The Sum Insured including bonuses (if any) declared under this policy are guaranteed as to payment in cash by the Federal Government, under Article 35 of the Life Insurance (Nationalization) Order 1972.

Premiums are payable yearly in advance directly to State Life. Advance payments of half-yearly, quarterly and monthly premiums will be accepted as installments of the yearly premiums. If the Life Insured dies, then the unpaid installments for that policy year (if any) will be deducted from whatever amount is otherwise payable by State Life. Receipts for premiums are valid only if issued on forms prescribed by State Life and signed by its duly authorized officers. The actual date of receipt of the premium by State Life will be taken as the date of payment of any premium.

The policyholders can pay to State Life any premium within a grace period of 31 days after it falls due. If the Life Insured dies during the grace period, before the due premium is received by State Life, then the due premium will be treated as received, but it will be deducted from whatever amount is otherwise payable by State Life.

If the grace period expires before due premium is received by State Life, the Policy will lapse unless it is kept inforce under the “Automatic Non-forfeiture” clause of the Policy. The lapse date will be taken as the due date of the premium in default. No. claim whatsoever shall lie against State Life, under a lapsed policy.

A lapsed policy may be considered for revival by State Life, upon receipt of evidence, free of cost and satisfactory to State Life that the life insured is eligible for life insurance. Depending on the duration of lapse, State Life may either require a declaration of good health by the life insured, his/ her personal statement or his/her full medical examination report. In any case, State Life may require other reports if deemed necessary. In addition, all arrears of premium together with profit or return (however called or described) to date at a rate determined by State Life from time to time, must be received by State Life before revival of a lapsed policy can be considered. State Life reserves the right to decline or defer revival of a lapsed policy or to offer revival on modified terms. A policy lapsed for more than five years will not be considered for revival.

State Life will convert this policy into a paid-up policy, at the written request of the policyholder, provided the policy has been in force for at least two consecutive policy years and no premiums are in default. No further premiums will be payable but the sum insured will be reduced. The reduced paid-up sum insured will be quoted by State Life on the request of the policyholder.

Any bonuses attached to the policy will be taken into consideration while determining the paid-up sum insured. A policy once paid-up will not be entitled to any further bonuses. If there are any outstanding dues of State Life against the policy, the paid-up sum insured will be specially calculated to allow for the clearance of all such outstanding dues.

If the reduced paid-up sum insured works out to be less than Rs. 100/- the policy will not be converted into a paid-up policy.

This policy will acquire a surrender value after it has been inforce for at least two consecutive years provided no premiums are in default. The surrender value will be quoted by State Life on request of the policyholder. The surrender value is guaranteed to be not less than 30% of “aggregate premiums” LESS any amounts already paid by STATE LIFE under this policy. Aggregate premiums mean all premiums paid under the policy excluding the following:

• Premiums for the first policy year
• Extra premiums; and
• Premiums for any supplementary covers.

This policy may be surrendered at the written request of the policyholder. State Life will then pay him/her the net surrender value of the policy (if any). “Net surrender value” wherever it appears in this policy means the surrender value of the policy LESS outstanding dues of State Life for loans given and automatic premium loans together with accrued profit or return (however called or described).

State Life may grant a loan to the policyholder on his/her written request, against the net surrender value of the policy. The amount of loan shall not exceed 80% of the said net surrender value. The rate of profit or return (however called or described), and other terms and conditions will be determined by State Life at the time of granting the loan. Loans of less than Rs.100/- will not be given.

The amount of loan together will accrued profit or return (however called or described) will be the first charge on the policy, prior to all other claims.

If the policy has acquired a surrender value and a premium has remained unpaid beyond the grace period, the policyholder will entitled to benefits under one of the following two options given hereinafter, depending on the option exercised (if any) in his Proposal for this policy;

Option A : Automatic Paid-up

Option B : Automatic Premium Loan

Provided the surrender value of the policy exceeds the total of due premium(s) remaining unpaid and any other amount owed to State Life. The option can be exercised at the time of taking the policy or at any time thereafter while the policy is in force. The option can be changed subsequently by written intimation to and endorsement in the policy by State Life, so long as no premiums remain unpaid beyond the grace period. If no option has been exercised by the policyholder, benefits under “automatic paid-up” option will apply.

A – Automatic Paid-up Option
This policy will be converted into a paid-up policy. The paid-up Sum Insured will be specially calculated to allow for the clearance of all outstanding dues of State Life against the policy. No further premium(s) will be payable but the sum insured will be reduced. Any bonuses attached to the policy will be taken into consideration while determining the paid-up sum insured. A policy once paid-up will not be entitled to any further bonuses. If the specially calculated paid-up sum insured works out to be less than Rs. 100/- the policy will not be converted into paid-up but will be treated as having been forfeited losing all its benefits. A policy, thus made paid-up may be revived for full sum insured as per provision of condition No-4 above.

B – Automatic Premium Loan Option
So long as the net surrender value of the policy equals or exceeds any due premium remaining unpaid beyond its grace perio9d, State Life will continue to keep this policy in full force, and treat the said premium as paid by creating an automatic premium loan against the net surrender value of the policy.

When the net surrender value of the policy becomes less than a due premium remaining unpaid beyond its grace period, the policy will be kept in full force for a further broken period. This broken period will bear the same proportion to the full period of the unpaid premium as the net surrender value bears to the unpaid premium. The policy will automatically be forfeited and lose all benefits at the expiry of the said broken period.

Profit or return (however called or described) will be charged on automatic premium loan at rates determined by State Life from time to time, so long as any automatic premium loan along with profit or return (however called or described) is outstanding against this policy, any payment received by State Life will first be applied to reduce this debt.

No benefits will be paid by State Life under this policy, unless the age of the life insured has been proved to its satisfaction.

If the age of the life insured is proved to be different from that stated in the proposal of this policy, State Life will adjust the premiums or benefits under the policy as it deems fit.

This policy will, however, become void from its commencement, if the age of the Life Insured at the commencement date is proved to be higher than the maximum entry age that was permissible by State Life under the table and term of insurance mentioned in the proposal of this policy.

If the life insured commits suicide within thirteen months from the date this policy was signed or within thirteen months from the date this policy was last revived then State Life will only return premiums actually received under this policy.

All amounts payable by State Life shall be paid in Pakistan Currency at the Principal Office/Office of issue mentioned in this policy.

Notice of assignment or nomination, duly attested, must be submitted for registration at the office of issue mentioned in this policy. In registering an assignment or a nomination, State Life does not accept any responsibility for its validity, legal effect or meaning.

Supplementary benefits (if any) and the corresponding premium payments will be governed by the terms of the supplementary covers attached to this policy. Premiums for these benefits will, however, be payable on the same dates as premiums under this policy.

State Life may issue premium notices although there is no obligation on its part to do so. It is the duty of the policyholder to pay the premium on its due date or within the grace period, whether premium notice is received or not.

Policies are incontestable with regard to statements made in the proposal after two years from the date of issue/revival/reinstatement of policy except for fraudulent and willful misstatement of material facts or on account of breach of any of the conditions of the policy.

The policy is free from all restrictions as to travel, residence and occupation.

This Policy shall be liable to be cancelled at the option of the policyholder within fourteen days of its commencement date and if the policyholder cancels the policy within that time all amounts paid by way of premium shall be refunded without any deduction for management expenses, other than expenses incurred in connection with the medical examination of any person insured under the policy. No person shall offer any inducement to a person for the purposes of procuring that person to cancel his policy in accordance with this rule.

Where payment under this policy becomes due and the person entitled thereto has complied with all the requirements, including the filing of complete papers, for claiming the payment, the State Life shall, if it fails to make the payment within a period of ninety days from the date on which the payment becomes due or the date on which the claimant complies with the requirements, whichever is later, pay as liquidated damages on the amount so payable unless State Life proves that such a failure was due to circumstances beyond its control.

For the purpose of this clause, failure or delay by any person in making payment (including without limitation payment under a contract of reinsurance) to State Life shall not constitute circumstances beyond the control of State Life.

The liquidated damages payable under this clause shall be payable for the period under this clause shall be payable for the period during which the failure continues and shall be calculated at monthly rests at the rate five per cent higher that the prevailing base rate as defined in section 2 (Viii) of the Insurance Ordinance, 2000.