Group Life & Pension Plans - State Life Insurance Pakistan
Group Life & Pension Plans
House Building & Perquisites Insurance Scheme
Under this plan each member of the group is insured for the total amount of loan outstanding against him inclusive of accumulated interest. The amount of Insurance is the actual amount of loan outstanding on the date of death whereas the premium is charged on the average loan outstanding over the whole policy year.
What need does it fulfill ?
It provides financial security to employers and financial institutions against the risk of untimely death of any of their indebted employee or client. Very often the family of the deceased person is not is a position to repay the loans taken out by him, especially if the deceased person was the sole breadwinning member of the family. In such a case the insurance coverage provides an assurance to the creditor that he would be able to recover his capital without causing hardship to the distressed family.
The creditor is also protected from the headache of constantly monitoring cases of delayed repayments of loan in hardship cases caused by unforeseen death of a bread winning family member. The premium due under this policy may be recovered by the creditor from the borrowers along with the loan repayment installments.
Benefits Of Group House Building & perquisites Insurance
In case of death of an insured member of the scheme the total amount of the loan outstanding against him including accumulated interest is payable to the policyholder. In case State Life earns a profit on any policy during a 3-year period, the policyholder is also entitled to some share in the profits depending upon the size of the group.
What riders can be addes ?
PTD (Accident) and NDB rider may be attached with this plan. These riders provide insurance cover against permanent disability due to accidental and natural causes rendering the insured member unable to earn a livelihood for himself and his family.
In such a case the attaching riders can facilitate the creditor in recovering the outstanding amount of loan.
Suitable For
This plan is suitable for employers who have a scheme for providing loans to their employees for house building, purchases of conveyance or any other goods of household use. It is also suitable for banks who are in the business of granting loans to their clients for purchase of house or conveyance or for some business venture. Similarly leasing companies and other financial institutions with similar facility may find this plan quite attractive.
Pay Continuation Scheme
- Manpower is still considered as one of the most important elements of productions inspite of the dramatic growth of microchip based automation in all walks of life, especially in commerce and industry. The overall efficiency of an organization therefore depends upon the quality of the manpower of its employees. The more devoted, hardworking and loyal the employees the higher the reward to the employer in the form of greater efficiency and profitability. Quality manpower can be attracted by offering a good employee benefits package based on ensuring security and peace of mind of the workforce so that a greater commitment is obtained from them. This is why the enlightened employer pays particular attention to the welfare and well being of their workforce through various employee benefits scheme.
- One of the functions of such schemes is to provide protection to the employee's dependants in the event of his death. Progressive employers do provide group insurance which pays a lump sum to the dependants. This however does not last long. What is required in addition is a regular monthly income for a period of time. To meet this Requirement State Life proudly presents a plan, which offers invaluable protection to the employee's family during his working life. The family's regular monthly income is protected for 15 years or until age 60 witchever is earlier. In this way coverage is provided for pay upon the death of the employee. This is illustrated by the following example:
- Supposing the pay of an employee is Rs 2000/- per month. If death takes place at age 47 then the benefits payable will be Rs 2000/- per month up to age 60, i-e., for a period of 13 years. Total amount payable Rs.3,12,000/-
- If death takes place at age 35 then the benefit payable will be 2,000/- per month for a period of 15 years. Total amount payable Rs. 3,60,000/-
Annual premiums will be calculated on the basis of the employee's pay and his age and will be payable at the beginning of each scheme year. If this policy qualify for profit commission it will be payable in accordance with the rules at the end of 3 years.
"Cover without medical evidence" is allowed on the same basis as group term with the monthly benefits being converted into a lump sum equivalent. The total of the benefits so arrived at should, however not exceed the maximum allowable under the policy.
Please contact our representative of further information and quotation at any of the following addresses: -
Mr. Muhammad Yousaf
(Saving & Insurance Adviser)
Mob# 0092-308-8240041
Group Endowment Insurance Scheme
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.
What Need Does It Fulfill?
n Pakistan most employers do not operate any pension scheme for their employees although some employers may have a provident fund scheme or a gratuity scheme. The expected benefits at retirement under a typical provident fund scheme and gratuity scheme combined are woefully inadequate for a retiring employee for maintaining his standard of living after retirement unless he supplements these benefits with his own personal savings. Keeping this in view some employers may wish to encourage a habit of saving amongst their employees for their own welfare. Group Endowment Insurance Scheme can be a means of introducing a compulsory saving scheme for the employees under the sponsorship of the employer. Participation in the scheme is usually compulsory. However, if participation in the scheme is voluntary, at least 75% of eligible employees must participate.
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
1. Profit Participation
The endowment insurance is issued on a with profits basis. The same bonus rate are applicable as for the corresponding individual endowment insurance policies.
2. 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.
3. Surrender Value
The policy acquires Surrender Value in respect of a member after insurance cover has been inforce for at least two years on that member and no premiums are in default.
4. 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.
5. Continuation Priviliges
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.
What riders can be added?
The ADB, PTD (Accident) and NDB can be added to this policy if desired.
Suitable For..
This plan is suitable for employers who desire to inculcate a habit of saving amongst their employees in addition to providing them insurance against premature death.
Group Pension Scheme
Foreword we, at State life, have become increasingly aware of the predicament of progressive employers wanting to better the lifestyle of their employees by providing financial security and job satisfaction, but not being able to do so, due to lack of availability of avenues and opportunities. This booklet is a guide to the State Life's Pension Scheme that enables an employer to provide substantial benefits to employees and ensure a higher state of well being for them. It explains the institution, administration and benefits of the pension scheme and with the help of expert professionals in our Pensions Division, we can assist you in availing it, in your own and your employees' interest. Our representatives will only be too pleased to be of any service to you.
1. Introduction
Once the working life of an individual is over, or he has retired, what will he live on? This is a question which every individual faces during his working life and is of equal importance to a concerned employer. Personal savings, Provident Fund and Gratuity are the normal assets he acquires. If not spent prudently, these aasets can fritter away in a short time.
State life's Pension Scheme is the only source which provides a steady monthly income, when other sources of income stop.
This booklet explains step-by-step the nature of the Pension Scheme, how it operates and what are its benefits to the employer as well as to the employees.
2. What is Pension Scheme
Basically it is a saving, or call it a contribution, which is collected during the working life of an individual and invested profitably. After retirement the individual is entitled to a steady monthly income from a fund built up from the earlier savings.
In a sense, it is a reward to the employee, granted today, while money is to be received on retirement.
3. Why a Pension Scheme
We advise a pension scheme due to following benefits to the Employees:
- After retirement when the monthly pay-cheque stops, the individual starts receiving a regular monthly income in the form of a pension.
- While contribution to the scheme, the individual gets a tax concession.
- The individual, after retirement, need not fear of a drastic reduction in his standard of living.
- All pensions are completely tax-free.
- Retirement comes as planned and not abruptly as a shock.
4. Benefits to the Employer
- Contributions to the Pension Scheme by the employer are treated as business expenses and deductible in full.
- The knowledge that at the end of the career, the employee will get a regular pension, helps to build up his job loyalty and the adherence to the job, to the employer's satisfaction.
- Employer does not have to find money to compensate an employee when he ceases to work.
- Shows that the Management cares for their staff and is concerned about their welfare.
- Attracts new employees.
- Retirement of personnel is planned in advance, removing uncertainty both for the employer and the employee.
- Promotion channels in the management hierarchy are unclogged.
5. Comparison with Provident Fund and Gratuity.
1. Provident Fund
This is like a savings bank. The contribution of the employer as well as the employee along with interest accumulated over the years, is handed over to the employee on his retirement.
However, in case an employee wishes to leave before retirement is due, employer's contribution may not have to be paid; or only part payment may be made.
2. Gratuity
Gratuity is exclusively the employer's contribution for the benefit of the employee. From half to a full month's salary is credited for every year of service. Reserves are set aside in the balance sheet but they do not attract tax concession, unless it is a funded scheme. The security of the employee to receive the gratuity is dependent on the continued existence of the employer and his profits, except in case of a funded scheme.
3. Pension Scheme
In comparison with the aforementioned two retirement benefits the Pension Scheme has distinct advantages:
- Payments through Pension Scheme are guaranteed for life.
- A pensioner can look forward to his retirement with confidence and security.
- Pension Scheme is the only method through which regular income accrues to an employee after retirement.
- The payment of the pension is not dependent upon the fortune of the employer.
- Lump sum comparable to those received from Gratuity or Provident Fund, can still be drawn by commutation or the pension while maintaining a steady monthly income.
6. How State Life can help you with the Pension Scheme?
State Life maintains a full-fledged pension Department capable of handling each and every scheme in the most competent and professional manner. It has actuaries, lawyers and other experts, besides offering a unified administrative, technical and investment service. An employer can relieve himself of the tedious and cumbersome work by using the professional service offered by State Life, the major ones being:
1. Designing a Pension Scheme according to am employer's exact requirements, in addition to determining the rate of contribution etc.
2. Preparation of explanatory documents, if required, for consideration by employees.
3.Assisting the employer's legal advisers with the preparation of Trust deed and Rules.
4.Providing reasonable assistance in negotiations with the Central Board of revenue for approval of the scheme.
5. Maintenance of Individual records of members of the scheme, their contributions, the employer's contribution, pension accrued etc.
6. Facilities for payment of pensions, when due
Security:
All policies issued by State Life are guaranteed and enjoy full financial security, backed by the Government under Article 35 of Life Insurance Nationalisation Order 1972.
7. Payment of Pension
The pension will be payable by monthly instalments; commencing from the retirement of member and ceases upon his death.
8. Guaranteed Payments
By incorporating a Guaranteed Pension period, payment can be ensured for a defined period say 5 to 10 years, whether or not a pensioner is alive after retirement, if, however, a pensioner survives the guaranteed period, pension will continue throughout his lifetime.
9. Supplementary Benefits
They may be termed as supplementary, but are indeed those invaluable finishing touches that make the picture complete. Employees would not feel secure unless their families were provided for in the event of their untimely demise. At a little extra cost employees may be given peace of mind by providing these benefits, some of which are listed below:-
Widow's Pension (upon death in service)
The pension will be payable to the wife of a member if he dies while in service. Normally, a widow's pension is one half of the member's pension entitlement.WIDOW'S PENSION (upon death after retirement)
The pension is payable to the wife if the member dies after retirement. In this case also a widow's pension is one half of the pension the member was receiving. The widow's pension, in either case would be payable for life but would cease in the event of remarriage.Orphan's Benefits
The inclusion of orphan's benefits in Pension Scheme along with the widow's pension, gives the scheme a level of completeness. A normal scale of orphan's benefit is 33% of the widow's pension per child, payable upon the child's attainment of age 18 or earlier marriage. Limit is imposed on the number of children who can claim such benefits.
10. Retirement Aspects
Pension will be payable to a member according to a predetermined scale on the normal retirement date fixed by the employer.
11. EarlyRetirement
A member who retires before his normal retirement date on account of becoming incapacitated, or for any other reason, may be granted a reduced immediate pension to commence on the day following the actual date of retirement.
12. Late Retirement
A member who remains in employer's service after the normal retirement date will receive an appropriately increased pension on retirement.
13. Withdrawl Benefits
If a member withdraws from the service of the employer before the normal retirement date due to any reason and without any entitlement to early retirement pension, his future contribution, or contribution made on his behalf, will cease.
Benefits to be paid on withdrawal will depend upon the "withdrawal from service" rules of the scheme. In such a case one of the following procedures may be adopted:
Refund of contribution
If a member withdraws from the contributory scheme a refund is made of all the contributions made by the employee.Defrred Paid-Up Pension
A withdrawing member may be allowed a deferred paid-up pension of the amount accrued to his account on the date of withdrawal. The reduced pension will commence on his normal retirement date.
Private Education
EDUCATION PLAN
Moving towards more educated Pakistan
Introduction:
It is the dream of every father and mother to educate their children. They sacrifice their needs and work hard to turn their dreams into reality. However, the human life is uncertain. A sudden death of the breadwinner could end all the hopes.
State Life has designed an innovative plan to address this area. You know that State Life is the largest Life Insurance Organization in Pakistan with offices throughout the country including remote areas. There are around 6 million people insured with State Life. We have the experience of more than 30 years in Life Insurance Business. Besides the immense financial strength, all the policies of State Life are guaranteed by Government of Pakistan.
Being the leading Insurer in the country, State Life aims to play its role in development of education. State Life would run this plan on non-profit basis. If the plan generates any profit to State Life, whole profit would be returned to the school which may be utilized for the welfare of students such as scholarship. Having such plan would also give competitive advantage to the school.
This plan intends to ensure continuation of education of school children in case their fathers or guardians die. The plan would cover the annual fee of the schools and cost of books and uniforms.
Schools to be Covered
Registered Private Schools with at least 300 students would be eligible to be covered under this scheme.
The G&P Division should approach the schools with good standing based on their general reputation, location, fee structure etc. This point should be taken as general advice and not as a matter of strict condition.
Eligible Persons
The fathers (with age below 60) of the students studying in class level Nursery to 10 would be covered under the scheme on compulsory basis. In case the father is not alive, guardian may be covered provided his age is not more than 60 years.
Benefit
In case the father or guardian dies while the student is studying in school, State Life would pay the fee of the student to the school. An additional annual grant equal to school annual fee would also be paid to cover the cost of books and uniforms. This payment would be made by State Life each year till the student completes education in class 10.
In case the annual fee of the school increases by more than 5% in any year, the benefit payment by State Life would take it as 5%
Cost
The cost of the scheme for first year would be 6.00% of total annual fee of the school. The cost would be paid by the school annually in advance.
State Life would review the cost each year.
Medical Requirements
There would be no medical requirements if the annual fee is equal to or less than the Class Level Wise Limits given below
| Class Level | Maximum Annual Fee upto which No Medical would be Required (Rs.) |
| Nursery, KG 1 & KG | 50,000 |
| Class 1-5 | 75,000 |
| Class 6-10 | 100,000 |
In case the annual fee is higher than the above limits, State Life would determine if any medical is required.
Data Requirement
Once the policy is issued to the school, the data of fathers/guardians such as name, date of birth, occupation, NIC # would be provided by the school to State Life within a period of 3 months.
Claim Settlement
The school would lodge the claim as soon as possible on a prescribed form along with necessary supporting documents such as death certificate, copy of NIC. State Life would start paying the fee within the shortest possible time, after necessary verification.
Termination of the Coverage
The insurance coverage would terminate on the earliest of following events:
a. Termination of the Contract between the School and State Life,
b. Father/Guardian attains the age of 60,
c. Student leaves the school,
d. Wind up of the School,
Profit Sharing
State Life would evaluate the scheme after every three years and if the scheme has generated any profit to State Life, 100% of the profit would be returned to the School. The profit of the Scheme would be worked out as follows:
Total Cost Paid or Payable
Less
State Life's Management Expenses & Contingency Margin
Less
Claims Paid,
Less
Claims in-process,
Less
Present Value of future payments on claims incurred & reported
Less
Provision for claims incurred but not reported.
State Life's Management Expenses & Contingency Margin as percentage of cost would depend on average number of students remained covered during the profit commission period, as follows:
| Average Number of Student per year | State Life's Management Expenses & Contingency Margin (as % of Cost) |
| 300-600 | 25% |
| 601-1,000 | 20% |
| 1,001-3,000 | 15% |
| More than 3,000 | 10% |
Closing Remarks
This is a brief of the Scheme which is sufficient at proposal stage. If a proposal is accepted, a detailed contract would be executed between the School and State Life, containing all the details of the scheme.
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