Study of salary administration for delta l ife insurance company ltd


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Study of salary administration for delta l ife insurance company ltd

  2. 2. 1 CERTIFICATE TO WHOM SO EVER IT MAY CONCERN This is to certify that SWARNA SUSMITA SIKDER is a bonafide student of VISHWAKARMA INSTITUTE OF MANAGEMENT. She has successfully carried out his summer project titled STUDY OF SALARY ADMINISTRATION at DELTA LIFE INSURANCE COMPANY, DHAKA in the partial fulfillment of Master of Business Administration course of University of Pune (2005 - 2007). She has worked under our guidance and direction. Her work is found to be good and complete in all respect. During the period we found her hardworking, sincere and loyal. We wish her all the best for future. DR. SHARAD L. JOSHI PROF. RAJESH VHATKAR (DIRECTOR) (PROJECT GUIDE)
  3. 3. 2 ACKNOWLEDGEMENT I would like to express my sincere gratitude to Mr. Deba Prasad Das, MD and my project guide Mr. M.Z.I Talukdar, SVP Delta Life Insurance Company Pvt Ltd, Dhaka and all colleagues at HRD for the opportunity, support & consideration. It was a great learning experience being with them for two months. They never considered me as a summer trainee and involved me in professional activity of the organization which helped me to learn practical work. Being a part of their work was an extremely pleasurable, valuable and learning experience. I specially thank my project guide Mr. Rajesh Vhatkar, Faculty Vishwakarma Institute of Management, Pune for his valuable guidance, co-operation & encouragement through the project. I would also like to thank Mr. Mizanur Rahman, SEO who has always been supporting, providing the information, guiding me about the project from time to time. My sincere thanks to other faculty members and Dr. Sharad Joshi, Director, VIM for lending their support and guidance. Finally, I am thankful to my family members for giving me the support, strength and time for accomplishing the task completely.
  4. 4. 3 Contents Sr. No. Topic Page No. 1 Executive Summary . 1 2 Objective ... 2 3 Theoretical Background 3 4 Company Profile .. 10 5 Vision, Goal & Values . 22 6 Services . 24 7 Research Methodology .. 33 8 Analysis ............................................ 35 9 Findings & Conclusion 52 10 Limitation .. 53 11 Recommendation . 54 12 Bibliography 55 13 Annexure .. 56
  5. 5. 4 Executive Sum m ary
  6. 6. 5 EXECUTIVE SUMMARY The project was carried out at Delta Life Insurance Company (DLIC), Dhaka, Bangladesh. The title of the project is study of Salary Administration. The duration of the project was of two months from 5th June 2006 to 5th August 2006. The objective of this study is to analyse Salary Administration in DLIC. The study was conducted to know the structure & scale of salary provided by the company to its employees. In this project, I studied about the present salary composition of DLIC along with the evaluation of incentives, bonus, and allowances given to the employees. I also studied the execution of Provident Fund, Gratuity and Encashment of Leave for the final payment of the employee when he/she leaves the company. During the course of the project, I got a clear idea about Life Insurance sector and about the overall functioning of the organization.
  7. 7. 6 Objective
  8. 8. 7 OBJECTIVES Primary Objective 1.To study the salary administration in Delta Life Insurance Company (DLIC). 2.To analyse the pay scale and fixation of basic salary in DLIC. Secondary Objective 1.To study the performance appraisal procedure & its implications on promotion, increment & other benefits in DLIC. 2.To understand the calculation of incentives, bonus, allowances, provident fund, gratuity, income tax in DLIC. *********************
  9. 9. 8 Theoretical Background
  10. 10. 9 HISTORY OF INSURANCE Insurance began as a way of reducing the risk of traders, as early as 5000 BC in China and 4500 BC in Babylon. Life insurance dates only to ancient Rome; "burial clubs" covered the cost of members' funeral expenses and helped survivors monetarily. Modern life insurance started in late 17th century England, originally as insurance for traders: merchants, ship owners and underwriters met to discuss deals at Lloyd's Coffee House, predecessor to the famous Lloyd's of London. The first insurance company in the United States was formed in Charleston, South Carolina in 1732. This company was started for the benefit of Presbyterian ministers' families, but it provided only fire insurance. Fire insurance is a pro-vision made by the insured for reimbursement in the event of a loss occurring by fire. On the part of the in-surer it is a promise to reimburse the insured for the loss that may occur. In making this promise, the insurer will take into consideration everything that may possibly increase the chance of a fire and everything that may decrease the chance of a fire, and, basing his calculation on these two sets of factors, will undertake the contract of indemnity and determine his charges and the form of contract. The sale of life insurance in the U.S. began the late 1760s. Some people think of insurance as gambling. It really isn't gambling even though it has the similarities of probability and odds. Insurance serves a public good of sharing the financial risks of existence and life and death among many to serve those who have experienced a loss. What is Insurance? Insurance is - A contract in which one party agrees to pay for another party's financial loss resulting from a specified event. - A promise of reimbursement in the case of loss paid to people or companies so concerned about hazards that they have made prepayments to an insurance company. - A plan in which individuals and organization who are concerned about potential risks will pay premiums to an insurance company, who in return, will reimburse them if there is loss. To generate a profit, the insurer will invest the premiums it receives.
  11. 11. 10 Examples of the different types of insurance available are automobile, home, health and worker's compensation. Whereas in most cases the insured is paid for their loss, with life insurance a beneficiary is paid when the insured person passes away. - A contract that provides compensation for specific losses in exchange for a periodic payment. - An individual contract is known as an insurance policy, and the periodic payment is known as an insurance premium. What is Life Insurance? A Life insurance policy is a contract between one (the policyowner-insured) and an insurance company (the insurer). Under the terms of a life insurance contract, the insurer promises to pay a certain amount of money (death benefit) to someone the policyowner chooses (a beneficiary) when he dies, in exchange for his premium payments. Life insurance, sometimes referred to as life assurance, provides for a payment of a sum of money upon the death of the insured. In addition, life insurance can be used as a means of investment or saving. An agreement that guarantees the payment of a stated amount of monetary benefits upon the death of the insured. Life Insurance is insurance that provides a financial remuneration on the premature death of the policyholder. By paying an agreed premium over a fixed term, the policyholder is entitled to receive a financial payout in the event that they die prior to the end date of the fixed term. It s a product which provides protection against the economic loss caused by a person's death. Why do we need life insurance? The need for life insurance is simple; we should consider life insurance if anyone depends on our income. Essentially, we transfer the risk (loss of our income) to the insurer by paying a fee, or premium, to the insurer. The insurer, with a large capital base and expertise in risk selection and management, is better able to accept this risk than any single individual would be. This risk transfer may be helpful in both personal and business situations.
  12. 12. 11 Personal needs: Dependent's Support: The major reason people buy life insurance is to replace income that would be lost because of the death of an income earner. If a person supports or helps support a family, the loss of income that would result from his death could mean that his surviving dependents may face financial difficulties. Household expenses continue, utility bills and school fees must be paid, and food and clothing must be purchased. Life insurance provides him with a sense of security in the knowledge that the life insurance money will be available to help support family members in case of his death. Education Costs: One of the primary objectives may be to send his children to a university or college. Due to an untimely death, the tuition may become beyond his family's reach. Life insurance may be used to provide for the tuition expense. Burial expenses and estate planning: Life insurance may be used to pay funeral or burial expenses. In addition, it may be used to pay inheritance taxes. Investment Income: Life insurance policies that accumulate savings can also be used as vehicles for personal savings and investment. Over a period of time, the accumulated savings in a permanent life insurance policy can grow to a substantial sum and, while growing, will still provide the insured with life insurance coverage. Charity: One can purchase life insurance in order to donate the proceeds to a charitable organization, such as a church or an educational institution. Business needs: A business continuation insurance plan: When the owner or a key person (any person whose death would cause the business a significant financial loss) dies, a business continuation life insurance plan may be used to provide the necessary fund for the business s continued operation.
  13. 13. 12 Buy-Sell Agreement: If one business partner dies and the other partner does not have enough money to buy his partner's financial interest in the company, life insurance may be arranged to cover this cost. Life insurance as Employee Benefits: Businesses often use life insurance to provide benefits for their employees. Employers pay for all or part of these employee benefits as part of the total package under which they compensate their employees.
  14. 14. 13 Introduction to Salary Administration What is Salary? The Roman word salarium linked employment, salt and soldiers, accepting salt from a person was synonymous with drawing sustenance, taking pay, or being in that person's service. Soldiers were known to have been paid, and maintain instead that the salarium was an allowance for the purchase of salt At that time salt production was strictly controlled by the monarchy or ruling elite. Today, the idea of a salary continues to evolve as part of a system of all the combined rewards that employers offer to employees. Salary (also now known as fixed pay) is coming to be seen as part of a "total rewards" system which includes variable pay (such as bonuses, incentive pay, and commissions), benefits and perquisites (or perks), and various other tools which help employers link rewards to an employee's measured performance. A salary is a form of periodic payment from an employer to an employee, which is specified in an employment contract. From the point of view of running a business, salary can also be viewed as the cost of acquiring human resources for running operations, and is then termed personnel expense or salary expense. In accounting, salaries are recorded in payroll accounts. Salary is compensation to an employee for services rendered on a weekly, monthly or annual basis. Salary is usually associated with office employees, supervisors, managers and professional and technical staff. In any organization, salaries and wages constitute a significant portion of the cost of operation of the business. Difference between Salary, Wage and Compensation ? Salary refers to the monetary payment on a monthly or annual basis. Wages are the remuneration paid by the employer for the service of a worker who is engaged by the hour, days, week or fortnight. Wages are payments to hourly-rated production and maintenance employee.
  15. 15. 14 Compensation refers to all forms of financial returns, tangible services and benefits employees receive as a part of an employment relationship. Compensation may be received directly in the form of cash (wage, bonus, incentives) or indirectly through services and benefits (pensions, health insurance, vacations). What is Salary Administration? Salary administration refers to the establishment and implementation of sound policies and practices of employee s compensation. Salaries represent a significant portion of the total costs in most of the organizations and so it requires sound administration. The control of salary level is of paramount importance even though the amount of control which can be exerted may vary among organizations and within an organization. Pay can influence employee s work behavior and attitudes. It becomes crucial for managers to ensure that pay systems are designed and administered in fair and equitable manner. The salary administration is thus concerned with the monetary or financial aspects of needs, motivation rewards. The responsibility for salary administration usually lies with the top management. Objectives of Salary Administration 1. Control of cost 2. Establishment of fair and equitable structure of remuneration 3. Utilization of wages and salaries as an incentive to greater employee productivity 4. Maintenance of a satisfactory public image 5. Determination of the system of job description and job evaluation 6. Decision of what and how people will be paid 7. Checking all activities of the salary administration group 8. To recommend changes in the salary policy and specific raises for executives at various levels 9. To review salary scheme 10. To attract and encourage staff to make full use of their abilities and develop their potential.
  16. 16. 15 Salary Policy Formulation of a sound salary policy is an important function of personnel department of any company. A sound salary policy is essential to procure, maintain and develop employees and to get effective results from them. In the word of Northcott, Wages operate both on the circumference and at the centre of industrial relations . An effective salary policy helps - in achieving and maintaining good industrial relations - to attract staff of the right caliber and encourage to make full use of their abilities and develop their potential - to convince its employees that its policy on salary is fair and realistic - to reward staff according to their contribution - in recruiting new employees in times of labor shortage - to cover specific personnel matters such as promotion, transfer, up gradation etc. - to prevent moral dissatisfaction among employees with its levels of pay.
  17. 17. 16 Com pany Profile
  18. 18. 17 COMPANY PROFILE Delta Life Insurance Company Ltd. establish mainly though the initiative of a group of Bangladeshi professionals working abroad along with a few enterprising local entrepreneurs, started its operation in 1986, after the Government of Bangladesh accorded permission in 1984 to carry on the business of insurance in the private sector. It soon made a mark in the life insurance arena by not only being the leader among the private sector indigenous companies, but by undertaking and successfully implementing innovative and welfare oriented life insurance schemes. DLIC now is a leading life insurance company of the country. This is happened only for its right operation systems and smooth developing policies. It introduced an array of conventional Life and Group Insurance Products many of which were the first in Bangladesh. For the first time, Health Insurance Products were also introduced by Delta Life. But more importantly, in fulfillment of the commitment towards social development, Delta Life for the first time not only in Bangladesh but also in the world introduced Micro-Life Insurance-cum-savings Products specially suited to the needs and pockets of poor people of the country who constitute more than 80% of the people of Bangladesh. It is appreciated by United Nations Organizations (UNO) for introducing Micro-Insurance in the world. In Micro-Insurance policy the least premium is Tk.9 per week that provides the much needed life insurance coverage along with the facility of regular savings on a long-term basis. Delta Life can take pride in molding the saving habits of the lower and middle class people and transforming them into prospective policyholders. The potential is now so strongly perceived that all life insurance companies old and new alike operating in the country have started their own micro-insurance products.
  19. 19. 18 DLIC was incorporated in November 10, 1986 and is mainly engaged in Ordinary Life (OL), Group Insurance (GI), Health Insurance (HI) business and non- traditional micro-insurance business under the name of Gono-Grameen Bima (GN- GRB). The company is a publicly traded company and its shares are listed on the Dhaka Stock Exchange and Chittagong Stock Exchange. Business Review: The Company's total revenue has increased by 16.21% to Taka 181.17 crores in 2002. Gross premium increased by 13.25% to Taka 150.85 crores in 2002 from Tk. 133.20 crores in 2001, although the Company's Gono-Grameen Division could not do well in respect of its first year premium. Investment and other income increased by Taka 7.91 crores, that is 32.78% over the previous year. The number of lives covered including those under group life stood at over 10 lac. The number of valued policies stood at over 194,000 in the Ordinary Life Division under which gross premium rose from Taka 72.53 crores in 2001 to Taka 89.31 crores in 2002, an increase of 23.14% over the previous year. In the Gono-Grameen Division, the number of policyholders stood at above 757,000 and gross premium increased marginally to Taka 54.03 from Taka 53.07 crores. The ratio of management expenses to total premium income decreased by 2.16% as compared to that in the year 2001. In absolute terms, management expenses during the year have increased by 7.28% from Taka 54.43 crores to Taka 58.50 crores. Salaries have however increased by less than 1% in 2002. Life Fund: The Life Fund of Delta Life is Taka 850 crores and the profit earned in 2005-2006 is Taka 258 crores. Actuarial valuation results show the company s Life Fund being well in excess of the policy liabilities. Authorised Capital: 5,00,000 Ordinary Shares of Taka 100 each 5 crores. Paid-up Capital: 3,00,000 Ordinary Shares of Taka 100 each 3 crores. Investment: Investments, excluding fixed deposits with banks and fixed assets, amounted to Taka 171.88 crores (at the end of 2002) and provided income of Taka
  20. 20. 19 18.08 crores. Fixed deposit with banks amounted to Taka 119.60 crores and provided income of Taka 11.12 crores. Dividends: The Board of Directors had recommended a dividend of Taka 45.00 (Forty Five) per share of Taka 100 each for 3,00,000 issued shares of the company for the year 2002. While recommending the dividends, the Board of Directors had taken into consideration the result of the actuarial valuation of the company s liabilities for policies issued till 31st December 2002, the assets as at that date, and the fund requirement for future development and expansion. Social Commitment: Delta Life Insurance Company has maintained its commitment to contribute to the improvement in the social status of women in the country. It has continued with sponsorship of the Women s Inter-College Handball Championship and a Nationwide Book Reading Program conducted by Bishwa Sahitya Kendra. The company has also continued with Nurjahan Smriti Award in the year 2001. Through its Gono-Grameen Division, the company has been recognized as an innovator in promoting poverty alleviation. In recognition of this role, Women s World Banking (WWB) based in New York honored Delta Life by making it a founding member of an international NGO, namely Global Network for Banking Innovation in Micro finance (GNBI). The Chairman and Managing Director of DLIC attended the Annual Conference of GNBI at its headquarters in New York in May, 2002. Number of Directors: There are 36 Board of Directors. Board of Committees: There are 4 committees. Finance, Account, Investment & Audit Committee, Building & Claims Committee, Training & Human Resources Development, Executive Committee. Number of Staffs: There are 2500 employees working in DLIC.
  21. 21. 20 Offices: DLIC does business through its 243 Agency Offices, 12 Service Cells and 6 Service Centres over the country. Agency Offices: They give license and code number for the marketing people to work at field level. Agency office is concerned for the commission based employees those are mostly bringing the profit to the company. Servicing Cell: Servicing Cells take premium from the policyholders and issue Primary Receipt (PR). There should be 4 copies of PR For the party (policyholder) For that Servicing Cell For the Head Office For the Service Centre a computerized receipt should be sent called Paka Receipt . 12 Servicing Cells are at Sylhet, Lakshmipur, Munshigonj, Manikgonj, Noakhali, Jessore, Barisal, Tangail, Thakurgaon, Faridpur, Natore, Chandpur. Servicing Centres: Servicing Centres inform the policyholders about the date of deposit the premium through letters, changing the name of nominees, address, changing the term or option of the policy etc. 6 Service Centres are at Dhaka, Chittagong, Bogra, Feni, Comilla and Khulna. Zone Operation Centre (ZOC): According to the brilliant idea of the honorable professor Safayat Ahmed Chowdhury (former Chairman and MD), DLIC started the Micro-Insurance Policy Scheme through out Bangladesh, which is an important milestone in the life insurance
  22. 22. 21 sector of Bangladesh. As a result, the Gono-Grameen Bima of DLIC started its journey in October 1993. At present it is performing its operation through out the country with the help of 18 Zone Operation Centres (ZOC) and about 800 Unit Offices under the control of them. The ZOCs over the country are formed in the same pattern and they work similarly. Generally a ZOC is divided into 2 Sections (1) Development Section:- This section is engaged in the marketing activities of GN-GRB with the help of the unit manager and his subordinate. It is controlled by Senior Development Manager (SDM). (2) Operation and Accounts Section:- It is responsible for all payment and transaction of that ZOC. It is controlled by Operation Manager.
  23. 23. 22 DEPARTMENTS OF DELTA LIFE Functions of each department at a glance: Head Office : All types of administrative work are done here. The departments under the Head Office of Delta Life are below: Human Resources Department (HRD): The Human Resource Department is basically responsible for caring out overall personnel management related activities of the company within the scope of personnel policies, administrative procedures and coordination with the management. Public Relations Department (PRD): It is involved to circulate the different financial statements, activities. They also publish half yearly magazine known as Delta Barta , produce yearly calendar, diary, and greeting cards. They advertise company s employment notice subject to the requirements of the HRD.
  24. 24. 23 MD s Secretariat: This department arranges appointment of the delegates and the higher officials with Managing Director of the company. Control and Compliance (C & C): They verify the bills of TA/DA and check the salary of the employee. Internal Audit: They visit different offices in order to verify the statements made by the department. If any irregularity is found then they request the concern department for necessary actions to correct the error. Establishment: They look after all visible assets (excluding depositing money) of the company, purchase all stationary and hardware, computer accessories, maintenance of the existing assets. Accounts: They prepare financial statements, annual reports, budget, book keeping of the company. They are accountable for the over all financial functions of the company. Share and Board: Board Affairs is mainly related with the meetings of the Board of Directors. There are 36 Directors presently with the company. Share Department is mainly involving transaction of shares of the company. Investment: This department invests the collected premium as per Insurance Act, 1938. The investment can be in bank, bond, securities, share market etc. Capital Market Operation (CMO): They transact the shares in the stock exchange, collect financial information, record keeping of the share and debenture. Information Technology (IT): They develop software for the use of the company only. They create and update the websites of the company according to the changes of the company. They provide the updated information in insurance market to the Directors. Legal: This department handles all the legal aspects of the company.
  25. 25. 24 Actuarial: Actuarial department involves in calculation of premium rates, surrender values, maturity values, reserves and to make decision on policy status, checking and verification of re-insurance and group insurance accounts. Re-Insurance: Delta Life Insurance Company mainly makes the re-insurance with Munich Re-Insurance Company (Germany) and Swiss Re-Insurance Company. This department arranges to deposit the portion of re-insurance to the aforesaid re- insurance companies and collect the portion of the sum assured from those companies. Training Department: They arrange on-the-job training and also arrange long-term training program for the newly recruited executives and the marketing people. There is a separate building newly constructed at Dhaka only for training and development purpose named as Training Institute which will conduct only the short-term and long-term training programs and courses on insurance. Several times number of efficient executives of Delta Life came to National Insurance Academy of Pune for training and they were sharing and getting knowledge by those training and after going back to Bangladesh they were conducting a short-term training program for all other employees to train them what they have learnt in Pune. Ordinary Life: This is the main source of the income of the company. The amount of sum assured (the risk of the company) is huge. The limit can go till crore. The departments under Ordinary Life are below: Servicing Department: This department Issues money receipt Informs the policyholder about the date of deposit the premium by sending letters.
  26. 26. 25 Changes the name of the nominee, address, terms and options of the policy. There are three options provided by the company that is done by Alteration Section of Servicing Department. Option A At least the policy should run for 2 years to get the paid-up value. Option B The policy will continue with the given premium till how long it can go. Option C If the policyholder stops paying premium, he will get only the paid-up value with bonus. Development Department: This department looks after the administrative side of the marketing employees. There are 2 sections of this department: (1) Agency Section: Employees are office staff. They give license and code number to the commission based employees. The lower the post, the longer the code. The longest code is of 6 digits. The hierarchy of the people those administrate the marketing of Development Department ED JEVP VP JAVP (2) Commission Section: The hierarchy is below MA (Marketing Associates) MO (Marketing Officer)
  27. 27. 26 AM (Assistant Manager) AC (Assistant Controller) DC (Deputy Controller) The employees get their commission based on the term, plan / sum assured of the policy. They are paid from the Service Cell after calculating the First year premium and their commission. Accounts Department: It plays a vital role for the efficient use of the finance of the company. It is responsible for all payments and transactions of the company. DLIC has efficient and qualified team for maintaining its accounts. The Accounts Department (OL) is basically divided into 7 working wings with specific functions, duties and responsibilities. The personnel attached to each section are responsible for work as specified below and they are reporting to their Line Manager or Supervisor. The wings are 1. Collection, Deposit and Payment Wing 2. Final Account, Budget and MIS Wing 3. Claim, Policy Surrender and Loan Wing 4. Daily Collection Sheet (DCS) Processing Wing 5. Daily Expense Sheet (DES) Processing Wing 6. Bank Memo (BM) Process Wing 7. Computer Wing Claims Department: Claims Department is divided into another 2 departments (1) Survival, Maturity and Surrender: This department calculates the final claim at the end of the period subject to the survival of the policyholder.
  28. 28. 27 When the policyholder is unable to continue the policy in different circumstances, he can surrender the policy for getting back the money. Based on the rules of the policy the party will get a certain rate. (2) Death Claim: If the policyholder dies before completion of the term, then his/her nominee can claim for the death benefit. In that case, if the demand is found true through investigation, sum assured is paid to the nominee of the insured. On the other hand, if the information given by the insured on proposal form while doing the policy is found false, the nominee will get only the deposited money. Underwriting Department: This department is the heart of any insurance company. All procedure or acceptance of the policy is done here. This is the gateway for people to meet life insurance. To make insurance, at first a proposal has been represented before Underwriting Section. Then the department gives the clearance of adopting any insurance policy. The department makes sure some criteria before accepting any policy like Health Checkup Age Disease Risky Jobholder for e.g. jobholder in Air Force Health Hazard Educational Qualification i.e. educated persons are health conscious so life risk is less. Family History i.e. how many family members died in early age? Does the policyholder have any hereditary disease? Social Status Gono-Grameen Bima Division: This is the division of Micro-Insurance. They work in villages, rural areas, thana, district, city, slum area for poor people and small business people.
  29. 29. 28 The activities of this division are more profit oriented, more suitable premium and rate of recovery is more. The amount of sum assured is small. The limit is 5000- 100000 Tk. Management Hierarchy of HR Department of DLIC
  30. 30. 29 Vision, Goal & Values
  31. 31. 30 VISION Delta Life is working to be the premier life insurance company in Bangladesh. The company will serve their customers with respect and will provide the best solution for their needs. It will be a company with qualified professionals who will work together as a team and serve with dignity and the highest level of integrity. It believes in excellence and will continuously improve its customer service and will obtain the loyalty of its customers with service beyond their expectations. Adding Value will be the operative words of the organization. GOAL Provide financial security to the customers with insurance policies that are most suitable for them. Make life insurance as easy-saving instrument and a profitable one with attractive bonus and improved customer service. Collect small savings from the people of the country and invest the accumulated savings in profitable nation building enterprises.
  32. 32. 31 Values - TRUEST Team work Respect for all people Unquestionable integrity Excellence in everything they do Speed in servicing Truthfulness
  33. 33. 32 Services
  34. 34. 33 SERVICES Types of Insurance Schemes provided by DLIC: Some popular plans of insurance provided by DLIC are specified below 1. Endowment plan with and without profit: This plan is most common and widely popular plan. This plan provides for a fixed sum at the end of a particular term or at earlier death of the assured. The plan is available under both options i.e. with profit and without profit. This is a straightforward coverage allowing a person to plan his future needs for security and projected savings through means of insurance. Endowment insurance can be useful for people who know that they will have to incur a specific expense in the future like a wedding or college tuition. They know that regardless of what the future may hold, the expense will have to be paid. Endowment insurance allows them to be certain that the money will be there. 2. One-two-three endowment plan with profit: This plan provides for high security at earlier death of the assured before expiry of term. The plan provides for double the sum assured at premature death due to illness or death occurs directly as the result of an accident along with accrued bonuses till death or maturity as the case may be. 3. Three payments plan: Given for term like 12, 15, 18, 21 years with or without profits. This plan provides for one fourth of the sum assured upon expiry of each one third of the term and on death at anytime within the term the full sum assured payment of one or all the instalments notwithstanding. In case of survival to the end of the term, remaining portion of the sum assured along with profits is paid after deducting the instalments already paid.
  35. 35. 34 4. Bi-annual payment plan: Given for 10, 15 & 20 years term and provides for payment of a portion of sum assured bi-annually after expiry of the 4th year of the policy, if the policyholder is then living. The amount of instalment and when payable is shown in the table below: Term Amount of instalment When payable Amount of Sum Assured payable on maturity 10 years 20% Upon expiry of 4th , 6th , 8th years 40% 15 years 15% Upon expiry of 4th , 6th , 8th , 10th & 12th years 25% 20 years 10% Upon expiry of 4th , 6th , 8th , 10th , 12th , 14th , 16th & 18th years 20% 5. Premium back term Insurance plans without profit: These are comparatively low cost plans. These plans provide for payment of sum assured in case of premature death within the term or refund of all premiums paid at the end of term, sum assured keeps on increasing at 8% per annum on each successive policy anniversary and such increased sum is paid at death during the term. On survival up to the end of term, all premium paid during the term is paid. A guaranteed profit to 10% of sum assured is paid along with full premium at the end of term as survival benefit. On death before maturity, the sum assured is payable. 6. Pension Plan without profit:
  36. 36. 35 Under this plan pensions are provided at quarterly intervals from an age designated by the policyholder for life, guaranteed for a minimum period of 10 years i.e. if the pensioner dies anytime within 10 years, his designated nominee will get pension for remaining term of 10 years. Before pension starts, if the assured policyholder dies, 10 times the annual pension is paid as a lump-sump to his nominee and the policy is terminated upon such payment. There is another plan that while providing for full protection against premature death as described above, provides for pension from a designated age as elected by the policyholder at an increasing rate i.e. pension will increase at 10% at intervals of 2 years. Payment of pension id guaranteed for at least 10 years and thereafter as long as the pensioner lives. Both these pension plans provide for waiver of premium in case of permanent and total disability due to accident before commencement of pension. 7. Child Education Protection Plan with profit: Multiple benefits in the form of scholarship, monthly annuity etc. in addition to sum assured is available under this plan. Sum assured or a part thereof is also payable to the policyholder in case the child dies prematurely. 8. Tri-dimensional Policy: Built-in benefits for payment of 50% sum assured immediately if critical illness is diagnosed. Premium and the sum assured will thereafter be halved and policy continues. Under this plan, a spouse may also be covered for major disease benefits.
  37. 37. 36 9. Moving Term Plan: Policies under the plan are initially issued and are to be taken for a minimum term (6 to 10 years) as elected by policyholder. If death occurs within this minimum term, full sum assured is payable. At the expiry of the minimum term, the policy may be surrendered for full refund of premiums paid. However, the policyholder need not terminate his policy at the end of the minimum specified period. The policy will automatically continue till age 65 years of the policyholder unless he terminates it earlier. The survival benefit comprises of refund of all premiums paid along with bonuses. In case of premature death the nominee(s) is paid the sum assured plus all premiums paid till death, or all premiums paid with profit accrued till death whichever is greater. 10. Single Premium Multiple Security Plan: It is a single premium policy offering multiple security for 5 years term. It covers natural death, permanent and partial/total disability and 7 major diseases like heart attack, stroke, coronary artery surgery, cancer, kidney failure, multiple sclerosis, paralysis and major organ transplant. 11. Micro Insurance: In GN-GRB the formalities are minimum. A person interested in a policy submits a simple 2 pages proposal form; it is signed or thumb-imprinted by him/her. There is no need for medical check-up. The person needs to be of age between 18 and 45 years, have a monthly income of Tk.5000/=(US $ 100.00), be of good health and supply a Declaration of Good Health (DGH) at the time of submitting the proposal form. Profit policies are offered for 10 and 15 years term both with premium payment mode being weekly or monthly. Premium rate is same irrespective of age at entry.
  38. 38. 37 12. Group Life Insurance: Delta Life offers both term and endowment schemes on group basis with a lot of variations. Some schemes of group life insurance are briefly described below: a) Group Term Insurance: Cheapest form of group insurance cover. It is taken for 3-year term and renewed for each successive 3-year term. At the end of term, profit commission as may be agreed upon by reference to size of group & premium rate, is payable if there arises a profit under the contract. b) Group Term Insurance with refund of full or partial premium with or without profit: Taken for a term of 10 years or more or that linked with superannuation age of employees. The scheme provides for full sum assured for death-in- service or refund of full/partial (say 50%) premium paid as the case may be upon expiry of the term or attainment of superannuation age by am employee. These plans are also available with guaranteed profits payable on maturity on premium paid. c) Group Endowment Scheme with or with profit: Under this scheme which is given for a fixed term, say 10 years or linked with the superannuation age of employees (term of cover shall then vary according to the age of employees), full sum assured is paid in case of death during the term or on maturity either full or a portion of sum assured, say 50% is paid. Besides, under with-profit option, profit vested till maturity or earlier death based on sum payable on expiry of term is paid. d) Group Pension Scheme: Provides for pension based on final pay at a certain percentage for each year of service.
  39. 39. 38 There are number of attractive supplementary covers may be added to any of the basic schemes described above paying a little extra premium. a) Accidental Double Indemnity benefit (ADB) Provides for double the sum assured in case of death directly resulting from an accident. b) Permanent Total or Partial Disablement In case of permanent or partial disablement as a result of accident or sickness depending upon its degree and extent, this supplementary cover provides for additional sum at a varying scale in relation to sum assured. Waiver of premium in case of total disablement as well as benefits for extended term insurance in available. c) Hospitalization Insurance The benefits of reimbursement of expenses incurred as an inpatient in a recognized clinic/hospital at predetermined scale may also be attached as a supplementary cover. d) Major Disease Benefit (MDB) Under this supplementary insurance, if an employee is diagnosed to have one of the diseases mentioned below, a part of the sum assured (25% or 50%) will be paid immediately. The diseases are: i) Myocardial infraction (Heart attack) ii) Stroke iii) Coronary artery surgery iv) Cancer v) Kidney failure vi) Multiple sclerosis vii) Paralysis and viii) major organ transplant. When an MDB claim is paid, the sum assured in the original group policy for that particular employee will be reduced by the amount so paid out. 13. Health Insurance: The objective of Health Insurance is to make the modern treatment facilities affordable to individuals from all socio-economic classes. DLIC is the pioneer of Health Insurance in Bangladesh. Delta Care Hospitalization Plan , the brand name of the Hospitalization plan of DLIC. Delta Care Hospital is
  40. 40. 39 designed to cover the expenses incurred for in-hospital treatment of its insured members which includes Accommodation Consultation Medicine Investigations Surgical operation Ancillary services like post operative care Blood transfusion Oxygen therapy Local ambulance service Dressing etc. Health Insurance Products are:- a) Individual Health Insurance policy: This policy is designed for health conscious citizen who likes to ensure proper and timely treatment for himself and his family members when needed advanced treatment facilities. An individual aged between 18 to 60 years may take out a policy. Dependent children above 01 (one) year and spouse or parents (upto 60 years) may also be included in the policy. Several benefit levels are setup under the policy with reasonable premium to suit individual need. b) Group Health Insurance Policy: This policy is designed with several benefit limits to suit the requirements and financial setup of any group who likes to ensure proper and timely treatment of any ailment of its members to keep them active and in good health. This scheme is suitable for a company, institution or organization. At least 95% of the total eligible employees/members should join the scheme. Any employee or a member aged between 18 and 65 years may be included under the plan and the total number of insured should not be less than 25 in a group. Besides, spouse and dependent children from 3 months upto 25 years living with the employee/member may also be included in the scheme.
  41. 41. 40 For e.g. Bangladesh Cricket Control Board has a group health insurance policy in this company. c) Overseas Mediclaim Insurance Policy: Overseas Mediclaim Insurance policy is a type of health insurance offered to Bnagladeshi Nationals and Resident Foreigners under which treatment expenses incurred abroad in the event of sudden and unexpected illness or accident are covered while on business or official trip and holiday tour. There are two plans under this policy: Plan-A : For visiting countries excluding USA and Canada. Plan-B : For visiting countries including USA and Canada. Maximum Benefit Limit: The policy is intended only for use by the insured person in the event of a sudden and unexpected sickness or accident when the insured is staying abroad. Any Citizen of Bangladesh or Resident Foreigner within the age limit of 6 months to 65 years may take out an Overseas Mediclaim Insurance Policy (OMP). Expenses for physician service, hospital, physician and medical services and local emergency medical transportation are covered in the policy. 14. Daughter Marriage Insurance: The policyholder of this plan will be the father. For appropriate reason mother also can take the policy for her daughter. The age limit of the policyholder (i.e. father/mother) should be between 21 to 55 years. The terms available for the policy are from 5 years to 16 years. Plan-A Plan-B US $ 50,000 US $ 100,000
  42. 42. 41 If the father/mother dies before maturity, then no more premium to be given and after the end of the term, the daughter will get the full sum assured (at that time the age of the daughter should be minimum 18 years). If the daughter dies before, then father can stop depositing the premium and will get back the paid-up amount. The range of the premium is from Taka 5,000 to Taka 1,00,000.
  43. 43. 42 Research Methodology
  44. 44. 43 RESEARCH METHODOLOGY Introduction Research is an art of scientific investigation through search of new facts in any branch of knowledge. It is movement from unknown to known. The study of research methodology gives the student the necessary training in gathering materials required, and also training in technique for the collection of data appropriate to particular problem. It helps in the use of statistics, questionnaire and controlled experimentation and in recording evidences, sorting it out and interpreting it. Knowledge of research methodology is helpful in various fields. Research methodology plays key role in project work. It consists of series of actions or steps necessary to effectively carry out research and the desired sequencing of these step. Basic features of a research process are : Research always start with a question or a problem. It s purpose is to find answers to questions through the application of scientific methode. It is a systematic and intensive study directed towards a more complete knowledge of the subject studied. Methods Of Data Collection Data collection is an elaborate process in which the researcher makes a planned search for all relevant data and is the foundation of all researches. It is the raw material with which a researcher functions. The task of data collection begins after a research problem has been defined and research plan is chalked out. While deciding about the method of data collection to be used for the study the researcher should keep in mind two types of data viz., primary data and secondary data. Sources Of Data
  45. 45. 44 A. Secondary data Secondary data is the data already collected by others for purposes other than solution of the problem at hand. In case of Secondary data the nature of data collection work is merely that of compilation. Secondary data has several supplementary uses. 1. Internal sources Company Records. Service Reports. Annual Report. Company Brochure. Company Library. 2. External sources Web pages of organizations and journals. Reference Books. Magazines. Newspapers. B. Primary data The data that is being collected for the first time or to particularly fulfill the objectives of the project is known as primary data. In my study work, interpersonal interview was the method of Data Collection. Data Evaluation All the data and information collected from the secondary sources and company officials was filtered & only relevant data is introduced in the report which helped in achieving objective of the project. This relevant data is finally evaluated to make the final report and to draw the conclusion.
  46. 46. 45 Analysis
  47. 47. 46 Salary Structure in DLIC Salary structure of the organization should facilitate the attraction, retention and motivation of staff so that they stay with the organization and make full use of their abilities. In DLIC salary is structured matching the importance of jobs in the company. The employee structure is Commission Based Employees are the marketing people those are selling the product of DLIC. From Marketing Associates to Deputy Controller get their commission based on the term, plan and sum assured of the policy. They are paid after calculating the First year premium and their commission. MA MO AM AC DC The rate of commission is given later on. Permanent Employees are scale-based employees. They get salary as per salary scale provided by the company. Temporary Employees are Record Keeper, Peon, Guard, and Driver. In addition to the salary scale, they get some extra benefits with their monthly salary. The benefits they get are given as Allowances which is discussed later on.
  48. 48. 47 Salary Scale DLIC has a large-scale salary range. Each and every employee is paid under the pay scale of the company. The salary of SVP and above is fixed by the decision of top management depending on the bargaining capacity of two parties. The salary scale may be revised time to time by the management. This year a new pay scale is given to Delta Life employees. For confirmed/permanent employees 15% increase in the basic salary and for temporary and probationary employees 12.5% increase those who have joined the company before October, 2005. New Pay Scale: The management has approved the following criteria for the implementation of newly approved pay scale effective from April, 01, 2006. i) A new rank of Senior Administrative Officer (SAO) was created to accommodate the Direct Recruits (previously known as Executive Officer). Salary offered for the new recruits being not in parity under the revised pay scale of Executive Officers. Future promotion will depend per above distinction. ii) Two new pay scales for Assistant, Record Keeper, and Peon of GN-GRB Unit Officers were created. iii) Drivers are to be entitled to receive an increase in their pay at 15% in addition to their previous increase 15% in basic salary while work-charged and temporary staff will receive 10% on their existing consolidated gross salary (i.e. on gross + previous 12.5% ad-hoc where applicable). The New Pay Scale of 2006: The New Pay Scale is attached at the adjacent page.
  49. 49. 48 Delta Life Insurance Company Ltd. Pay Scale - 2006 Grade Designation Payscale Initial Basic House Rent Allowance House Maintenance Allowance Corporate Allowance Senior Executive Vice President 24000-1200-42000-1400-63000 24,000 15,000 8,000 1,600 1 Existing 16800-800*25-36,800 16,800 11,700 8,000 1,25 Executive Vice President 21000-1000-36000-1200-54000 21,000 12,000 6,500 1,600 2 Existing 14700-700*25-32200 14,700 10,300 6,500 1,250 Joint Executive Vice President 17600-800-29600-900-43100 17,600 10,000 6,000 1,500 3 Existing 12600-600*25-27600 12,600 8,100 6,000 1,150 Senior Vice President 15000-750-26250-800-34250 15,000 8,000 4,500 1,200 4 Existing 11000-550*25-24750 11,000 6,500 4,500 1,000 Joint Senior Vice President 12350-650-22100-700-29100 12,350 7,000 3,000 1,000 5 Existing 8500-500*25-21000 8,500 5,000 3,000 900 Vice President 9600-600-18600-650-25100 9,600 6,000 3,000 6 Existing 7200-450*25-18450 7,200 4,050 3,000 Joint Vice President 8500-500-16000-550-21500 8,500 5,000 2,000 7 Existing 5950-425*25-16575 5,950 3,000 2,000 Assistant Vice President 7650-450-14400-500-19400 7,650 4,000 1,000 8 Existing 5200-400*25-15200 5,200 2,300 1,000 Joint Assistant Vice President 6800-400-12800-450-17300 6,800 3,200 500 9 Existing 4,875 1,975 500
  50. 50. 49 Delta Life Insurance Company Ltd. Pay Scale - 2006 Grade Designation Payscale Initial Basic House Rent Allowance House Maintenance Allowance Corporate Allowance Senior Executive officer 6300-350-11550-440-17550 6,300 3,000 10 Existing 4550-325*25-12675 4,550 1,950 11 SeniorExecutive Officer 5950-350-11200-400-17200 5,950 3,000 Executive officer 5100-300-9600-350-14850 5,100 2,500 12 Existing 4000-250*25-10250 4,000 1,500 Junior Executive Officer 3750-250-7500-300-12000 3,750 1,800 13 Existing 3375-225*25-9000 3,375 1,125 Officer Gr. - 1 3400-200-7400-250-11150 3,400 1,000 14 Existing 3000-200*25-8000 3,000 600 Officer Gr. -2 2700-150-5700-EB175-8325 2,700 900 15 Existing 2500-125*10-3750- EB150*25-7500 2,500 450 Assistant / Record Keeper 2625-125-5125-EB150-8125 2,625 750 16 Existing 2400-100*15-3900- EB125*20-6400 2,400 400 Peon / Guard 2000-100-400-EB125-6500 2,000 500 17 Existing 1800-75*15-2925-EB100*25- 5425 1,800 250 Only for GN-GRB Unit Office Assistant & Peon
  51. 51. 50 Assistant / Record Keeper 1500-100*15-3000-125*10- 4250 1,500 700 18 Existing 1100-60*15-2000-80*10-2800 1,100 350 Peon / Guard 900-75*15-2025-100*10-3025 900 300 19 Existing 600-50*15-1350-60*15-2250 600 150 Rules for Fixation of Basic Salary under new pay scale: The 15% ad-hoc increase on basic salary shall be added with basic salary as on March 31, 2006 (because the new pay scale will be applied from April, 01, 2006). The resultant figure is applied to find out the new basic pay at immediately next or equal to relevant step/slab in the new pay scale. When the difference between the new basic salary and old basic salary plus ad-hoc is less than one increment in the new pay scale, an increment in the new pay scale shall be added to the basic pay calculated as above. To the new pay thus fixed shall be added one increment each for every 2 years of service in the same grade, subject to a maximum of 2 increments. Calculation: For better understanding of the calculation of fixation of basic salary, here is an example of a JAVP promoted to AVP. To calculate his new basic salary (for AVP post), let us assume The basic of JAVP = 10,500 Tk. AVP s increment = 450 Tk. (as per pay scale)
  52. 52. 51 Step1. Basic of JAVP Increment of AVP = 10,500 450 = 23.44 Step2. Fraction resultant × Increment (1) = 23.44 × 450 = 10,548.00 Step3. Round figure of the resultant × Increment (1) = 24 × 450 = 10,800.00 Step4. Make the difference of step2 & step3 = 10,800 10,548 = 252 Step5. If the difference is less than 1 (one) increment (i.e. 252 less than 450), then make it 1 increment and add with the basic pay calculated above. i.e. 10800 + 450 = 11,250 Tk Therefore, 11,250 Tk is the Basic Salary of the new AVP. Step6. Now if his service duration as JAVP is 2 years (before April, 01, 2006), then to the Basic of AVP, he will be added one more increment (as per the rules for fixation by the company) i.e. 11,250 + 450 = 11,700 Tk. Therefore, 11,700 Tk will be his Basic Salary for new AVP post. Step7. If his service duration as JAVP is 4 years or more than 4 years, then he will 2 increments to his basic. i.e. 11,250 + 450 + 450 = 12,150 Tk Therefore, 12,150 Tk will be his Basic Salary for new AVP post.
  53. 53. 52 Personal Evaluation Procedure The objective of an employee s work performance evaluation is to: - evaluate the employee s performance in relation to her/his hob description - enable the employee to assess his/her own work and suggest ideas for improvement - enable management to plan his/her career development and appropriate deployment on the basis of this assessment. Such assessment is normally done once in every year. This assessment/performance appraisal is regularly carried out for setting work standards, assessing the employee s actual performance relative to these standards and providing feedback to the employees with an aim of motivating that person to eliminate his performance deficiencies or to continue to perform above par. The Assessment Form for employees: The Assessment Form for employees evaluated by Management is given in the Annexure. How the evaluation is done? In any department of DLIC, at first the performance appraisal of an employee is assessed by his Line Manager (LM) according to the rating and assessment criteria of the performance appraisal. Then again Head of the Department (HOD) assesses and recommends the appraisal based on the score and recommendation given by the LM. Then the appraisal form is sent to the Head of HRD or to the Appraisal Committee. The Appraisal Committee may be constructed by JSVP and above (upto MD). After final assessment of Appraisal Committee based on the percentage obtained, the employee is subject to receive increment(s) in the scale of his/her grade.
  54. 54. 53 According to the company s rule and current practice an employee is entitled to get his/her annual salary increment after finalization of the respective employee s appraisal procedure. Annual Increment On every anniversary of confirmed appointment of an employee, he/she subject to satisfactory performance during the preceding year will receive an increment in the scale of his/her grade. If an employee shows outstanding merit and exceptional ability and quality, he/she may receive additional increments solely at the discretion of the management. For salary increase of the employees the following matters are considered in this year: 1. Existing confirmed staff members with no objection may be given 1 increment in the scale of their respective grades for the preceding year (2005) effective from January, 01, 2006. 2. Assistant, Peon, Guard and Cleaner on temporary basis with no objection may be given yearly financial benefit effective from January, 01, 2006 at the rate of Assistant Tk. 150 Peon/Guard Tk. 100 Cleaner Tk. 100 Field staff of GN-GRB unit offices where premium income is poor (say, less thanTk. 50,000) will not receive annual normal salary increase as stated above. 3. Increment may be paid to officers, upto and including Senior Executive Vice President except B scheme field executives. 4. Employees who have less than 6 months of service after their confirmation will not receive this normal 1 increment.
  55. 55. 54 5. Decision for approving annual 1 increment for the existing confirmed employees bearing any objection in personal record may be withheld. Scheme: There are two Schemes of employees. Scheme A and Scheme B. Scheme A All commission based employees come under A Scheme. From Marketing Associate (MA) to Deputy Controller (DC). Scheme B From Deputy Controller who is promoted to JAVP of the company are called B Scheme employees. Incentive Plan An incentive is any factor (financial or non-financial) that provides a motive for a particular course of action. Financial incentives are said to exist where an employee can expect some form of material reward especially money in exchange for acting in a particular way. Individual Incentive Plans A portion of total profit is given to the shareholder or policyholder (last year 48% dividend) and another portion given to the employee. The incentive given to the employee is yearly and may be equal to 1 basic or 2 basic of the respective grade of that employee. There is no such Group Incentive Plans in DLIC. Only marketing people get award in annual conference (award like Dhaka-Kolkata-Dhaka air ticket). Commission The payment of commission as remuneration for a service rendered or products sold is a common way to reward sales people or agent. Payments often will be calculated on the basis of a percentage of the products sold.
  56. 56. 55 Field workers and B Scheme employees get commission against any policy depending upon the term and sum assured. The Policy Agent will get 40% commission of the premium in 1st year. Suppose sum assured of the policy is 5000 Tk. Then the agent will get 40% of 5000. i.e. 2000 Tk in first year. The Marketing Associate (MA) will get 32% commission. i.e. 32% of 2000. The Agency Manager (AM) will get 16% commission. i.e. 16% of 2000. The Deputy Controller (DC) will get 8% commission. i.e. 8% of 2000. In the second year only Agent will get 5% commission of the renewal premium. If the policy is on force then the agent will get the renewal commission. Supervisory commission depends on the fulfillment of the target. Non-financial Incentives Non-financial incentives are given by the company for the welfare of the lower grade employees. Cleaner, Driver, Peon and Guard get non-financial incentives as their Uniform (company dress code) by the company. These four types of employees get 2 sets of uniforms yearly. The uniform set of male employee includes pista color shirt, black pant and black shoe (given after every 4 years). The female employees get 2 sarees. Both male and female employees get an umbrella after every 2 years.
  57. 57. 56 Festival Bonus Every regular employee is entitled to receive annual festival bonus equivalent to two months basic salary. The bonus is paid in accordance with the religion of the respective employee. For Muslim employees the festival bonus is payable in two instalments (for Eid-ul-Fitra and Eid-ul-Azaha). For Hindus (Durga Puja), Christians (Christmas) and Buddhists (Buddha Purnima) the festival bonus is paid in one instalment. A new employee who has worked at least 6 months with the company will be entitled to festival bonus. Consolidated employees (temporary & contract basis employees) will get 60% bonus of their consolidated salary. But they have to join the company at least before one month of the festival. Gratuity Gratuity is a lump sum payment made by employer as a mark of recognition of the service rendered by employee. Every employee is entitled to receive gratuity at the end of 3 years of continuous service up to a maximum of 30 years. Calculations: Service with the company 3 years to 5 years = 50% of last basic salary for every year of service For e.g., 50% of last basic service length = 50% of 8000 4 years = 4000 4 = 16,000 Tk will be paid to the employee as gratuity at the end of his service. Service with the company more than 5 years = 100% of last basic salary for every year of service
  58. 58. 57 100% of 8000 6 years =8000 6 = 48,000 Tk. will be paid to the employee as gratuity at the end of his service. If service length of the employee is 5 years 6 months, then 5 years will be counted to pay his gratuity. If service length is 5 years 6 months 1 day, then 6 years will be counted for gratuity calculation. Gratuity will be paid on discharge, resignation, retirement or death of the employee. No payment for gratuity will be made in case of dismissal of breach of discipline or misconduct. Provident Fund (PF) Every regular employee is eligible to be a member of Delta Life Employees Provident Fund to be administered in accordance with the relevant law. The membership will only have effect from the Date of Confirmation (DOC). Upto the year 1996, the own contribution of the employee to his provident fund was 8.33% of his basic salary. From 1997, the employee has been contributing 10% of the basic salary each month to his PF. If service length after confirmation is 3 to 5 years, then company contribution will be 50% of employees own contribution. If service length is more than 5 years, company contribution will be equivalent to employees own contribution. Allowances An allowance is a term used to describe an allocation of money from one person to another. It is an amount of money provided to employees to offset specific expenses such as for travel interstate, food or to buy protective clothing, parents may
  59. 59. 58 give their children a relatively small amount of money on a recurring basis, such as $5 every weekend. DLIC provides the following allowances to the regular employees as decided by the management time to time: (ranges shown in the pay scale) 1. Housing Allowance given to all employees of the company. 2. House Maintenance Allowance given to JAVP and above grade. 3. Medical Allowance given to all employees. 4. Corporate Allowance - given to top management those are the decision maker of the company. This allowance is given to JSVP and above. 5. Utility Bill it is given for water, gas and electricity bill to VP and above. 6. Entertainment Allowance given to EO and above 7. Conveyance Allowance given upto VP from Peon. JSVP and above get Free car facility or Car Scheme from the company. Car Scheme employee can buy the car on instalments. Only JSVP and above are entitled with this package. The amount of instalment will be deducted from the monthly salary. When the car is owned by the employee, the company will bear its maintenance and other cost. 8. Washing Allowances Peon,Guard and Cleaners they get 100 Tk as Washing Allowance per month. Driver - There are two types of drivers: 1. Attachment Driver they get 100 Tk Washing Allowance per month with the Attachment Allowance (the extra time spent with their boss) 2. Poolet Driver they get only 100 Tk Washing Allowance per month. They only do the duty during the office hour, no extra duty with boss. 9. Club Membership Allowance with a view to facilitate professional or customer contacts for development of business, the company may authorize an employee from EVP and above to join one approved social or service club where the employee is posted. All club membership will be approved by the MD. Company will reimburse the cost of entrance fees and the
  60. 60. 59 monthly/annual subscription fee up to the limit as determined by the company from time to time. 10. Technical Allowance it is for technically skilled employees (like computer expert) or for highly educational qualification (like CA, Ph.D). By the decision of top management this allowance is given to the necessary employees. 11. Traveling and Daily Allowance Traveling Allowance (TA) and Daily Allowance (DA) are applicable only when an employee is on duty outside the respective duty station. Rules of TA/DA: 1. Daily and Travel Allowance will be paid for tours outside the duty station only. Each tour must be approved by the concerned authority in the prescribed form before commencement of journey. 2. All claims for travel cost must be properly supported by Tickets/Bills/Vouchers. 3. Where company s vehicles are used, actual fuel cost with toll charges will be reimbursed and no other travel allowances will be allowed. 4. Full DA shall be given for tours of minimum 24 hours, which will be calculated from the starting time up to the time of return to duty station. Lodging Allowance will however be paid for overnight stay. 5. If the tour is at least 6 hours 25%, 7-14 hours 50% and if above 14 hours but less than 24 hours 75% of Food Allowance will be paid. 6. No DA will be paid for tours within 20 Km distance of the duty station, but a meal allowance equivalent to maximum 25% of Food Allowance will be paid only if necessary. 7. Claims for TA/DA duly authorized by LM/HOD must be submitted to the accounts department along with Tickets/Bills/Vouchers within 14 days of travel. For outside Dhaka staff, bill should be submitted to the HOD within 30 days and to the accounts department within 45 days of tour. 8. Local conveyance means travel up to a distance of 10 Km. For distance in excess of 10 Km public transport such as Bus/Coach must be used. Ticket/Vouchers for local conveyance need not be submitted but must be
  61. 61. 60 certified by HOD of the employee. This rule is not applicable for the Grades 6 to above. 9. Officers in Grade 6 and above are entitled to incidental Expense Allowance of 400 Tk. Only for each tour (more than 24 hours). 10. For overseas visits, TA & DA would be decided by the MD. 11. In case of transfer from one district to another an employee is entitled to TA and for a maximum of 2 day s DA. 12. If an employee is transferred at his own request, no TA/DA and Allowance for Transfer of Personal Effects will be given. 13. In case of transfer, Transfer Order and Joining Letter must be included with the claim. 14. In case of attending training, conference or special meetings, where allowances are fixed by the company or food and lodging are provided by the company, this rule will not be applicable. 15. Under special circumstances MD can vary the above allowances/limitations. Mode of Travel: Grades Mode of Travel 1-2 and Above AC Coach/1st class/AC Train/Executive Air + Local Conveyance by Taxi, Baby-Taxi 3-5 AC Coach/1st class/AC Train/Economy Air + Local Conveyance by Taxi, Baby-Taxi 6-7 AC Coach/1st class/AC Train + Local Conveyance by Taxi, Baby Taxi 8-9 AC Coach/1st class Train + Local Conveyance by Taxi, Baby Taxi 10-11 AC Coach/1st class Chair Coach Train + Local Conveyance by public transport/rickshaw/Baby Taxi (in case of emergency/necessity) 12-15 Chair Coach/Bus/2nd class Train (Shovon) + Local Conveyance by public transport, tempo, costar, van, rickshaw 16 Coach/Bus/2nd class Train + Local Conveyance by public transport, tempo, costar, van, rickshaw 17 Coach/Bus/3rd class Train + Local Conveyance by public transport, tempo, costar, van, rickshaw
  62. 62. 61 Daily Allowance (in Taka): For Divisional Cities For Other Areas Grades Lodging Food Lodging Food Above Actual 1-2 1,500 1,000 1,000 900 3-5 1,000 800 700 600 6-7 800 600 500 400 8-9 500 400 300 300 10 300 300 275 275 11 275 275 250 250 12-13 250 250 200 200 14-15 200 200 175 175 16 175 175 150 150 17 150 150 125 125 11. Transfer Allowance 1. Travel All regular employees are entitled to cost of travel and DA as per above mode and rate according to the grade, enforced for the time being, of the post for self and dependent family for each day of journey actually required for joining a posting on transfer which necessitates a change of residence. 2. Transfer of Personal Effects the company will pay the cost incurred in the crating, packing and transportation of reasonable quantity of personal effects, to be sent by rail or other means on production of documentary evidences subject to the maximum rates as enforced for the time being.
  63. 63. 62 Allowance for Transfer of Personal Effects (in Taka): Grades Distance in Km 3 - 6 7 - 9 10 - 12 13 - 15 16 - 17 0 60 2,500 2,000 1,500 1,000 800 61 150 4,500 3,000 2,000 1,500 1,000 151 250 4,500 3,200 2,200 1,800 1,200 251 350 5,000 3,500 2,500 2,000 1,500 351 450 5,500 3,800 2,800 2,200 1,800 451 550 6,000 4,000 3,000 2,500 2,000 551 - 700 7,000 4,500 3,500 3,000 2,500 13. Apart from all these allowances, overtime payment is there for employees. Earned Leave Encashment Employees will receive financial compensation (basic salary only) for any Earned Leave due to him/her upto a maximum of 120 days only at the following instances: Resignation Termination Retirement Death An employee can enjoy 24 days yearly Leave. 10 days are Earned Leave (EL). But from the rest 14 days employee will get 12 days only because according to company rules, yearly leave cannot be more than 120 days. Earned Leave Encashment = Basic / 30 No. of deposited Leave If basic is 4500 Tk. and deposited Leave is 45 days, then
  64. 64. 63 Earned Leave Encashment = 4500 / 30 45 = 150 45 = 6750 Tk. Income Tax "Income tax" means a tax imposed on or measured by net income including any tax imposed on or measured by an amount arrived at by deducting expenses from gross income of an individual, corporations. Income Tax, where applicable, will be borne by the employee and will be deducted at source from the monthly salaries of the employee by the company to ensure that the correct legal requirements are followed in this matter. Each individual employee will be issued a certificate at the end of each fiscal year for the amount of income tax deducted at source. If the yearly basic income of the employee is less than 1,20,000 Tk., then no tax should be payable. If the yearly basic income is more than 1,20,000 Tk., then 10% tax should be deducted. 1800 Tk is the minimum rate of payable income tax. If the yearly income is 1,30,000 Tk., then he has to pay 1800 Tk. This is the drawback of income tax rules of the company. Suppose an employee earns 2,50,000 Tk. working in DLIC, therefore, 10% of 1,30,000 Tk (2,50,000 1,20,000) tax should be deducted. i.e. 13,000 Tk. will be the tax payable by that employee. If the yearly income is 3,00,000 Tk., 15% tax should be deducted. i.e. 15% of 1,80,000 Tk (3,00,000 1,20,000) = 27,000 Tk is the payable income tax. If the yearly income is 3,50,000 Tk., 20% tax should be given. i.e. 20% of 2,30,000 Tk (3,50,000 1,20,000) = 46,000 Tk will be the tax payable. If yearly income is more than 3,50,000 Tk, 25% is the tax deduction. This is the maximum rate payable income tax by an employee.
  65. 65. 64 Tax on Allowance: Tax is also applied on Conveyance Allowance: If the conveyance allowance is 18,000 Tk., tax will be imposed on allowance. It will be added with the basic salary and if the amount of basic salary exceeds 1,20,000 Tk, then 10% tax should be deducted and it will follow the rules of income tax similarly. Final Payment System Final payment is the accumulation of PF, Gratuity and Earned Leave Encashment when the employee is leaving the company. Bankers Before the year 2000 upto the grade SEO monthly payment had been given by cash. After that all payments of all employees has been given by cheque. The Bankers associated with DLIC where the employees of the company can open a salary account to encash the monthly salary are: Bangladesh Krishi Bank Pubali Bank Limited Uttara Bank Limited Rajshahi Krishi Unnayan Bank Standard Chartered Bank City Bank N.A National Bank Limited Dutch Bangla Bank Limited Hongkong & Shanghai Banking Corporation Limited (HSBC)
  66. 66. 65 Findings and Conclusion
  67. 67. 66 FINDINGS AND CONCLUSION Salary administration is the new function assigned to the HR Department. Earlier it was handled by Account Department. A new pay scale is introduced in DLIC from April 1, 2006 ; keeping in mind the present economic condition & inflation rate. The new pay scale includes various new schemes and allowances. After doing the performance appraisal in the company, the new pay scale was applied. Most of the employees were benefited by increments & promotion given according to new pay scale. There is a predetermined rule for computing the fixed basic salary of the employees those who are getting promotion & increments. The performance evaluation procedure is not absolutely perfect in DLIC. The promotion, incentives & other benefits are determined on the basis of performance evaluation process. There was certain degree of dissatisfaction & conflict emerged due to the performance evaluation. Good incentive plans, bonus, schemes & allowances were given to the employees in DLIC. The Final Payment given to the employee is the accumulation of Provident fund, Gratuity & Earned Leave Encashment. *********************
  68. 68. 67 Lim itations
  69. 69. 68 LIMITATIONS Salary administration was recently included as a HRD function in the company, so there was lack of sufficient data. Shortage of time to go in-depth of the topic. Due to Companies norms & regulations some of the official & financial data couldn t be made available. Sources of data for collection of secondary data were limited. Sufficient books, publications and journal were not available on the topic. The overall span of the organization is too big to cover all the aspects completely related to salary administration. Many times the officials were so busy that they couldn t answer the queries related to the topic. *********************
  70. 70. 69 Recom m endations
  71. 71. 70 RECOMMENDATIONS Performance Evaluation procedure should be modified to avoid conflict & dissatisfaction among the employees. The HR department should recruit skilled, knowledgeable & competent personals and should provide them regular training facility for skill enhancement. Online information should be updated regularly so that the clients and potential customers must get the latest information regarding various insurance schemes and plans offered by the company. Internet connection and Information system should be setup in the HR department so that its functions could be performed smoothly and efficiently. Unnecessary man power should be eliminated so that the various packages can be increased for rest of the employees. Appraisal should be done fairly so that conflict, dissatisfaction & attrition rate gets reduced. The employees were found working unhappily after performance appraisal is done. All the important and necessary data & files should be properly organized and preserved, which is not the case in DLIC. Disciplinary manners should be taught to the lower grade employes. Technical equipments should be serviced & repaired at regular intervals. The relationship between top & lower management should be made more cordial to bridge the gap and to fulfill the target set by the company. *********************
  72. 72. 71 Bibliography
  73. 73. 72 BIBLIOGRAPHY Human Resource Management - David A . Decenzo Stephen P . Robbins Publisher : John Willy & Sons. (7th edition) Human Resource Management - A.K.Singh, B.R.Duggal, Puneet Mohan Publisher : Sun India Publications. Human Resource Management - P.G.Aquinas. Publisher: Vikas Publising House Pvt Ltd Human Resource Management - Anjali Ghanekar DLIC Annual Report 2003
  74. 74. 73 ANNEXURE Delta Life Insurance Company Ltd. Assessment Form For Employees PF# P- FROM R/K TO VP NAME: UNIT/ DEPARTMENT: DESIGNATION LOCATION: ACADEMIC AND PROFESSIONAL QUALIFICATION DATE OF JOINING: PROBATION PERIOD: SALARY DURING PROBATION PERIOD: FINAL ASSESSMENT (final assessment section to be completed by respective HRD after MD (CC)'s approval) QUALITIES OF STAFF (Marks to be awarded on the qualities listed below, on grading scale - 10 highest, 0 lowest. Please see ratings and assessment criteria on the other side of this form) Score 1.KNOWLEDGE Has clear understanding of the facts factors pertinent to the job 2.QUALITY produces work of high quality; work is accurate and error free 3.QUANTITY produces high volume of acceptable work under normal condition 4. DEPENDABILITY Has complete confidence of supervisor. Reliable & completes assignments on time. 5. DECISION MAKING S/he think intelligently & makes his decision. 6. TEAM WORK /RELATIONSHIP WITH CO-WORKERS Has strong team spirit. Maintains excellent relationship with co-workers. 7. COMMUNICATION Written: able to write clearly & concisely. Able to convey the message clearly. Verbal: Can get the message clearly. 8. PUNCTUALITY Always maintains office hours & working days. LINE MANAGER'S RECOMMENDATION: Total: NAME DESIGNATION SIGNATURE/ DATE PERCENTAGE:
  75. 75. 74 COMMENTS AND RECOMMENDATIONS OF HEAD OF THE PROJECT SIGNATURE OF HEAD OF PROJECT DATE: COMMENTS AND APPROVAL OF MD SIGNATURE OF MD DATE: RATINGS CRITERIA: ASSESSMENT CRITERIA: 9-10 OUTSTANDING greatly exceeds required performnce PERCENTAGE DECISIONS 7-8 GOOD Exceeds required performance. 81% and above To be confirmed + 3 increments 71% and upto 80% To be confirmed + 2 increments 5-6 SATISFACTORY Acceptable performance 61% and upto 70% To be confirmed + 1 increments 51% and upto 60% To be confirmed 3-4 AVERAGE Below reqd. performance but trying to improve 41% and upto 50% Probation period to be extended 1-2 UNSATISFACTORY Unacceptable performance but can improve 31% and upto 40% Probation period to be extended with severe warning 0 POOR Unacceptable performance Has no scope for improve 30% and below To be confirmed + 3 increments
  76. 76. 75 FREQUENTLY ASKED QUESTIONS These questions are generally asked by the people and potential customers who want to take the policy. Q:1:- How a policyholder can deposit his premium from abroad? Ans: A policyholder living abroad may deposit premium under his DLIC policy in Bangladesh Taka or in equivalent foreign exchange by Demand Draft (D/D) or Accounts Payee Cheque issued in favour of "Delta Life Insurance Co. Ltd.'' and drawn in a bank in Bangladesh. He should write the policy No.on cheque/DD and sent the same to DLIC Head Office at Dhaka. Q:2:- Is policy bonus payable before maturity? Ans: The bonuses attached with a policy is payable only at the time of final settlement of the insurance money, i.e. at maturity of the policy or at earlier death of the assured or when the policy is surrendered, for its surrender value. Q:3:- Can a policy be transferred in the name of another person? Ans; A policy cannot be transferred in the name of any other person. But its right and benefits can be assigned in favour of any person or an organization. In such a case risk of the policy is borne on the life of original policyholder while the ''Assignee'' receives the benefits that come through the policy. Q:5:- Does Delta Life offer any Insurance facility for overseas travel? Ans: DLIC has introduced Overseas Mediclaim Policy (OMP) for short stay abroad. It is a type of health insurance offered to Bangladeshi Nationals and Resident Foreigners under which treatment expenses incurred abroad in the event of sudden and unexpected illness or accident are covered while on business or official trip and
  77. 77. 76 holiday tours. Some health insurance cover is now a pre-requisite for a visa to developed countries. The policy is intended for use by the insured person in the event of a sudden and unexpected sickness or accident when the insured is staying abroad. The acceptable age limit is 6 months to 65 years. Benefits include expenses for physician service, hospital, medical services and local emergency medical transportation. This coverage is given on the basis of following information. a) Age of the proposer b) Country which he/she intends to visit. c) Duration of his/her stay abroad. d) A declaration of continued good health by the proposer. Rate of premium is quoted on request. Claim is settled in the country where the treatment is availed. Q:6. Why I have to furnish medical requirements for a revival when I am paying all the arrear premiums and late fees? Ans: The Company insures a man in good health. When there is a discontinuity the policy becomes irregular and it no longer bears any risk or bears limited risk as per policy conditions. So, when a revival is requested, the assured has to produce evidence of insurable condition of his person. Sometimes a simple declaration of good health by the assured is enough. But when the period of discontinuity is considerable, the Company calls for medical evidences.
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