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 subscribers of the EPFO. 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. In this page, we will provide information on what the EDLI scheme is, its benefits, eligibility, and how it works.
The Employees’ Deposit Linked Insurance or EDLI scheme 1976 is one of the most important schemes operated by the Employees’ Provident Fund Organisation (EPFO). All EPFO members are eligible for this EDLI benefit once their Provident Fund (PF) or Employees’ Provident Fund (EPF) account is opened.
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. It is mandatory for all employers registered under the EPF scheme to provide the EDLI scheme to their employees.
What does EDLI insurance cover work?
The Employee Deposit Linked Insurance (EDLI) provides a death benefit insurance cover. The registered nominees of the insured person 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 in combination 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 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 enrol in the EDLI scheme. This makes it easy for all employees to enroll in the scheme 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 has been increased to ₹7 lakh from April 2021.
Minimum assured benefit: Under EDLI scheme 1976, the minimum assurance benefit is of ₹2.5 lakh in case the deceased member was in continuous employment for 12 months before 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 benefits 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 benefits given under the 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 members 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 claim 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 claim 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 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 from the employee’s bank account