Accidental Injury Benefit

    c
c
cccccccccccccccccc‘  
          c

c Family Income Benefit


c Survival Benefit
c General Payments (Stationary, Bonuses, Salary etc.)
c Field Maters (Rent of AM Office, Contest etc.)

It is not necessary that the audit will be only about money, the audit of business
figures, audit of promotion files is also required.

c MpMM M M 

   

REÊ is a separate unit from the business of state life, they don¶t have any direct
link with the functioning of other departments the basic function of REÊ is to look after
the real estate business of the state life, all the buildings of sate life.

The ground floors of all the state life buildings in Pakistan is rented to other
companies in order to earn some revenue REÊ controls all the rented area and deals with
rent issues of the buildings.

It also deal with the lift system, power generation system, janitorial, paint,
security of the building, renovations, parking and it also provides a central air
conditioning system, water system, all the facilities which are provided to the state life
gallery at the gate lighting of gallery and gate been provided by this department, It
provides maintenance and repairing services to all the departments in case of any
problem, in case of any service required the REÊ provide them the manpower and all
other expenses been beard by that department, REÊ is under the Lahore office, their link
is with the Lahore office.

c  2M  M M M M 

   

The market of group insurance comprises industrial and commercial


establishment. The employees of these establishments are insured on behalf of the

    c
c
cccccccccccccccccc‘  
          c

employer. The premium is calculated by considering the age, designation and physical
hazards. The policy is issued for the coverage of one year. It is renewed each year. The
grace period for the payment of the premium is one month. After grace period the policy
is lapsed.

Êifferent plants are offered by SLIC. Supplementary Contracts are added to the
plan i.e. Accidental Êeath Benefit (AÊB), Partial Total Êisability (PTÊ). The benefits
available under the PTÊ and AÊB Riders can be provided to the member for 24 hours as
follows:

c Êeath due to any cause at anytime (24 Hours),


c Permanent Total/Partial Êisability caused as a result of an accident at any time
(24 Hours).
c Temporary disability caused because as a result of accident occurred during off
duty hours only.
c Rules of group insurance are different for different employees according to their
grades.

M M M MMM    p pM    M    


pM   M

c There should be at least 10 persons.


c There is no maturity in Group insurance, while there is maturity in life insurance.
c The policy is issued for the coverage of one year.
c If a person retires then till the 5 years of his retirement. If he dies the whole
amount of sum assured will be given to his nominee.

 M  pM   M

c The employer gives a list of employees to be insured to G&P.


c The rate and amount of premium is calculated, if the party agrees on the terms
then application is demanded.
c Then case is transferred to Lahore zone for underwriting and decision-making.

    c
c
cccccccccccccccccc‘  
          c

c Medical is done according the size of the group. If the group is large then there
are less chances of medical. If risk is high (large sum assure) then chances of
medical is greater.
c Policy bond is sent from Lahore to Multan and then issued to party.

M  

Group and pension department takes a pension policy. A particular amount is


deducted from the salary of individual employee. When employee retires then state life
gives pension for whole life.

  M   M  

All mater of the ³Group and pension´ are dealt by Lahore zone. If any
organization applies for group insurance then his request is send to the Lahore zone for
assessment and underwriting. The amount of premium is also sent to Lahore zone. Group
and Pension has no regional office. In Group and Pension there is only zonal office and
sector office, and they have contact with PO Karachi.

‰c Mp   M  MMp M 

   

This department imparts training to the needy appointed staff. It teachers them all
the rules and regulations, procedures, practices regarding the insurance job. It also gives
them different dimensions regarding the acquisition of new policies. Previously this
department was called Human resource Êevelopment Êepartment (HRÊÊ), now it has
been changed ³Field Man Power´ department.

MpM   M     

Prior to nationalization of Life Insurance in Pakistan in 1972, very few


organizations had any system of training for the field force and office personnel. Even
those companies, which had any system of training programs, were in the process of
developing their own training material and related curricula. With the nationalization of
the Life Insurance in Pakistan, one of the major positive steps taken for the field

    c
c
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          c

personnel was that training for the field personnel was made compulsory for the first
time. No agent could solicit Life Insurance business without undergoing a basic training
course of 5 days duration. Experienced executives who had decades of practical
experience of Life Insurance

 MM     

With the passage of time, besides the basic training programs new and
sophisticated training programs were introduced, specially designed and introduced by
Life Insurance Marketing Research Association and Life Office Management in the
United States. These programs soon became popular and practical adaptability to local
conditions. Now these have been adapted in Urdu along with relevant material.

It is a proud achievement of State Life that training programs like Agent


Êevelopment Program (AÊP), Marketing Orientation Program (MOP) and Marketing
Management Series (MMS) are being conducted in all the zones of the Corporation
through three Regional Academics at Karachi, Lahore and Rawalpindi and training
centers in all zones. In addition to this, holding of Training Seminars of one day and two
days duration is a regular feature.

Three computer-training centers are also operating at Kasur, Shikarpur and Jhang
under the Prime Minister¶s training program for semi rural communities. For holding
these courses and programs, the SLIC has developed a team of dedicated and skilled
professionalism trainers who performs their responsibilities under directions of the
Human Resource Êevelopment Êivision at the Principal office Karachi. Last year as
many as 1700 training courses were held which catered to the training needs of 22,000
participants. Some new training programs were also introduced on topic like
Commitment, Psychology of success, Trust, Productivity and Motivation.

SLIC is contemplating to offer training opportunities to other institutions in near


future. For the current year, the Corporation has a target of 2000 training courses catering
to the need of some 25,000 participants. This year some innovative topics both for field
and for office were introduced. I.e. Office Management, Business Communication,
Synergy for Excellence, Scientific Planning and ISO 9000.

    c
c
cccccccccccccccccc‘  
          c

The Êivision also nominated 632 officials to renowned institutions like PIM,
NIPA and Petromen. One officer was nominated to attend a course in Tokyo, Japan. Out
of 1485 that appeared in the FLMI, 943 qualified different papers, 33 completed FLMI
and 9 completed FLMI Masters.

The training to SR, SO, SM, AM (Field workers) and office employees is given.
The training is given for three weeks in a month throughout the year. For the
development and enhancement of marketing skills of the field & office employees,
different courses are offered in the department. This department has one manager and one
assistant manager with brilliant qualification and marketing skill. They perform their job
as regular trainers. Êespite some trainers are hired outside the Organization. The hired
trainers are compensated @ Rs. 500 per day during the training period. Following are the
main courses offered in the department:

c One Week Basic Training Courses (BTC) for SRs,


c One Week Basic Training Course for Sales Officers and Sales managers.
c 27 Units Agent Êevelopment Program (AÊP) of Life Insurance Marketing &
Research Association (LIMRA-USA).
c 17 Units Management Orientation Program (MOP) of LIMPRA (USA).
c 26 Week Study Course in Agency Management (SCAM) of LIMPRA (USA).
c Marketing Management Series (MMS)
c SLIC has 26 Training Centers throughout the country and 3 Training Academies
in Lahore, Rawalpindi, and Karachi.
c FMÊ also provides the training to the employees of other department of state life,
such as people from PHS, NEW BUSINESS are also trained here.


c M  p2M M pM M M M 2

   

The office & general matters are dealt in P&GS Êepartment. This department has
the sole responsibility and authority of the disciplinary action of the employees.
Selection, recruitment, termination of the employees is the main functions of the P&GS

    c
c
cccccccccccccccccc‘  
          c

Êepartment. This department also deals in medical facility to the office employees,
leaves and similar other general services. The stationary used in different department is
maintained in this department. The daily correspondence is dispatched in this
department. Followings are the main sections of this department:

M  MpM  

All the employee matters such as appointment, promotion, demotion, transfer and
allowances are dealt by personnel section. Annual Confidential Reports ± 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 competent authority for this appointment. This appointment also depends on the
business of the Zonal Office. The appointment of officers is done by Principal office
(PO) Karachi or Regional Office. Selection Committee constituted by Zonal Head
conducts 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 the employees are promoted by the
criteria and instructions set by PO Karachi. PO or Regional Office does promotion of
officers. In Multan Zone, there are 362 office employees, 9 Sectors Head and 43 Area
Manager (AM). There are number of subsections in this department:

M pM 

All the hospitalization expenses are beard by SLIC provided that these are
incurred in approved hospital (i.e. In Multan the approved hospitals are Fatima,
Medicare, and Govt. Hospitals). The expenses of medicine are reimbursed. The
reimbursement of medicine is not allowed to staff (Having grade 1 to 8) but they are
given Rs. 600 p.a. in shape of salary as medical allowance.

pMMM 

Following are the main two types of leaves:

c Casual Leave

    c
c
cccccccccccccccccc‘  
          c

c Medical Leave

20 days casual leaves are allowed to all employees in a year. The medial leave or
application leave is allowed for 48 days in a year. Unused leaves are accumulated and
after two years these leaves in excess of 180 days can be encashed. In case of death all
leaves, not utilized, can be encashed.

M M 

When Sale Manager (SM) is promoted to Area Manager (AM), he is categorized


as A, B, C, and he has entitled to have his own office at his own choice at the expense of
SLIC. A good location is selected by the AM. After selection of place, Zonal Head is
informed about the location, by application written by AM. This application is
transferred to P&GS Êepartment for the analysis of location of the office. This location is
annualized by Zonal Rent Committee (ZRC). A lease agreement is made with the
landlord after analyzing the approved map for the location and property registration form.
The office rent entitlement for the categories of A, B, C, of AM is Rs. 2000, Rs. 2000, &
Rs. 1000 P.M. Respectively.

 
M 

This section maintains the record of stationary such as paper, pencil, envelops
printed letters, forms, calculators, dustbin etc. whenever any department requires the
stationary, the concerned department fills a Requisition Slip. The stationary is issued to
the concerned department and it is recorded in the register.

pM 

This section is responsible for purchase, sale and maintenance of Furniture &
Fixture, Equipment etc. A Zonal Procurement Committee (ZCP) is constituted for the
purchase of assets. The assets are purchased from the suitable supplier after 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 year the closing balance is intimated to PO Karachi.

    c
c
cccccccccccccccccc‘  
          c

rc M 
 M M 

   

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 sending 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.

 MMp  M p


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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 promotion.

    c
c
cccccccccccccccccc‘  
          c

M MM   

c Minimum qualification for SR is metric.


c Minimum requirement is 12 policies in one year.
c Rs 50,000 should be achieved in one year.
c
      
c
(From Sales Representative to Sales Officer)
c
c 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/-
c Must have at least 20 policies in force on different lives.
c Must have achieved a minimum second year persistency of 70% in the immediate
preceding year-
c Must have achieved a minimum renewal persistency of 70% in the immediate
preceding year.
c
(From Sales Officer to Sales Manager)
c
c 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/-.
c Must have minimum second year persistency of 70% in the immediate preceding
year.
c Must have at least 80 policies in force in his organization.
c Must have minimum renewal persistency of 90% in the immediate preceding
year.

Dc   M p 

   

Almost all the departments (i.e. NB, PHS, P&GS, and Cash Counter) are
interconnected by computer network. A separate computer section controls all the
activities of the departments. This computer network was established in 1995.

    c
c
cccccccccccccccccc‘  
          c

  MM   M 

The software used in computer network both for back-end and front-end is
Oracle. SLIC has licensed this software from Oracle Corporation.

M    M  M 

IBM does the entire networking and quotation they used in this computer network
is,

c 32 terminals in different departments with one central computer.


c Minicomputer 6000 Risk
c Coaxial Cable is used.
c Networking topology is Star-Bus.

   

In each floor one distribution box is there. In simple words distribution box is a
machine which takes the data from main server and distributes the data to different
printers and terminals.

M  p  

For security purpose, each user at each terminal has his unique password.
Password is the unique address to open the computer and start the working.

 p
 M 

For each month different reports are prepared of the working of the different
department. These reports are sent to the concerned departments for reconciliation.
After reconciliation the data is transferred to the master file. Master file is a file in which
no change can be made in any way. After transferring the data to Master files the data is
copied in floppies and transferred to Principal Office (PO) Karachi. In PO different
ledgers are prepared and these are sent back to Zones. Further checking of accounts
(collection/ payments) is made and errors are detected.

    c
c
cccccccccccccccccc‘  
          c

 MM

Back up can be defined as the process of copying the date from hard disk to the
Cartridge or Spool Tape. Cartridge or Spool Tapes are the storage devices, where the data
is accessed sequentially. Every Friday the backup is made in SLIC.



To avoid unexpected power failure ³ultimate power supply device is managed,


which provide electricity from 20 to 30 minutes. It cost Rs.200, 000.

DDc M    M M 

   

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.

 M  M

ÊISCUSSION
‡Budgeted amount ‡ Finally
is written and Submitted to
expenses are ‡ Êiscuss the The Board of
reduced gradually
proposed budget Êirectors for
with Executive proposal.
from it.
Êirectors and
BUÊGET Chairman.
SUBMITTEÊ
PROPOSAL

c
Budgeted amount is equally distributed in four quarters. Big zones are rated on
total premium while small zones are rated on first year premium (FYP). 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.

    c
c
cccccccccccccccccc‘  
          c

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 requirements. 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.

  M 

Every department feeds its daily work in the computer. At the end of the month
computer summarizes it as;
c Cash premium in collection books
c Cash paid in cash books.
c 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.


ppM 

This section deals with different allowances and loans which are offered to the
employees. Two employees are working in this section. Allowances that are available for
officers are;
c
c  M
 Mpp  M

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.

c  M M 

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

    c
c
cccccccccccccccccc‘  
          c

c p
pp  M

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

pp  M 

c  M M 
The house rent allowance paid to the staff is 18 % of their basic pays.

c  M
 Mpp  M

The staffs that possess motorcycle are paid Rs.800 per month, and those who
does not possess are paid Rs. 675 per month.

c Mpp  M

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

This is also a fixed amount of Rs. 300.

c p
pp  M

It is also a fixed amount of Rs.675.

c M  pp  M



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.

c M ppp  M

A.c Rs.1000 per month for married.
B.c Rs. 725 per month for unmarried.

    c
c
cccccccccccccccccc‘  
          c

c M ppp  M



Technical allowance to the telephone / telex / fax operators, franking machine /
adrenal operators, photo state machine operators, lift operators Rs. 175 per month.

c  pMpp  M



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.

p  

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

Dc   p
  Mp  

This is gross salary and 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.

c p  

Its contributed provident fund loan. It has two types.

D

c The maximum amount is three basic pays.


c This is also interest free.
c Êeducted over 20 months.


c The maximum amount is 12 basic pay or 90 % of CPF whichever is less.
c This is also interest free loan
c Êeducted in 50 installments.



    c
c
cccccccccccccccccc‘  
          c

c  M M   M



c This loan is only for staff.
c The maximum amount is six current basic pays.
c Having 10 % interest.
c Êeducted in 18 months.
c No deduction in the month of Eid.

c  M
 Mp  

c The maximum amount for staff is Rs. 55000, which is known as
motorcycle loan.
c 10 % interested is charged.
c Êeducted over 40 months.
c No deduction in the month of Eid.
c For officers the maximum amount is Rs 100000, which is known as car
loan.
c Rules and regulations are same as above.
c  Mp  p  

c The maximum amount varies from level to level, because it depends
mostly on salary.
c For the maximum amount they use this formula;
45 % of the salary x 1000 / 8.85
c Charges 10 % interest.
c No deduction in the first year.
c 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 ³Êebit Voucher´ (ÊV) and the other is
journal voucher (JV). In the books of account the Êr the voucher and Cr the amount.



    c
c
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          c



















 c

   p p



c






    c
c
cccccccccccccccccc‘  
          c

  5

c A ratio is a quantity that denotes the proportional amount or magnitude of one
quantity relative to another.
c A ratio is a simple mathematical expression of the relationship of one item to
another. Ratios can be expressed in words, fractions, decimals or percents.

There are three types for the analysis. These are


c Time series analysis
c Cross sectional analysis
c Ratio analysis

  p


c It is the study of financial condition and performance through ratios derived from
items in the financial statements.
c A method of analyzing a business by looking at its balance sheet and income
statement.

Ratio analysis is the calculation and comparison of ratios which are derived from
the information in a company's financial statements. The level and historical trends of
these ratios can be used to make inferences about a company's financial condition, its
operations and attractiveness as an investment. The ratio analysis which I have discussed
in report regarding SLIC is as follows:

c Liquidity ratios
c Êebt ratios
c Activity ratios
c Profitability ratios

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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

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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.

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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

The current ratio of last five years of SLIC is as follows:

Current Ratio
Year 2005 2006 2007 2008 2009
Ratio(time) 0.89 0.85 0.79 1.36 0.96


 

-!!+)% &%$"




  

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Current ratio of State life insurance Corporation for the year 2006-2007 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. But in 2008 its capability of paying
their current liabilities increase. 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 somewhere else.

M  

Êebt ratios show that up to what extant a firm is financed by debt and to which
extent the firm is using borrowed money. The debt ratio is derived by dividing a firm¶s
total debt by its 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 means that shareholder¶s equity is more than credit and
financial position will be sound. Mathematically it can be written as,

Êebt ratio = Total liabilities


Total assets

The debt ratio of last five years of SLIC is as follows:

+6% &%$"
Year 2005 2006 2007 2008 2009
Ratio(time) 1.02 0.99 0.99 0.99 0.99


 

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Êebt ratio of the firm shows that up to what extent the assets of a firm are
financed by equity and how much is financed by debt. From year 2006- 2009 debt ratio
of SLIC show that the ratio for these years is same, so it means that for these year SLIC
financed their assets with same proportion, because ratio are the same. It means that
SLIC assets are financed with the same proportion by both creditors and shareholders.


  

Activity ratio, also known as efficiency or turnover ratio, it measures that how
effectively a firm is using its assets.It measures the speed with which various accounts
are converted into sales or cash.

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The second group of profitability ratios is about profits on investment. This ratio
measures the profitability of assets regardless of the Capital structure. An important test
of management abilities that how much they can earn on funds supplied from all sources.
Mathematically;

ROA = Net Income after taxes x 100


Total assets

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The ROA of last five years of SLIC is as follows:





Year 2005 2006 2007 2008 2009
Ratio % 0.24 0.19 0.14 0.15 0.15

 

+%-!) )..+%

 
 


 

 






    

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Return on asset shows that how much an organization get return on whatever they
had invested. Return on asset ratio of SLIC for the year 2005show that it has higher
return on asset in that year. It means that either the investment proportion is the same or
the increase in return is higher. So the management should give importance return on
asset, because higher return on asset will ultimately increase their net profit. Higher
return on their investment is the key to their overall net profit. Especially their investment
in capital assets must be considering 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.

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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 firm. 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.
c
ROE = Net Income after taxes x 100
Shareholder¶s Equity
c

The ROE of last five years of SLIC is as follows:

M
Year 2005 2006 2007 2008 2009
Ratio % 20.75 23.9 24.4 24.8 25.3
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Return on equity ratio show that how much an organization can get return through
the investment of equity. Return on equity ratio of SLIC from years 2005-2009 show that
they are getting back a favorable return upon the investment of their equity gradually. It
is a positive sign for state life insurance corporation because on one hand the
shareholders will 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.

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An analysis indicating towards the organizations strengths, weaknesses,


opportunities and threat is termed as SWOT Analysis. Such an analysis is very important
for the management in retaining the strength, overcoming the weaknesses, capitalizing
over the emerging market opportunities, and carving ways to successfully tackle with the
threats and ultimately converting them in the strengths for the organization. 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 formation.

Êuring six weeks of my stay at SLIC in Multan, I have come across the following
SWOT analysis of the corporation.

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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.

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MM  M   



As SLIC is market leader, and big organization so it can lunch a better
advertisement campaign through any kind of media.

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c
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.

pM  MM 



As they follow strict rule for promotion, so the top management of SLIC in a very
much competent experience. So their decisions give benefit to organization.

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MM

Employee of SLIC are very much competitive and very much skillful they know
very well the corporation activities, which increase the efficiency of an organization.

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As SLIC is an old organization, so it develops a Goodwill, so policyholder built
trust on it, and people want to invest in it.

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As SLIC is government organization, so there is also government support to
organization which also increases their stability and Goodwill.

M M

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As field worker are commission based, so turn over in SLIC high because those
who fail to bring business, leave the organization.

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  M  M  M M 



Because of economic condition, when the saving of people lower they can¶t
continue their policy. So they surrender the policy, and this is one of the important
weaknesses of SLIC.

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Economic condition of Pakistan is not so good, due to which people have lass
saving, so when saving will be lass they can¶t be able start a policy.

pM M M 



A large part of population is leaving in rural areas and people of that area is not
aware about life insurance.

M M M 



As SLIC is market leader, and there is no other close competitor, so they not give
proper attention to marketing activities.

  


    pM   

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

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

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

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SLIC also bring so many innovations in their present product, like they decrease
the maturity duration of policy or can decrease sun assured of policy etc.

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M M 

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.

MM  M M



As Pakistan economic condition is not so stable so recession in economy can
affect its performance by increasing the surrender rate of policy by policy holder.

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As customer¶s needs are changing, like if they have saving they might use in
some other business in stated investing in SLIC.

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M p
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PEST analysis stands for "Political, Economic, Social, and Technological


analysis" and describes a framework of macro-environmental factors used in the
environmental scanning component of strategic management. The model has recently
been further extended to STEEPLE and STEEPLEÊ, adding education and demographics
factors. It is a part of the external analysis when conducting a strategic analysis or doing
market research and gives a certain overview of the different macro environmental
factors that the corporation has to take into consideration. It is a useful strategic tool for
understanding market growth or decline, business position, potential and direction for
operations.

As being a market in economy SLIC is also being affected every time by political,
economic, social and technological factors.

 pp 

The political environment of Punjab is quite stable since the takeover of the recent
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 SLIC
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.

M p 

The economical environment too is almost in the favor of businesses prevailing in
the province. Same is the case with SLIC, because it is a long 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. Êue to positive and friendly economic factors their vast set-up and

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business regulations people feel free to invest their savings for a long-term and safe
return.

  p p 
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 ³Islam´. People of this
province have great devotion towards the principles and teaching of Islam. Êue 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 SLIC.

M p p 

In terms of technological advancement SLIC 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
SLIC 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 SLIC can compete on strong
grounds.

 

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p  p pM  




Being a student of BBA (HONS) I find that insurance sector is the most
appropriate organization for me to learn and doing the work because you learn and seek
the concepts in practical life. Although the practical applications of marketing tools are
very different from what we learn from books and teachers in classes it seems to be very
helpful for me.

I have done my semester before internship program and in these semesters I


learnt a lot which is applicable in this sector and have a scope in insurance sector. I
studied finance and marketing subjects in my study program. There is a lot of
applicability of these courses in SLIC.

All the processes of SLIC required marketing, finance and HRM terms like ratio
analysis, 4 P¶s of marketing, inventory management etc. if I did not learn all this then I
would be face difficulties but my classroom study help me very much to understand the
operations of SLIC. Moreover presentations, assignments, projects, computer skills
especially MS Office was really have a great importance in financial institutions as well
as in my organization.

Class room learning also helps me to adjust quickly in the organization, and be
familiar with the operationsÊue to my class room learning, I was able to acquire, utilize
and share my knowledge as well as the knowledge I got from my organization. 

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MpM  p  

One of the most important aims of the student life is to express himself / herself
correctly and adequately. This was the believe in my mind when I first decided to go to
SLIC to complete my internship program. Êetermined, Confident and Persistent in the
pursuit of knowledge and learning, I was on my way to SLIC, Multan Zone and joined
the organization on 29th June, 2010.

I have learnt a lot of things from SLIC where I carried out my internship for six
weeks like,

c Working schedules, salary system of employees, loan facilities.


c How to deal with the customers and what are the basic communication skills that
must have to talk with customers.
c How to keep the policy plan sales record and customer database record.
c Learns about different job analysis methods and techniques, different training
methods, on-job and off-job training.
c How to improve Renewal Persistency.
c Recruitment and to get result.
c Policyholder Services.
c Commission and interest preparation system.
c
This type of internship will give me opportunities to learn the working condition
and how to work in the organization and how to observe the environment in every aspect
of life. This type of training gives me a lot of confident to communicate with different
people at different level. I get lot of experience from this type of training and make sure
to help me in my career building and future life as well.

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M MM M p  


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c
If I was the manager of SLIC I will be friendly to my employees and make them
work hard and effectively. I should give time to my work and keep a check on the
employees. I also have to manage different operations in the office and also have to
develop good relations with our customers because for every organization the customers
are the key. I will also develop different and handsome packages or offers for the
customers so that they could remain with the corporation. I will conduct a meeting after
every 2 weeks in which I will call all of my sales team working in the market. And have a
comprehensive meeting with them that what are they doing. And how can we improve
our sales. Being a manager it is my responsibility that I should be loyal to my
organization and be available whenever I am needed.

c I will definitely increase more and more services for employees to decrease client
turnover rate.
c I should arrange more and more training programs for my employees.
c I will offer my company¶s products to the employees at lower price.
c I shall expand the number of branches to all the major cities of Pakistan.
c There is no proper feedback from employees of the organization to their customer
I shall improve this feedback immediate.
c I shall try to involve the organization¶s staff in decision making process to
decrease the centralized system in SLIC.
c
c

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It is concluded from the report and other documents which were consulted for the
completion of this report, that State Life Insurance Corporation is one of the leading
corporations of the country. It has provided a life Security Protection to about 5 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.


c

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M 2 M M  


c

The SLIC has a monopoly in the life insurance business. The only one competitor
is EFU. 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:

c 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.
c 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.
c 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.
c As it is accepted that field workers are very essential factor in bringing business.
So turnover 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.
c 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.
c 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

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open cash counter in side areas also, this will make the people to deposit their
premium easily.
c 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.
c 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.
c State life insurance has more than 52 building throughout 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.
c

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p 
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  M     M  
SLIC State Life Insurance BBA Bachelor of Business
Corporation Administration
IFS Insurer Financial Strength AÊB Accidental Êeath Benefit.
PACRA Pakistan Credit Rating Agency AM Area Manager
IL Individual Life GL Group Life
RE Real Estate FIB Family Income Benefit.
FYP First year Premium AIB Accidental Indemnity
Benefits
AÊB Accidental Êeath Benefits WP Waiver of Premium
SWP Special Waiver of Premium TI Tern Insurance
JV Journal Voucher LIMRA Life Insurance Marketing
and Research association
ÊV Êebit Voucher RPR Refund of Premium Rider
NB New Business P&GS Personnel and General
Services.
TFC Term Finance Certificate PHS Policy Holder Services
CPF Contributed Provident Fund ZCC Zonal Claim Committee
RCC Regional Claim Committee NIC National Identity Card
GÊV General Êisbursement SR Sales Representatives
Voucher
SO Sales Officers SM Sales Manager
SA Sum Assured BFC Basic Foundation Course
MOSC Management Orientation MMS Management Marketing
Study Course Series
ROA Return On Asset EFU Eastern Federal Union
ROE Return On equity SWOT Strength Weakness
Opportunity Threat
CPM Competitive Profile Matrix PEST Political Economical Social
Technological
TA Traveling Allowance HRM Human Resource
Management
MS Micro Soft
c

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MM M M

To make this internship report, data is taken from the following resources:

www.statelife.com.pk\career

www.wikipedia.com\state_life

www.ask.com\insurancesector

www.iap.net.pk\insurance

Annual reports of state life insurance corporation of Pakistan.

Êiscussions with key persons at state life Multan.

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