INTERNSHIP REPORT

ON
STATE LIFE INSURANCE

By
Farhan Khurshid
Roll No. 14

BBA (Hons)
Session 2015 - 2019

Department of Business Administration

Faculty of Management Sciences
University of kotli

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 LETTER OF TRANSMITTAL
The Placement officer
Department of Business
University of Kotli (A.K)
Subject: Submission of Internship Report.
Dear Maam,
This report is in response to the instructions of in which you have confirmed me the nomination
of my internship at State Life Insurance Rawalpindi Zone Sector Hajira Area Forward Kahuta (Area
Code- 3023) (AK) . I have completed my six weeks internship program from 22-07-2018 to 06-09-2018
in which you have confirmed me the nomination of my internship at STLI Main Branch Kotli (AK). My
finding and related recommendations are given in detail in this report, which is enclosed. It would be
pleasure for me to hear your comments after you have gone through this report. Though while reading if
you like to discuss any point with me, I shall be happy to do so at any time convenient to you.

Yours truly,
Farhan Khurshid
Roll No.14
Session 2015-19

ii
INTERNSHIP LATTER

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 PREFACE
This Report is based on the knowledge and experience which I have gained from STLI bank in
short time period of internship. It is in effect of study regarding operations, Functions, tasks and services
of State Life Insurance of Pakistan. For the trade and economic development of country banking play an
imperative role. Like other sectors banks are also using different modern software and technologies which
influence them multiple managerial activities of its business. After completion my internship
I prepared this Report which is an overview what I have learnt and observed in this tenure about branch
banking. I tried my best to provide all possible information in brief and comprehensive outward
appearance.

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 ACKNOWLEDGEMENT
All praises and thanks are to Allah Almighty, The Giver of bountiful blessings. Prayers and peace
of Allah be upon the Noble Prophet and his Family and Companions. Allah the One Who granted me
insight and devotion to perform such creative work.
I take this opportunity to express my deepest gratitude to my parent, family, friends and
customers for their continued support, trust and appreciation for my work and dedication. I want to
equally acknowledge the staff members of State Life Insurance Of Pakistan Hajira Area Forward
Kahuta. being thoughtful for guidance and providing me valuable information regarding my internship.

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 Table of Content
Chapter No 1 ....................................................................................................................... 1
INTRODUCTION .......................................................................................................... 1
1.1 Background of the Report ................................................................................... 1
1.2 Purpose of Study ................................................................................................. 1
1.3 Methodology ....................................................................................................... 1
1.3.1 Primary Data ............................................................................................... 2
1.3.2 Secondary Data ........................................................................................... 2
1.4 Limitations .......................................................................................................... 2
Introduction to Insurance ................................................................................................ 2
1.5 Defining Insurance .............................................................................................. 2
1.6 Contract of Insurance .......................................................................................... 3
1.7 Reasons for Insurance ......................................................................................... 4
1.6 Doctrines of Insurance ............................................................................................. 4
1.8 1.7 Types of Insurance ....................................................................................... 4
1.7.2 Medical Insurance ........................................................................................ 4
1.7.3 Disability Insurance ..................................................................................... 5
1.8 General Insurance ................................................................................................. 5
1.9 Policy Terms ....................................................................................................... 6
1.10 Premium .............................................................................................................. 6
1.11 Claims, Benefits and Dividends .................................................................. 6
Chapter No 2 ....................................................................................................................... 7
2 Introduction to State Life Insurance Corporation of Pakistan (SLIC) ....................... 7
2.1 Establishment of SLIC ........................................................................................ 7
2.2 Major Achievements ........................................................................................... 8
2.3 Objectives of SLIC ............................................................................................. 9
2.4 Mission................................................................................................................ 9
2.5 Quality Policy ..................................................................................................... 9
2.6 Basic structure of State Life ................................................................................ 9
2.7 Product of SLIC ................................................................................................ 10
Chapter No 3 ..................................................................................................................... 11

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3 TYPES OF INSURANCE ....................................................................................... 11
3.1 Branches of Insurance ....................................................................................... 11
i. General Insurance (it is concerned with other than life) ........................... 11
ii. Life Insurance ( it is concerned with human being) ................................. 11
3.2 Modes of Insurance ........................................................................................... 11
3.2.1 Whole Life Insurance ................................................................................ 11
3.2.2 Endowment Assurance.............................................................................. 11
3.2.3 Term Insurance ......................................................................................... 12
3.2.4 Child protection Policy ............................................................................. 12
3.2.5 Group Endowment Insurance Scheme ...................................................... 12
3.2.6 Benefits of Group Endowment Insurance Scheme ................................... 12
3.2.7 Other Policies of SLIC .............................................................................. 13
3.3 Supplementary Contract/Riders ........................................................................ 14
3.3.1 Accident Death & Indemnity Benefit (AIB) ............................................. 14
3.3.2 Accidental Death Benefit (ADB) .............................................................. 15
3.3.3 Family Income Benefit (FIB).................................................................... 15
3.3.4 Waiver of Premium (WP) ......................................................................... 15
3.3.5 Special Waiver of Premium (SWP) .......................................................... 16
3.3.6 Term Insurance (TI) .................................................................................. 16
3.3.7 Refund of Premium Rider (RPR) .............................................................. 16
Chapter No 4 ..................................................................................................................... 17
4 MY RESPONSIBILITIES ....................................................................................... 17
4.1 Internee’s Activities .......................................................................................... 17
4.2 Departments in Which I Have Done Work ....................................................... 18
4.2.1 Risk Management Department ................................................................. 18
4.2.2 Underwriting Department ......................................................................... 18
4.2.3 Claim Department ..................................................................................... 18
4.2.4 Accounts Department................................................................................ 19
4.2.5 Account Opening Department .................................................................. 19
4.3 Opening Account in State Life Insurance ......................................................... 20
4.4 Observations ..................................................................................................... 20

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Chapter No 05 ................................................................................................................... 22
5 PEST Analysis of SLIC ........................................................................................... 22
5.1 PEST Analysis of SLIC .................................................................................... 22
5.1.1 Political Factors ........................................................................................ 22
5.1.2 Economical Factors ................................................................................... 22
5.1.3 Socio cultural Factors ............................................................................... 22
5.1.4 Technological Factors ............................................................................... 23
5.2 Value Chain Analysis ....................................................................................... 23
5.2.1 Primary Activities ..................................................................................... 23
5.2.2 Support Activities ..................................................................................... 24
5.3 Critical Analysis of Corporation ....................................................................... 24
5.3.1 Training ..................................................................................................... 25
5.3.2 Policy Limits ............................................................................................. 25
5.4 SWOT Analysis of SLIC .................................................................................. 25
5.4.1 Strength ..................................................................................................... 26
5.4.2 Weakness .................................................................................................. 26
5.4.3 Opportunity ............................................................................................... 27
5.4.4 Threats....................................................................................................... 27
5.5 Recommendations ............................................................................................. 28
5.6 Conclusion ........................................................................................................ 29
Reference .......................................................................................................................... 30

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 Chapter No 1
INTRODUCTION

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.

1.2 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 BBA.
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.

1.3 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.

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1.3.1 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 organization.
c) Visiting different departments of the organization.

1.3.2 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

1.4 Limitations

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

sometimes 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 SLIC.
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

1.5 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

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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.

1.6 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.

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1.7 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 Doctrines 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 enough.
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 estimable

1.8 1.7 Types of Insurance

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

4
 the amount to the insured for his health purpose. This amount covers the cost of medical
treatment.

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.

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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.

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 Chapter No 2

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 Pakistan.
State Life Insurance Corporation of Pakistan is headed by a Chairman and assisted by the
Executive Directors appointed by Federal Government. Up to July 2000 the Corporation was run
by Board of Directors constituted under Life Insurance (Nationalization) Order 1972. In July
2000, under Insurance Ordinance 2000, the Federal Government reconstituted the Board of
Directors of State Life which runs the affair of this Corporation.
The basic structure of the Corporation 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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 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.

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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.

9
 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.

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 Chapter No 3

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” basis.

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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.

3.2.5 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.

3.2.6 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.

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 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 default.

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.

3.2.7 Other Policies of SLIC

 Jeewan Sathi
 Three Payment Plan
 Shadabad Plan
 Personel Pension Scheme
 Sunehry policy

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3.3 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 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.

 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)

3.3.1 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

14
thousand sum insured depending upon the occupational rating of proposed for standard lives
whose age should be between 18 to 55 years.

3.3.2 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 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.

3.3.3 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.

3.3.4 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 insured.

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3.3.5 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.

3.3.6 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

3.3.7 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.

16
 Chapter No 4

4 MY RESPONSIBILITIES
4.1 Internee’s Activities

During Internship, it was my prime objective to furnish my knowledge (Theory) to various

Practical situations. The practical work presents an analytical problem while relating theory with
practice. As a result, analysis of practical versus theory requires a distinct approach. This part of
report is the essence of the internship, as this will help to better understand the working
environment

During the internship of six weeks I stayed for specific number of days in each department

According to requirement.

 I learnt that how to apply the knowledge in practical form.

 I got the knowledge of promotional activities.

 I learnt that how the customers pay orders.

 I learnt that the customers are very important, they must be delivered first, their

complaint must be resolved as soon as possible and dealing should be very beneficial for

both.

 I learnt that employees work better in friendly and co-operative atmosphere.

I have undergone an internship program as a part of my study schedule. It was a six week
internship program. The duration was 26. July, 2018 to 06 September 2018. It was a great
opportunity for me to work with such a prestigious organization which will definitely aid me
in developing professional skills and the right attitude towards achieving my goals. I worked for
six weeks at STATE LIFE INSURANCE COMPANY LIMITED Kotli Azad Kashmir, as in
internee. I was placed in different departments of State Life Insurance Co. Ltd. And studied the
whole organization, but I got a chance to do some practical work in the Risk Management

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 Department, Underwriting Department, Claim Department and Accounts Department. This helps
me a lot in preparing the internship report and the analysis of the Company and remarked about
the company on the basis of my studies and analysis of the financial statements and overall
review of the company. Even though six weeks training is a very short period to learn about any
organization but I gain a lot of knowledge due to cooperative staff. The receptionist sent me to
Area Manager, Muhammad Azeem who asked me some questions, I presented him the internship
letter granted by the University. Mr. Muhammad Azeem gave me introduction about the
company’s business and told me its main functions. In the mean while I start my internship.
After 3 week I got well enough knowledge about organization.

4.2 Departments in Which I Have Done Work

4.2.1 Risk Management Department

I spent 4 days in Risk Management Department and there I learned about the preliminary
information about the risk and methods to inspect a risk properly and told me how the risk
management process is employed. What type of recommendations is made according to the
subject matter and type of loss exposure? Personally no any industrial tour for inspection of the
risk was made by me because no opportunity was provided to me. I just studied the inspection
and risk assessment reports prepared by my trainers.

4.2.2 Underwriting Department

All the persons underwriting department were very cooperative and polite to me and never
hesitated to provide many type of information inquired by me. They gave me the information
about insurance policies that company is offering and how these were prepared.

4.2.3 Claim Department

After working in under writing department I was placed in claim department here I worked
under the supervision of different people.

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 They were so kind to me and told me some of the important functions and operations of the
department and also told me the procedure of claims of each insurance policy that State Life
insurance is offering to its clients. My main duties in this department were as follows:

 Typed the official letters

 Filling of claims documents

 Enter the data electronically

 Arranging the document files

 Read the policy working condition and warranties and clauses

In claim department I worked and got a wonderful practical knowledge &experience.

4.2.4 Accounts Department

During my internship in this department I learned about the major functions of keeping
records associated with accounting for services. I work under the supervision of different
people. They told me about annual report, balance sheet, and income statement and told me that
the accounting department was responsible to collect data and prepare financial statements. With
his help I was able to do financial analysis of State Life insurance. That was important to know
the company’s exact financial position.

4.2.5 Account Opening Department

In this department I gained the practical knowledge about opening account. This
Department deals with opening current and saving account for its customers and all matters
regarding there of the customers opening current / saving accounts be categorized as following:

 Individual

 Company

 Trust

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  Staff

 Other

4.3 Opening Account in State Life Insurance

In order to open an account first of all the customer has to fill a form prescribed by the Life
insurance. The person is required to bring some reference or introduction for opening the
account. Introducer may be the person who has any account with BOP. Some important
information regarding introducer e.g. the name and account number of the introducer is written
on the space provided on the specimen signature card. Then in order to find out whether he is a
true introducer or not in sent to him thanking him for this introduction so that anything wrong
may come into notice. There are different requirements for different types of account and
account holder.

4.4 Observations

State Life insurance Co. Ltd. has strong financial standings. State Life insurance has
developed strong relationship with its customers by understanding their needs and treating them
with respects, dignity and importance. The driving force behind its commitments and services is
its focus on customers, incurring that it not only meets, but also exceeds their expectations and
this is why that State Life insurance Co. Ltd. The profits of State life insurance Co. Ltd. have
grown considerably and also its market price per share during the last few years and this trend
is expected to continue in future. Company’s claim and expense ratios have also dropped
significantly during the last years due to better underwriting practices. Company has developed
the good contacts with the foreign reinsurance companies of good rating. Company has brushier
or forms for the clients to understand the different services that company is providing. Company
is targeting not only on financial institutions but also individual customers. Company still not
able to become the market leader, since after its establishment. The agents of the company are
not providing complete information to the customers according to the tariff. The higher net
profitability shows the company’s efficiency in controlling its general and administrative
expenses. The other major reason behind the higher level of net profitability is the large amount

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of investment income received on the investment that company has made in various
organizations including government.

The flaw exists in the asset efficiency of the company. State Life insurance is not efficient
is utilizing its asset in proper way to generate sufficient amount of net premiums. In branch job
rotation is uncommon. Normally employees are not rotated through all departments during their
job tenure which may cause boredom among employees.

The employees of the branch are not motivated to a great extent. After taking in to
consideration all above factors how the employees can be motivated.

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 Chapter No 05

5 PEST Analysis of SLIC

5.1 PEST Analysis of SLIC

5.1.1 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.

5.1.2 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.

5.1.3 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

22
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.

5.1.4 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.

5.2 Value Chain Analysis

Broadly value chain analysis is divided into two categories.

Primary Activities
Support Activities

5.2.1 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

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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.

5.2.2 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.\

5.3 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

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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 corporation.

5.3.1 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.

5.3.2 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 possible.

5.4 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 formation

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 5.4.1 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.
iii. 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.
iv. 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.
v. 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.

vi. 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.
vii. Government security
As SLIC is government organization, so there is also government support to organization
which also increase their, stability and Goodwill.

5.4.2 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

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 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 SLIC.
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.

5.4.3 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 SLIC.
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.

5.4.4 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

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 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.

5.5 Recommendations

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

28
 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.

5.6 Conclusion

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.

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 Reference
i. Annual Report for the year 2017,State Life Insurance Corporation.
P # 22,23,28, 54,55.
ii. Annual Report for the year 2015, 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, 2011, P
# 5,6.
v. Tahaffuz “An In-house magazine” State Life Insurance Corporation of Pakistan,
vi. 2016, P # 8,9,10.
vii. www.statelife.com.pk

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