The Employees Deposit Linked Insurance Scheme (EDLI) is an insurance scheme that was launched by the Government in 1976. This scheme was launched with the objective of providing social security benefits to the employees of the private sector for whom such benefits were not commonly provided by the employer. Today, the EDLI scheme is managed and administered by the Employees Provident Fund Organisation (EPFO) and the scheme provides term life insurance cover on the life of the member employee.
Employees Deposit Linked Insurance Scheme
The Employees Deposit Linked Insurance Scheme or EDLI is an insurance cover provided by the EPFO (Employees Provident Fund Organisation) for private sector salaried employees who are members of EPFO. The EDLI scheme was launched in 1976. The registered nominee receives a lump-sum payment in the event of the death of the person insured (employee) during the period of the service.
EDLI scheme covers all organisations registered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. They must subscribe to this scheme and provide life insurance benefits to their employees. This scheme works in combination with EPF (Employees’ Provident Fund) and EPS (Employees’ Pension Scheme).
Features Of Employees Deposit Linked Insurance Scheme
- EDLI applies to all employees with a basic salary under Rs. 15,000/- per month. If the basic salary is above Rs. 15,000 per month, the maximum benefit is capped at Rs. 6 lakh. With effect from 28.04.2021, the EPFO has increased the maximum benefit to Rs.7 lakh.
- The claim amount under EDLI is 35 times the average monthly salary in the past 12 months, subject to a maximum of Rs 7 lakh.
- There is no need for the employees to contribute to EDLI. Their contribution is required only for EPF.
- Under the EDLI, a bonus of Rs. 1,50,000/—is available. With effect from 28.04.2021, the bonus has increased to Rs.1.75 lakh.
- The Ministry increased the minimum benefit amount to Rs.2.5 lakh in Feb 2018, which was valid for two years. The EPFO has extended this minimum amount of Rs.2.5 lakh with retrospective effect from 15th Feb 2020.
- Any organisation that has more than 20 employees needs to register for EPF. Therefore, any employee who has an EPF account automatically becomes eligible for the EDLI scheme.
- There are no exceptions to the insurance coverage provided by EDLI. It protects the insured person round the clock, all around the world.
- An employer can opt for another group insurance scheme, but the benefits offered must be equal to or more than those offered under EDLI.
- As per the provisions of the EDLI, the contribution of an employer must be 0.5% of the basic salary or a maximum of Rs. 75 per employee per month. If there is no other group insurance scheme, the maximum contribution is capped at Rs. 15,000/- per month.
- For all calculations under EDLI, the dearness allowance must be added to the basic salary.
Benefit paid by the EDLI scheme
30 * Average monthly salary drawn by the employee over the last 12 months preceding the date of death, subject to a maximum of Rs.15,000
Furthermore, a bonus of Rs.2.5 lakhs (increased from Rs.1.5 lakhs with effect from September 2020) is also paid with the coverage.
So, the total benefit, considering the salary is more than Rs.15, 000, would be as follows –
(30*15000) + 150,000 = Rs.7 lakhs
If, the salary is below Rs.15, 000, say Rs.10, 000, the benefit payable under EDLI insurance would be as follows –
(30*10000) + 250000 = Rs.5.5 lakhs
EDLI Scheme Eligibility
- Employees’ basic salary is up to Rs.15,000. When the employee’s salary exceeds Rs.15,000, the maximum benefit paid under the EDLI will be Rs.7 lakhs.
- The employee’s organisation should have more than 20 employees to opt for the EDLI scheme.
Documents Required To Payout Under EDLI
- Duly completed Form 5 IF
- Death Certificate of the insured person.
- Succession Certificate in case the legal heir files the claim.
- Guardianship Certificate if the claim is filed on behalf of a minor by a person other than the natural guardian.
- Copy of cancelled cheque for the account in which the payment is to be received.
How to make a claim under EDLI?
- The claimee/claimant should fill up and submit Form 5 IF.
- The form should be signed as well as certified by the employer stating that the employee was an active member of the EPF scheme. If, however, there is no employer or if the employer is not available, the form needs to be attested by authorized individuals who can be any of the following –
- The local MLA or MP
- Bank manager where the employee’s bank account has been maintained
- Magistrate
- A gazetted officer
- A post-master or sub-postmaster
- Member of EPF, CBT or any regional committee
- Form 20 to withdraw the employee’s EPF, Form 10C/D for claiming benefits from all the employee benefit schemes and other documents should be submitted to the regional EPF Commissioners Office
- The submitted documents would be verified by the EPF commissioner and the claim would be paid within 30 days.
- If the claim is delayed, interest would be payable on the delayed claim. The interest would be calculated @12% per annum for each day of delay till the date of actual payment of the claim.
FAQs
Calculation Of EDLI Charge?
The registered nominee will receive a lump-sum payout in the event of the death of the insured person. If no nominee or beneficiary is registered, then the amount would be paid to the legal heir. With effect from 28.04.2021, the pay-out to be awarded will be calculated as under:
30 days * Average Monthly salary of the Employee for the last 12 months (capped at Rs 15,000).
Furthermore additional bonus of Rs. 2,50,000 will also be given
Total = Rs 4,50,000 (15,000*30 days) + Rs. 2,50,000 (Bonus) = Rs 7,00,000 benefit.
Therefore, the maximum payout under EDLI is capped at Rs. 7,00,000/-
How much bonus is applicable under the scheme?
Rs. 1.75 lakhs is applicable under the scheme.