Employees Deposit Linked Insurance Scheme: Benefits, eligibility and charges
The Employees’ Deposit Linked Insurance Scheme (EDLI) is an insurance cover provided by the Employees’ Provident Fund Organization (EPFO). A nominee or legal heir of an active member of EPFO gets a lump sum payment of up to Rs 6 Lakh in case of demise of the member during the service period.
It may be noted that all organizations covered under Employees’ Provident Fund (EPF) and Miscellaneous Provisions Act, 1952 get enrolled for EDLI automatically. This scheme works in combination with EPF and EPS. There is no exclusion under this scheme and the insurance cover depends on the salary drawn in the last 12 months of the employment before death.
Both employee, as well as the employer, contribute to all three schemes run by the EPFO. The contribution made by the employer to EDLI is 0.5% (subject to a maximum of Rs 75).
Here’s everything you need to know about the scheme:
1. An EPFO member is only covered by the EDLI scheme as long as he/she is an active member of the EPF. His/her family/heirs/nominees cannot claim it after he/she leaves service with an EPF registered company.
2. There is no minimum service period for availing EDLI benefits.
3. The employer has to make the contribution for EDLI and no fee can be deducted from the employee’s salary
4. The claim amount under this scheme is 30 times the average monthly salary in the past 12 months subject to a maximum of 6 lakh (4.5 lakh basic + 1.5 lakh bonus).
5. The average monthly salary is calculated as the Basic + Dearness Allowance of the employee. A bonus of ₹ 1.5 Lakhs is also applicable under this scheme
6. The employer can opt-out of the scheme in case he takes a higher paying life insurance scheme for employees under Section 17 (2A)
The insurance amount that the nominee of a deceased member gets is calculated as 30 times the average monthly salary in the last 12 months of employment. The maximum average monthly salary of an employee is capped at Rs 15,000
For example, 30 times the salary comes to be around to be 30 x Rs 15,000 = Rs 4,50,000
A bonus amount of up to Rs 1,50,000 is also paid to the claimant. Thus, the total amount payable under this scheme to the beneficiary is Rs 6 lakh
How to Claim EDLI benefits: In order to claim benefits, Form 5 IF has to be filled. Also, the member should have been (at the time of his death), an active contributor to the EPF scheme. The benefits can be claimed by the nominee and in case no nominee is declared, the surviving family members will be eligible for claiming the benefits.
Family under EPS is defined as spouse, male children (up to 25 years), unmarried daughters. If there are no surviving family members, the insurance benefits can be claimed by the legal heir of the deceased member. The claim form has to be signed and certified by the employer. In case there is no employer, the form has to be attested by Gazetted Officer or Magistrate or President of Village Panchayat or Chairman / Secretary / Member of Municipal or District Local Board or Postmaster or Sub Postmaster, MP or MLA or Member of CBT or regional committee of EPF or bank manager (of the bank in which the account was maintained).
Documents required to claim EDLI benefits: The claimant has to submit several documents along with Form 5 IF to get the amount disbursed under the scheme. These documents include
1. Death Certificate of the member
2. Guardianship certificate if the claim on behalf of a minor family member/nominee/legal heir is by other than the natural guardian.
3. Succession certificate in case of a claim by the legal heir.
4. Copy of a cancelled cheque of the bank account in which payment is opted.
5. In case the member was last employed under an establishment exempted under the EPF Scheme 1952, the employer of such establishment is required to furnish the PF details of last 12 months under the certificate part and also send an attested copy of the Member’s Nomination Form.