The Employee Provident Fund Organisation (EPFO) offers an insurance cover through the Employees’ Deposit Linked Insurance Scheme (EDLI) for private sector salaried employees.
This insurance benefit is available for all private-sector EPFO subscribers. As an employee, you want to ensure that you are well-protected not only during your employment but also in unfortunate events such as disability, illness, or death.
The Employee Deposit Linked Insurance (EDLI) Scheme is one of the government schemes that can provide financial assistance to your family in case of such events. This page provides information on the EDLI scheme, its benefits, eligibility, and how it works.
The Employees’ Deposit Linked Insurance (EDLI) scheme 1976 is one of the most important schemes operated by the Employees’ Provident Fund Organisation (EPFO).
Once their Provident Fund (PF) or Employees’ Provident Fund (EPF) account is opened, all EPFO members are eligible for this EDLI benefit.
As per the EPFO rules, a PF account holder is eligible for an assured life insurance benefit of 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. All employers registered under the EPF scheme are required to provide the EDLI scheme to their employees.
What does EDLI insurance cover work?
Employee Deposit Linked Insurance (EDLI) provides death benefit insurance cover. The insured person’s registered nominees will receive a lump sum payment in the event of the insured employee’s death during the service period.
Under the scheme, the minimum lump sum payment is Rs 2 lakh, and the maximum payout is Rs 7 lakh.
How to calculate payout under the EDLI scheme
To calculate the payout under the Employees’ Deposit Linked Insurance (EDLI) scheme, the payout is based on the subscriber’s salary.
For example, if the average salary for the last 12 months of the employee is Rs 15,000, then it is multiplied by 30 (Rs 15,000 x 30), resulting in Rs 4.5 lakh – the amount paid to the nominee. In addition, the nominee receives a bonus payout of Rs 2.5 lakh, increasing the final payout to Rs 7 lakh.
The EDLI scheme applies to all companies registered under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
Organizations are required to subscribe to the scheme and offer benefits to employees. The EDLI scheme works with the EPF scheme and the Employees’ Pension Scheme (EPS).
| Name of the scheme | EDLI Scheme |
|---|---|
| Title | EPFO provides the EDLI Scheme to their employees |
| Subject | EPFO provides EDLI Scheme to their employees |
| Category | Insurance |
| Website | https://www.epfindia.gov.in/ |
| ELDLI scheme | EDLI Scheme PDF |
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 employees during their working years. The scheme also pays a lump-sum amount to the employee’s nominee in case of death.
Financial Security: The scheme provides financial security to the employee’s family members 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 family’s day-to-day expenses.
Affordable Premiums: The premiums for the EDLI scheme are very affordable, and the employer must pay the entire premium. The premiums are calculated as a percentage of the employee’s basic salary and dearness allowance.
No Medical Examination Required: An employee does not need a medical examination to enroll in the EDLI scheme. This makes it easy for all employees to enroll and receive 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, the maximum assured benefit was up to ₹6 lakh, which increased to ₹7 lakh from April 2021.
Minimum assured benefit: Under the EDLI scheme 1976, the minimum assured benefit is ₹2.5 lakh if the deceased member was in continuous employment for 12 months before his or her death.
No contribution from employees: This life insurance benefit for EPFO members is free of cost for PF/EPF account holders. Their employer will pay 0.50 percent of the monthly wages up to the ceiling of ₹15,000.
Auto-enrolment: There is an auto-enrolment provision for PF or EPF account holders. Once they become EPFO members or subscribers, they become eligible for EDLI scheme benefits.
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 EPFO members, nomination under the EPF scheme is applicable to the EDLI scheme, 1976. To claim insurance benefits given under the EDLI scheme, the nominee or beneficiary needs to fill out 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 members.
- Age Criteria: To be eligible for the EDLI scheme, an employee must be between 18 and 60 years of age.
- Continuous Service: The employee must have completed at least one year 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%.
Calculation of EDLI Benefits
The 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
If the employee dies while in service, the nominee can claim EDLI benefits. The claim should be made within 30 days of the employee’s death. The employer is responsible for submitting the claim to the EPFO office.
How to claim EDLI?
Notably, only those making EPF contributions are eligible. It is also important that employees register a nominee with their employers to benefit from the scheme. However, family members and legal heirs are eligible to apply even if the nominee is not registered by the employee.
To make the claim, the nominee or legal heir needs to submit EDLI Form 51F, which can be downloaded from epfindia.gov.in. The form needs to be signed and certified by the employer.
If there is no employer, the form can be attested by either the bank manager of the branch where the employee maintained his account, the 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 the three schemes: EPF, EPS, and EDLI. All duly filled forms can then be submitted to the regional EPF commissioner, who will settle the claim within 30 days.
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 from the employee’s bank account