EDLI Scheme: EPFO provides you Rs 7 lakh insurance cover without paying any premium? Do you know how to apply for it?

Employee insurance scheme under EPFO: When we talk about Employees' Provident Fund (EPF), we think of it as a retirement scheme in which both employers and employees contribute. If fully exhausted, the monthly contribution provides one with a sizeable retirement corpus. But we never consider EPF as an insurance scheme. We hardly think that EPFO can provide up to Rs 7 lakh in insurance for family members/nominee/legal heir if the active member dies midway through their service.

EPFO has such provisions, which provide up to Rs 7 lakh in insurance to the legal heir and nominee.

The scheme is known as the Employees' Deposit Linked Insurance Scheme (EDLI). In this write-up, know more about this scheme.

What is EDLI?

In 1976, the central government started providing insurance benefits to the family members of active EPF account holders.

The purpose of the EDLI scheme was to ensure financial assistance to the family members of an employee who dies during their job.

All members get the facility of the EDLI scheme.

The insurance amount can be up to Rs 7 lakh, and it depends on the salary drawn in the last 12 months of employment by the employee before their death. 

What is the claim amount under EDLI?

The claim amount under the EDLI scheme is 35 times the average monthly salary in the last 12 months.

But it can't exceed Rs. 7 lakh. The minimum benefit amount under the scheme is Rs 2.50 lakh. 

Do you have to apply for EDLI?

All organisations registered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952, automatically qualify for EDLI.

It is mandatory for them to subscribe to this scheme and enrol their employees with a basic salary of at least Rs 15,000. 

Do I have to contribute to EDLI?

No. An employee has to contribute to the EPF and Employee Pension Scheme (EPS).

As far as the EDLI scheme is concerned, only the employer contributes 0.5 per cent of the basic salary of an employee (subject to a maximum of Rs. 75).
 

How is EDLI insurance cover calculated?

30 days * Average monthly salary of the employee for the last 12 months (capped at Rs 15,000).

Apart from that, an additional bonus of Rs 2,50,000 is also given to the family members.

The total is = Rs 4,50,000 (15,000X30 days)+Rs 2,50,000 (bonus) = Rs 7,00,000.

Therefore, the maximum benefit under EDLI is capped at Rs 7,00,000.

Who gets EDLI benefits?

The nominee is specified by the insured person who has died. 

If the deceased didn't nominate anyone, the family member or the legal heir can apply for EDLI benefits.

How to claim to get EDLI benefits?

The claimant needs to fill EDLI Form 5 and have it signed and certified by an employer.

If the employer is not available or the sign can't be obtained for some reason, then Form 5 should be attested by one of the following:

Local MP or MLA

Magistrate

Gazetted Officer

Bank manager (in whose branch the account was maintained)

Post Master or Sub-Postmaster

Member/Chairman/Secretary of Local Municipal Board

Member of the regional committee of EPF or CBT 

The claimant then needs to submit the filled form and the required documents to the regional EPF Commissioner’s Office for claim processing.

After the submission, the EPF must settle the EDLI claim within 30 days of the receipt.

If the deadline is crossed, the claimant is entitled to 12 per cent annual interest till the date of actual disbursal.