Employees’ Deposit Linked Insurance Scheme : A Brief

Employees' Deposit Linked Insurance Scheme : A Brief

Reetu | Oct 21, 2021 |

Employees’ Deposit Linked Insurance Scheme : A Brief

Employees’ Deposit Linked Insurance Scheme : A Brief

The Employees’ Deposit Linked Insurance Scheme (EDLI) is a type of insurance cover offered by the Employees’ Provident Fund Organization (EPFO) (EPFO). In the event of the death of an active EPFO member during the service period, the nominee or legal successor receives a lump sum payout of up to Rs 7 lakh.

All organisations covered by the Employees’ Provident Fund (EPF) and Miscellaneous Provisions Act, 1952, are automatically enrolled in EDLI. This plan operates in tandem with EPF and EPS. This scheme has no exclusions, and the insurance coverage is based on the wage earned in the last 12 months of employment before death.

EPFO recently tweeted about the EDLI scheme’s features in order to make EPFO members aware of the scheme’s benefits. The tweet stated, “Salient Features of Employees’ Deposit Linked Insurance (EDLI) Scheme, 1976.”

EPFO-EDLI scheme features that you need to know:

Maximum assured benefit: If an EPF member dies while on the job, the nominee or legal heir will receive a maximum promised benefit of Rs 7 lakh. The highest assured benefit was formerly set at Rs 6 lakh, however it has been raised to Rs 7 lakh beginning of April 2021.

Minimum assured benefit: If the dead member remained in continuous work for 12 months prior to his or her death, the minimum assurance benefit under the EDLI scheme of 1976 is Rs 2.5 lakh.

No contribution from employees: This life insurance benefit is provided free of charge to EPFO members who have a PF/EPF account. Their employer would contribute 0.50 percent of their monthly wages up to a maximum of Rs 15,000 per month.

Auto enrolment: Auto enrolment is available for those with a PF or EPF account. Once they become an EPFO member or subscriber, they are eligible for the EDLI plan.

Direct bank transfer: The EDLI programme payout will be credited immediately to the bank account of the EPF or PF account holder’s nominee or legal successor.

It’s worth noting that an EPFO member is only covered by the EDLI programme if he or she is an active EPF member. After he or she leaves employment with an EPF-registered company, his or her family, heirs, or nominees are not eligible to claim it. There is no minimum service requirement to be eligible for EDLI benefits.

The employer is responsible for paying the EDLI payment, and no fee can be deducted from the employee’s pay. This policy allows you to collect 30 times your average monthly wage for the previous 12 months, up to a maximum of Rs 7 lakh. The employee’s Basic + Dearness Allowance is used to calculate the average monthly salary. Under this scheme, a bonus of Rs 2.5 lakhs is also available.

If the employer chooses a higher-paying life insurance plan for his employees under Section 17, he can opt out of the scheme (2A). The insurance coverage offered by EDLI has no exceptions. It protects the insured individual 24 hours a day, 7 days a week, all over the world.

How to Claim EDLI benefits?

Form 5 IF must be completed in order to claim benefits. In addition, the member must have been an active contributor to the EPF system at the time of his death. The benefits can be claimed by the nominee, or if no candidate is named, the benefits can be claimed by the remaining family members.

Under EPS, a family consists of a husband, male children (up to 25 years old), and unmarried girls. If there are no living relatives, the insurance benefits can be recovered by the dead member’s legal heir. The employer’s signature and certification are required on the claim form. If there is no employer, the form must be attested by a Gazetted Officer or Magistrate, the President of the Village Panchayat, the Chairman / Secretary / Member of the Municipal or District Local Board, the Postmaster or Sub Postmaster, the MP or MLA, the Member of the CBT or the regional committee of the EPF, or the bank manager (of the bank in which the account was maintained).

Documents required to claim EDLI benefits:

To receive the money from the plan, the claimant must provide numerous papers in addition to Form 5 IF. These documents include the following:

  • Death Certificate of the member
  • If a claim is made on behalf of a minor family member, nominee, or legal heir by someone other than the natural guardian, a guardianship certificate is required.
  • In the event of a legal heir’s claim, a succession certificate is required.
  • A copy of a cancelled check from the bank account where payment is to be made.
  • If the member was last employed in an institution exempted under the EPF Scheme 1952, the employer of that establishment must provide the member’s PF data for the previous 12 months under the certificate section, as well as an attested copy of the Member’s Nomination Form.

It’s worth emphasising that the EDLI scheme’s main goal is to provide financial stability to the policyholder’s family members (deceased person). Family members are defined as a spouse, an unmarried daughter, or a male kid under the age of 25.

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