The Employees’ Provident Fund Organisation (EPFO) runs multiple schemes for salaried employees. Besides EPF and EPS, it also offers the lesser-known EDLI
(Employees' Deposit-Linked Insurance) scheme, which provides life insurance cover of up to Rs 7 lakh, fully funded by employers. A free life insurance cover is automatically added to your PF account. No separate application is required and there is no premium to pay for this. The benefit is automatically available to every active PF member. The EDLI scheme was launched in 1976, which aims to offer financial protection to families in the event of an EPFO member’s death. The cover has no exclusions and is linked to the salary drawn in the preceding 12 months.
How EDLI payout is calculated?
The EDLI payout is calculated as 35 times the employee’s average monthly salary over the past 12 months, capped at Rs 7 lakh. Salary includes basic pay plus dearness allowance, with an additional Rs 1.75 lakh bonus. However, employers may opt out if they provide a higher life insurance cover under Section 17(2A).The EDLI scheme offers insurance coverage ranging from Rs 2.5 lakh to Rs 7 lakh, with the cap being increased to Rs 7 lakh from Rs 6 lakh on April 28, 2021. Employers contribute 0.50 per cent of the employee's monthly wages, capped at Rs 15,000, as premium for this scheme.
If policyholder dies, his/her beneficiaries are paid an amount equal to 35 times the average monthly salary earned in the final 12 months of employment. The highest possible average monthly salary contribution for an employee is limited to Rs 15,000. Hence, 35 times the salary amounts to Rs 5.25 lakh, adding to this comes a bonus amount of up to Rs 1.75 lakh in favour of the claimant under this scheme. Accordingly, the beneficiary is entitled to receive a total payout of Rs 7 lakh under the scheme.
How EDLI benefits are claimed?
If an employee dies during service, the EDLI scheme offers a lump-sum payout to the registered nominees and the claim process is simple, requiring documents such as the death certificate, date of birth proof, bank details, Aadhaar and photographs. EPFO has clarified that claims will not be denied due to Non-Contributory Period of Service (NCP) days, including unpaid leave or absence.To claim the EDLI insurance, nominees or heirs need to submit EDLI Form 5 IF along with required documents to the regional EPF Commissioner's office. Claims are typically settled within 30 days. If delayed, the commissioner pays 12 per cent annual interest from the deadline to the actual payment date.
Who is eligible to claim EDLI benefits?
- Nominee of the member
- Spouse of the member
- Male children (up to 25 years) of the member
- Unmarried daughters of the member
- Surviving family members of the member
- Legal heir of the deceased member
