The Employee Provident Fund Organisation (EPFO) provides an insurance cover under the Employees Deposit Linked Insurance Scheme (EDLI) for private sector salaried employees.
The insurance benefit is available for all private-sector subscribers of the EPFO. As an employee, you want to ensure that you are well-protected, not just while you are working but also in case of unfortunate events such as disability, illness, or death.
One of the government schemes that can offer financial assistance to your family in case of such events is the Employee Deposit Linked Insurance (EDLI) Scheme. In this page, we will provide information on what the EDLI scheme is, its benefits, eligibility, and how it works.
EPFO EDLI Scheme
The Employees’ Deposit Linked Insurance or EDLI scheme 1976 is one of the most important schemes operated by Employees’ Provident Fund Organisation (EPFO). All EPFO members are eligible for this EDLI benefit once their PF or EPF account gets opened.
As per the EPFO rules, a Provident Fund (PF) account holder is eligible for assured life insurance benefit up to ₹7 lakh without paying any premium.
What is the Employee Deposit Linked Insurance Scheme?
The EDLI Scheme is a life insurance scheme that provides a lump-sum amount to the nominee of the deceased employee in case of their untimely death while in service.
This scheme is part of the Employees’ Provident Fund (EPF) and is regulated by the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. It is mandatory for all employers registered under the EPF scheme to provide the EDLI scheme to their employees.
|Name of the scheme||EDLI Scheme|
|Title||Check EDLI Scheme Features 2023|
|Subject||EPFO provides EDLI Scheme to their employees|
|ELDLI scheme||EDLI Scheme PDF|
What does EDLI insurance cover work?
EDLI is mainly death benefit insurance cover under which registered nominees of the person insured to receive a lump sum payment in the event of the death of the employee insured under the scheme during the service period.
The minimum lump sum payment under the EDLI insurance scheme is Rs 2 lakh and the maximum payout is Rs 7 lakh.
How to calculate payout under EDLI scheme
The payout is calculated based on the salary of the subscriber. For example, if the average salary for the last 12 months of the employee is Rs 15,000 then it is multiplied by 30, i.e. 20,000×30, which comes to Rs 4.5 lakh – the amount paid to the nominee. Additionally, the nominee gets a bonus payout of Rs 2.5 lakh, which increases the final payout to Rs 7 lakh.
ELDI is applicable to all companies registered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952.
Organisations are required to subscribe to the scheme and offer benefits to employees. EDLI scheme works in combination with the EPF scheme and the Employees‘ Pension Scheme (EPS).
The Benefits of the EDLI Scheme
The EDLI scheme provides several benefits to both the employees and their nominees. Here are some of the key benefits of the scheme:
Life Insurance Coverage: The EDLI scheme provides life insurance coverage to the employee during their working years. The scheme provides a lump-sum amount to the nominee of the employee in case of their death.
Financial Security: The scheme provides financial security to the family members of the employee in case of their death.
The lump-sum amount received by the nominee can be used to pay off any outstanding debts, such as home loans, and to meet the day-to-day expenses of the family.
Affordable Premiums: The premiums for the EDLI scheme are very affordable, and the employer is required to pay the entire premium. The premiums are calculated as a percentage of the employee’s basic salary and dearness allowance.
No Medical Examination Required: There is no requirement for a medical examination for the employee to enroll in the EDLI scheme. This makes it easy for all employees to enroll in the scheme and receive the benefits.
EPFO EDLI Scheme Features
EPFO members should know the EDLI scheme features, EPFO tweeted about its scheme citing, “Salient Features of Employees’ Deposit Linked Insurance (EDLI) Scheme, 1976.” Here we are provided EPFO EDLI scheme features:
Maximum assured benefit: Maximum assured benefit up to ₹7 lakh to be paid to the nominee or legal heir of the EPF member if death occurs while in service. Earlier, maximum assured benefit was up to ₹6 lakh, which has been increased to ₹7 lakh from April 2021.
Minimum assured benefit: Under EDLI scheme 1976, minimum assurance benefit is of ₹2.5 lakh in case the deceased member was in continuous employment for 12 months prior to his or her death.
No contribution from employees: This life insurance benefit being given to the EPFO member is free of cost for the PF/EPF account holders. Their employer will pay 0.50 per cent of the monthly wages up to the ceiling of ₹15,000.
Auto enrolment: There is auto enrolment provision for PF or EPF account holders. They become eligible for EDLI scheme benefit once they become an EPFO member or subscriber.
Direct bank transfer: The EDLI scheme benefit will be directly credited to the bank account of the nominee or legal heir of the EPF or PF account holder.
However, for information to the EPFO members, nomination under the EPF scheme is applicable for the EDLI scheme, 1976. To claim insurance benefit given under EDLI scheme, the nominee or beneficiary needs to fill the form 51F.
Eligibility Criteria for the EDLI Scheme
To be eligible for the EDLI scheme, an employee must meet the following criteria:
- EPF Membership: The employee must be a member of the EPF scheme. All employees who earn a basic salary of up to Rs. 15,000 per month are required to be a member of the EPF scheme.
- Age Criteria: The employee must be between 18 to 60 years of age to be eligible for the EDLI scheme.
- Continuous Service: The employee must have completed at least one year of continuous service with the employer.
How Does the EDLI Scheme Work?
The employer is responsible for enrolling the employee in the EDLI scheme and paying the premiums on their behalf.
The premiums are calculated as a percentage of the employee’s basic salary and dearness allowance. The current rate of premium is 0.5% of the employee’s basic salary and dearness allowance.
Calculation of EDLI Benefits
The amount of benefit received under the EDLI scheme is based on the employee’s average monthly salary during their service period.
The benefit amount is calculated as 30 times the average monthly salary, subject to a maximum of Rs. 7 lakhs. If the employee’s salary exceeds Rs. 15,000 per month, the excess amount is not taken into consideration while calculating the benefit.
Claim Procedure for EDLI Scheme
In case of the employee’s death while in service, the nominee can make a claim for the EDLI benefits. The claim should be made within 30 days from the date of the employee’s death. The employer is responsible for submitting the claim to the EPFO office.
How to make a claim under EDLI
Notably, only those making EPF contributions are eligible. It is also important that employees register a nominee with their employers to get the benefit of the scheme. However, family members and legal heirs are edible to apply even if the nominee is not registered by the employee.
The nominee or legal heir needs to submit EDLI Form 51F in order to make the claim. The form can be downloaded from epfindia.gov.in. The form needs to be signed and certified by the employer.
In case there is no employer then the form can be attested by either the bank manager of the branch where the employee maintained his account, or local MP or MLA, gazetted officer, magistrate, member/chairman/secretary of the local municipal board or member of the regional committee of EPF or CBT.
The nominee can also submit Form 20 and Form 10C/D to claim all benefits under three schemes EPF, EPS and EDLI. All duly filled forms can then be submitted to the regional EPF commissioner who will take 30 days to settle the claim.
Documents Required to Claim EDLI Benefits
The following documents are required to claim EDLI benefits:
- Claim Form 5IF
- Death certificate of the employee
- Form 10D (in case the nominee is eligible for a pension)
- Employee’s identity proof
- Employee’s address proof
- Employee’s bank account details
- Cancelled cheque of the employee’s bank account
Frequently Asked Questions (FAQs)
Who is eligible for the EDLI scheme?
All employees who are members of the EPF scheme and have completed at least one year of continuous service with the employer are eligible for the EDLI scheme.
Who pays the premiums for the EDLI scheme?
The employer is responsible for paying the entire premium for the EDLI scheme.
What is the rate of premium for the EDLI scheme?
The current rate of premium for the EDLI scheme is 0.5% of the employee’s basic salary and dearness allowance.
How is the benefit amount calculated under the EDLI scheme?
The benefit amount is calculated as 30 times the employee’s average monthly salary during their service period, subject to a maximum of Rs. 7 lakhs.
What documents are required to claim EDLI benefits?
The required documents to claim EDLI benefits include claim form 5IF, death certificate of the employee, form 10D (in case the nominee is eligible for a pension), employee’s identity proof, employee’s address proof, employee’s bank account details, and cancelled cheque of the employee’s bank account.
What happens to the EDLI benefits if the employee leaves the job?
If the employee leaves the job, they are no longer covered under the EDLI scheme.
Can an employee enroll in the EDLI scheme voluntarily?
No, an employee cannot enroll in the EDLI scheme voluntarily. The scheme is mandatory for all eligible employees who are members of the EPF scheme.
Can the nominee of the employee claim the EDLI benefits if the employee dies after leaving the job?
No, the EDLI benefits are only payable if the employee dies while in service.
Can the employee choose the nominee for the EDLI scheme?
Yes, the employee can choose the nominee for the EDLI scheme. The nominee can be changed at any time by submitting the necessary documents to the employer.
Can the employee increase the coverage amount under the EDLI scheme?
No, the coverage amount under the EDLI scheme is fixed based on the employee’s average monthly salary and is subject to a maximum of Rs. 7 lakhs. It cannot be increased by the employee or the employer.
The Employee Deposit Linked Insurance Scheme is an important scheme that provides life insurance coverage to employees while they are working. The scheme provides financial security to the family members of the employee in case of their untimely death.
Employers are required to enroll all eligible employees in the scheme and pay the entire premium. The benefits under the scheme are calculated based on the employee’s average monthly salary and are subject to a maximum of Rs. 7 lakhs.
Claiming the benefits under the scheme is a simple and straightforward process, and the nominee is required to submit the necessary documents to the employer.