STATE LIFE

INSURANCE CORPORATION OF PAKISTAN

TABLE OF CONTENTS
CHAPTER 1

Page No:

introduction
1.1

INTRODUCTION TO SLCI OF PAKISTAN ...

1.2

HISTORICAL BACKGROUND OF INSURANCE

BUSINESS ...............................................

1.3

1.5

03

THE DEVELOPMENT OF LIFE INSURANCE

BUSINESS IN PAKISTAN..

1.4

01

04

OBJECTIVES, MISSION STATEMENT AND

QUALITY POLICY OF SLIC .

05

PURPOSE OF STUDY.

06

CHAPTER 2

KINDS / BRANCHES OF INSURANCE

2.1

KINDS OF INSURANCE

2.2

TYPES OF INSURANCE

2.3

MODES OF INSURANCE ..

07
07
08

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

CHAPTER 3

Page No:

ORGANIZATIONAL SETUP AND

FUNCTIONAL AREAS OF SLIC
3.1
3.2

SLICs ORGANIZATIONAL STRUCTURE.. 09

NEW BUSINESS DEPARTMENT.. 10

3.3

PERSONAL & GENERAL SERVICES

3.4

DEPARTMENT 10
BUDGET AND ACCOUNT DEPARTMENT 11

3.5

HUMAN RESOURCES DEPARTMENT...

3.6

INTERNAL AUDIT AND EVALUATION

3.7

DEPARTMENT 12
AGENCY ADMINISTRATION DEPARTMENT.. 12

11

CHAPTER 4

Products of slic
4.1

ENDOWMENT ASSURANCE

4.2

PAYMENT PLAN

4.3

WHOLE LIFE ASSURANCE..

4.4

SUPPLEMENTARY CONTRACTS

13
16
16
16

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

CHAPTER 5

Page No:

FINANCIAL HIGHLIGHTS FOR THE

PERIOD ENDED 2009
5.1
5.2
5.3
5.4

BALANCE SHEET.. 17
PROFIT AND LOSS ACCOUNT 19
CASH FLOW STATEMENT... 20
STATEMENT OF CHANGE IN EQUITY.. 21

CHAPTER 6

CONCLUSIONS AND SUGGESTIONS

6.1

CONCLUSIONS.

6.2

SUGGESTIONS... 22
22
BIBLIOGRAPHIES.. 24

6.3

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

CHAPTER 1
introduction
1.1 INTRODUCTION TO SLIC OF PAKISTAN
State life Insurance Corporation of Pakistan is a semi government
corporation of Pakistan, which works under the ministry of commerce in
Pakistan. 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 Policyholders Services. Regional Offices, each
headed by a Regional Chief, supervise business activities of the Zones
functioning under them. The Principal Office, based at Karachi, is responsible
for corporate activities such as investment, real estate, actuarial, overseas
operations, etc.(www.slic.com.pk)

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

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:
1. 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.
2. State Life is profitable organization and it paid Rs.2.657 billion as
dividend to the Government of Pakistan since its inception in 1972.
3. State Life has played very vital role in the economy by providing
employment to the people of the country 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.191.445 billions.
4. Investment portfolio also includes investment in Real Estate which stands
at a book value of Rs.2.538 billion as at 31.12.2009 whereas it fair value
is around Rs.21.681 billion in the same period.
5. The Paid up Capital increased from Rs.10 million in 1972 to Rs.1,100
million in 2009.
6. The Premium income increased from Rs.0.317 billion in 1972 to 28.367
billion in 2009. Similarly Investment income including rental income
increased from Rs.0.81 billion in 1972 to 274.152 billion in 2009.
7. Total statutory fund of State Life stands at Rs.199.445 billion in 2009 as
against Rs.1.494 billion in 1972.
8. State Life is smoothly striving towards its objective of making life

insurance available to large section of the society by extending it to

common man. As at December, 2009 the total number of policies inforce
under individual life were 2.895 million and number of lives covered
under group life insurance were 3.754 million.(www.google.com)

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

1.2 HISTORICAL
BACKGROUND
INSURANCE BUSINESS

OF

The idea of insurance is intimately concerned with the group of

human combination in the earliest stage may have similar to that of social animal
that is association for mutual aid and defense of family. Actually business of
insurance came into existence in the fifteenth century after the industrial
revolution because business transaction were increased and need for insurance
companies were felt:
Mostly men used to get insurance for their ships and cargoes.
Specially when long distance were involved jri the trade then insurance
companies came in to exist to insure shipping industries in the world and people
were encouraged to invest in overseas trade that is why rapid industrial growth
took place in Europe.(www.google.com)

EARLY LIFE INSURANCE

According to Danni-I-long life insurance was developed after
property insurance. Record indicates that from of life insurance existed in the
ancient world in the sixteenth century in England however those few life
insurance contracts the existed were issued by individual properly underwriters.
Life insurance provides a sum of money if the person who is
insured, dies while the policy is in effect. Health insurance can be of two forms:
1) Medical expenses coverage and 2) Disability income coverage expenses.
Medical expenses coverage provides account for payment of
specified income benefits. Property and liabilities insurance are two other major
kinds of insurance. Property insurance provides a benefit that bears the loss
incurred by the property damaged or lost because of fire, theft, accident or
causes described in the policy. Liabilities insurance provides a benefit payable
on the behalf of a covered party who is held responsible for hearing or others or
their property. Both property and liabilities policies place limit on the amount of
the benefit that company will pay.(www.wikkipedia.com)

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

1.3 THE
DEVELOPMENT
INSURANCE IN
PAKISTAN

OF

LIFE

Life insurance has a bright future in Pakistan because of industrial

advancement new industries are springing up. More and more facilities are being
provided. Investment from foreign private sector is being encouraged; the entire
communication system is being modernized to meet the growing need of the
country. The working population is increasing tremendously. All these factors
speak about bright future of insurance in Pakistan.
In Pakistan two organizations are authorized to carry life insurance
business i.e. postal life insurance corporation and state life Insurance
Corporation.
The postal life insurance was started about 100 years ago as
scheme for benefits of postal employees. The benefits were intended to
employees of other organizations from time to time; today the scheme is open to
government and non-government employees and all other persons having
assured, means employees income.
Life insurance companies doing business in Pakistan as follows:
American life insurance Co. Ltd.
EFU (Eastern Federal Union) life insurance Co. Ltd.

Metropolitan life insurance Co. Ltd.

And currently established Commercial Union life insurance

company Ltd, which is the largest life insurance corporation of UK, but entrance
of private sector in life insurance business has not affected the life insurance of
SLIC.(www.slic.com.pk)

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

1.4 OBJECTIVES, MISSION STATEMENT &

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

Mission
To remain the leading insurer in the country by extending the
benefits of insurance to all sections of society and meeting our commitments to
our policy holders and the nation.(annual report of slic of pk)

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.(staff)

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

1.5 PURPOSE OF STUDY

A research evaluation project, aims at providing opportunity to
young, acquaint him/her self to the actual work place and writing of its project
requires him to use all the skills, abilities acquires during course of study BBA
degree.
However the following are the purpose of study:
To study the importance of SLIC in the business process.
To seek practical knowledge/ training under the supervision of
professional and trained people.
The aim to analyzing and studying the function of SLIC.
To identify the areas of operation and there development.
(HR Manager Dur Muhammad Baladi)

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

CHAPTER 2
KINDS / BRANCHES OF
INSURANCE
Definition of Insurance
Life insurance can be defined in many ways such as:

A legal contract between policy holder and the insurer is called Insurance.

Life insurance provides financial security against unforeseen but named

Events. (www.google.com)

2.1 KINDS OF INSURANCE

Mainly there are only two kinds of insurance:

General Insurance
It is concerned with any thing other than life.

Life Insurance
It is concerned with human beings.

2.2 TYPES OF INSURANCE

Individual life
Group life
(Insurance Book)

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

2.3 MODES OF INSURANCE

Term Insurance (General insurance)
Endowment Insurance
Whole Life Insurance

(Pervez Bhatti Area Manager)

Term Insurance
It use in general as well as life insurance it is conditional contract
and for particular period it pays claim during and the contractual period after
expiry of that period there is nothing to be paid for claim.
It is risk covering and its cash value can not generated it is also
called good and transit insurance. (www.google.com)

Endowment Insurance
It matures at the expiry of the term selected by the policyholder
who gets sum assured and bonuses at the maturity or the beneficiary gets the
sum assured plus bonuses in the event of death of policy holder.
(www.google.com)

Whole Life Insurance

Matures at the age of 85 years the policyholder gets sum assured
and bonuses at the maturity or the beneficiary gets the sum assured plus bonuses
in the event of death of policyholder.(www.wikkipedia.com)

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

CHAPTER 3
ORGANIZATIONAL SETUP AND
FUNCTIONAL AREAS OF STATE
LIFE INSURANCE CORPORATION
OF PAKISTAN
3.1 SLICs ORGANIZATIONAL STRUCTURE

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

Departments of SLIC
3.2 New Business Department
This is one of the most important departments of SLIC. Here new
policy holders are invited for having life insurance policies. As it is clear from
the name of the department that each new started business is initially processed
from here. The forms i-e: proposals forms are issued to issued to new policy
holders whatever directly or through life insurance agent. Not only this but also
the complete assessment of customer also done here. For e.g. some one wants a
term insurance plan for twenty years and showing himself healthy and ordinary
business man. This is quite possible from so for that an "underwriting process"
occurred, in which they can acquire whatever information of their client from its
relative or co-workers e.g. getting information from his/her relative about
character, health and dealing with others. The underwriter can acquire some
medical reports his/her health. (www.insurance.com)

3.3 Personal
&
Department

General

Services

Personal Service
The personal department is concerned with all aspects of
employment, employees, service, and safety and welfare of employees. This
department is responsible for recruit new employees for this department,
maintain management relations and look after employee's benefits and
discipline.

General Service
The general department is concerned with allocation of resources
like maintaining stationary, distribution of stationary items and printed material
checking and posting to sub zones, areas and sectors handling petty cash
account, maintain budget register, processing bill payments, repairing of future
sales computer, contribution of uniform.(www.google.com)

10

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

3.4 Budget and Accounts Departments

Budget and Accounts department is responsible to formulate the
co-operations annually budget by collecting and assessment of budget proposals
of different sub zones, areas and sectors.
For the smooth working the department is formulated in following cells.

Commission cell

pays commission to field staff.

Disbursement cell

Each and every payment to staff for zones

made through this cell.

Banking cell

Records receipts and payments.

PHS claims cells

Verification and checking of documents.

Counter services dept:

Payment of vouchers and petty cash which is

below Rs: 500/=

Others responsibilities of Budget & Accounts department are:

Budget & Accounts department maintain the company's accounting
record.

Prepare tax return.

Analyze operating cost.

Planning and controlling budget.(Financial Management H.Baker)

3.5 Human Recourses

Department

Development

It is often called training department and given supplementary training

to field workers SR's, FM's and even staff including officers within and outside the
organization. State life focuses on education and recruitment it gives multi benefits to
employees who are getting education. It has following courses:

Sales representative basic course

Sales officer basic course.(HRM by Gary Dessler)

11

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

3.6 Internal Audit

Department

and

Evaluation

This department is concerned with critically examine:

The rectification of record.

Checking documents.

To verify mistakes etc.(Dur Muhammad Baladi)

3.7 Agency Administration Department

Agency administration has a channel of:

Sales representatives (SR).

Sales officers (SO).

Sales manager (SM).

Area manager (AM).

(www.slic.com.pk)
The Sales representatives are the key man of the corporation. He is the

first intermediary between the prospective policyholder and the corporation.

After Appointing as sales representatives they will undergo for 5 days
basic training in class room to be conducted by FMD dept; sales representatives are
appointed-on commission basis. As sales representatives complete his task then he will
promoted to SO then SM and then AM after AM he become a government employee.
(www.google.com)

12

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

CHAPTER 4
PRODUCTS OF STATE LIFE
INSURANCE CORPORATION OF
PAKISTAN
4.1 ENDOWMENT ASSURANCE
It is the safest and surest method of guaranteed cash provision
either at specified time or at death it serves the requirement of the family in
various shapes by way financial help at retirement education of children of
capital for business.(www.slic.com.pk)
Endowment assurance are available for both "with" and "without
profit" basis. Under these policies the sum assured plus bonus is payable at the
end of specified number of years or at death of assured if earlier premium are
payable for the specified number of years or till death if earlier.
It required the minimum age group of 10 years and the maximum
age group of 65 years the term include in the policies also minimum 10 years
and maximum 55 years.(www.slic.com.pk)
Endowment assurance include following plans.
Shadabad Plan
Sunehri Policy
Child Education And Marriage Plan
Child Protection Policy
Jeevan Sathi Plan. (www.wikkipedia.com)

13

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

Shadabad Plan
This plan will meet the requirement of who appreciate the basic
saving purpose of endowment insurance and the bonuses and terminal bonuses
payable. This plan also protect their loved in case they die, all forbid before
maturity the benefits of plant is that is case of dearth from any cause an
additional Rs: 1,000 will be payable in lump sum and on the death of accident of
and additional Rs:2,000 will be payable.(www.google.com)

Sunehri Policy
Sunehri policy is an innovative life instance it is flexible, and
meets the challenges of inflation quite economically.
In this the premium will increase by 6% P.A however the
policyholder has a birth not to increase and pay the same amount of last year.
The benefit of the plan is that if the insured dies during the first two years of the
policy, then the initial basic sum assured will be payable if the insured dies in the
3rd of later policy years, then the death benefits will equal the sum assured
applicable of the policy year of death plus the adjusted opening cash value.
(www.slic.com.pk)

Child Education and Marriage Plan

Child education and marriage plan is concerned with the protection
of child's future. It provides a lump sum benefits for the child at the completion
of the policy term. The lump sum become payable when child attains the age of
18, 21 or 25 years, these ages may be selected considering the occasion at which
children generally need financial assistance for higher education, marriage or
setting business.(www.slic.com.pk)

14

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

Child Protection Plan

These 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 pay therefore policyholder subject to any special condition applicable
to female lives.(www.google.com)
The maximum age of child is 6 month therefore 1 year nearest
birthday, and maximum age 15 years nearest birthday.
The minimum age of the payer must be 20 years and maximum
age is 50 years. This plan contains the supplementary contracts i.e. FIB, AIB etc.

Jeevan Sathi Plan

Under this plan policies are issued on the lives of two people and
simultaneously cover the risk on die lives of both partners for the sum assured.
The minimum age group is 29 and maximum age group is 50 years term.
It has 10 years 15, 20, 25, 30 and 35 years, as its name refers this
policy is generally its slogan is single policy single premium two personal forms
and risk coverage's for both lives. That are a life partner in particular other in
general, is very much a like to joint life endowment.(www.wikkipedia.com)

15

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

4.2 PAYMENT PLAN

Three payment plan, which consist the minimum age group of 20
years and the maximum age group of 75 years. It has the fixed prescribed terms.
The terms are 18,21,24,27 & 30 years, under this the contract policy holders
have the right to draw 50% of sum assured in two installments. From 1st 25%
can be drawn after the completion of 2/3 period of the term and other 25% can
be drawn after the completion of another 1/3 of the term and 2/3 of over all term.
(Insurance booklet)

4.3 WHOLE LIFE ASSURANCE

Whole life assurance plan is a unique combination of protection
and sing which can be purchased at .very economical premium payable annually
or in half yearly, quarterly or monthly installments. Death at any time before age
85 years terminates payment of premium and there sum assured (plus bonuses)
become payable in the event the ensured survive to the policy anniversary
nearest become payable. The minimum age groups of person are 10 years and
maximum 65 years.(www.slic.com.pk)

4.4 SUPPLEMENTARY CONTRACTS

The following supplementary contracts are available on the
policyholder's life.

Accident Indemnity Benefits

(AIB)

Waiver of Premium

(WP)

Special Waiver of Premium

(SWP)

Term Insurance Rider

(TIR)

Hospital and Surgical

(H&S)

Accidental Death Benefits

(ADB)

Family Income Benefits

(FIB)

Refund of Premium Rider

(RPR)

Guarantee Insurability

(GI)

(www.slic.com.pk)

16

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

CHAPTER 5
FINANCIAL HIGHLIGHTS FOR THE
PERIOD ENDED 2009

5.1 BALANCE SHEET

17

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

(Annual Report of State Life Insurance Corporation of Pakistan)

18

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

5.2 PROFIT AND LOSS ACCOUNT

(Annual Report of State Life Insurance Corporation of Pakistan)

19

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

5.3 CASH FLOW STATEMENT

(Annual Report of State Life Insurance Corporation of Pakistan)

20

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

7.4 STATEMENT OF CHANGE IN EQUITY

(Annual Report of State Life Insurance Corporation of Pakistan)

21

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

CHAPTER 6
CONCLUSIONS AND SUGGESTIONS
6.1 CONCLUSIONS
After the completion of internship the following conclusions have
been drawn.
It seems that life insurance has not introduced its business in rural areas
effectively so that people are not well aware of the insurance till yet
which may consider a loss to the corporation.
It seems that the agents of representatives are not fully trained, equipped
with such skills could attract every type of people fir insuring policy.
(Internee)

22

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

6.2 SUGGESTIONS
On the basis of conclusions the internee recommends the following
suggestions.
State life insurance should introduce its business more effectively internal
areas with proper guidance so that the people can more benefits of the
insurance.
Life insurance should make the policy in such a way that it could meet the
income level of rural insurance.
To earn more profit strategies must be improved.
It is suggested that there is a need of effectively advertising in rural areas

and local people. And advertising material should be published in

respective local language.
(Internee)

23

STATE LIFE
INSURANCE CORPORATION OF PAKISTAN

6.3 BIBLIOGRAPHY
1. www.slic.com.pk
2. Gary Dessler 2008, HRM, 11th edition, Prentice Hall, USA.
3. Burns, T.and G.Stalker. (1961) The Management of Innovation. London:
Tailstock.
4. Iqbal Ahmed Bhatti, 1996, statistics, 8th edition.
5. HRM, by SS Khanka.
6. Dur Muhammad Baladi, Hyderabad zonal head.
7. Muhammad Ali Shah, HR Manager.
8. Pervez Bhatti, Branch Manager.
9. Economic Survey of Pakistan.
10. Magazine Business Economist.
11. Security and exchange commission of Pakistan.
12. www.google.com
13. www.wikkipedia.com
14. www.businessweek .com
15. www.slic.com.pk

24