EPFO Provides Free Insurance To All Employees, Here’s How Nominees Can Avail Of The Benefits

Among the many benefits the Employees’ Provident Fund Organisation (EPFO) provides to all private sector employees is the Employee Deposit Linked Insurance Scheme (EDLI). This free insurance cover, which was launched in 1976, provides financial assistance in the form of insurance to the family members in the event of death of the EPFO member while on the job. In case of the death of an employee while on the job, the nominee or legal heir of an active member of EPFO receives a lump sum payment of up to Rs 7 lakh.

The organisations that are covered under the Employees’ Provident Fund (EPF) and Miscellaneous Provisions Act, 1952, get enrolled for EDLI automatically. This scheme works in combination with the Employees’ Provident Fund (EPF) and the Employees’ Pension Scheme (EPS). The employer contributes to the EDLI scheme.

Objective Of EDLI Scheme:

The EDLI scheme was launched in 1976 in a bid to provide insurance benefits to members of EPFO. This scheme does not have any exclusion. The main aim of EPFO for this scheme was to protect the family members financially, in the case of unfortunate death of an employee. The amount of the insurance cover depends on the salary drawn in the last 12 months of the employment before death.

Features Of EDLI

The following are the features of the EDLI scheme.

1] The family members, legal heirs, or nominees of the member can avail of the insurance benefits

2] EPFO members are automatically enrolled for EDLI.

3] As long as an employee is an active member of EPFO, he/she is covered by the EDLI scheme. After he/she leaves service with an EPF-registered company, his/her family/heirs/nominees cannot claim it.

4] There is no requirement of minimum service period for availing of EDLI scheme benefits.

5] No fee can be deducted from the employee’s salary, and the employer has to make the EDLI contribution.

6] The claim amount under ELDI is calculated at 35 times the average monthly salary in the past 12 months, capped at a maximum of Rs 7 lakh.

7] If the deceased member was in continuous employment for 12 months before his/her death, there is a minimum assurance benefit of Rs 2.5 lakh.

8] Here is how the average monthly salary is calculated: Basic + Dearness Allowance of the employee.

9] There is also a bonus of Rs 1.75 lakh applicable under this scheme.

10] In case a member takes a higher-paying life insurance scheme for employees under Section 17(2A), the employer can opt out of the scheme.

EDLI Benefits Calculation:

The insurance amount that the beneficiaries of a deceased member gets is determined by multiplying 35 times the average monthly salary in the last 12 months of employment.

The maximum average monthly salary considered for this calculation is capped at Rs 15,000. Hence, multiplying 35 by the maximum salary comes to be around Rs 5.25 lakh. Moreover, a bonus amount of up to Rs 1.75 lakh is paid to the claimant under this scheme. Consequently, the total amount payable under this scheme to the beneficiary is Rs 7 lakh.