Employee Deposit Linked Insurance

This article talks about everything you need to about the Employee Deposit Linked Insurance (EDLI) Scheme.

· 4 min read
Employee Deposit Linked Insurance

In this Article:1. What is Employee Deposit Linked Insurance (EDLI) Scheme?2. Features of Employee Deposit Linked Insurance 3. What are the documents required to claim under EDLI?4. How to Claim the EDLI Benefits 5. EPFO Scheme Contribution Comparison6. Summary

Life has become too unpredictable, and thus adequate insurance cover is vital for every individual. Private sector employees are often deprived of the social security benefits enjoyed by government employees. Employee Deposit Linked Insurance (EDLI) Scheme was introduced in 1976 by the government to extend the benefits of life insurance to private sector employees.

What is Employee Deposit Linked Insurance (EDLI) Scheme?

EDLI scheme is an insurance cover offered by the Employees’ Provident Fund Organization (EPFO). The government announced this insurance scheme, especially for the private sector salaried employees. Under this scheme, the nominee or legal heir of a member of EPFO is paid a maximum of Rs. 7 lakhs in the event of the death of the member during the period of service. All the organizations registered under the Employee Provident and the Miscellaneous Provisions Act, 1952 must offer the EDLI scheme to their employees. EDLI scheme works together with the EPF, and EPS and the insurance cover depends on the salary drawn in the last 12 months of the employment before the death.

Features of Employee Deposit Linked Insurance

  • Eligibility: The members of the EPFO are enrolled in this scheme automatically. Therefore, all the employees who have EPF account become eligible for the EDLI scheme. The insurance benefits can also be availed by the family members, legal heirs, or the nominees of the employee.
  • Claim Amount: Under the EDLI scheme, the claim amount is calculated as 30 times the average monthly salary of the past 12 months subject to a maximum of Rs. 7 lakhs, where the average salary is Basic + Dearness Allowance of the employee.
  • Bonus: Under the EDLI scheme, a bonus is also available to the employees to a maximum extent of Rs. 2.5 lakhs.
  • Employer’s Contribution: Under the EDLI scheme, the contribution of an employer should be 0.5% of the average salary or a maximum of Rs. 75 per employee per month. If the employer does not offer any other group insurance scheme, the maximum contribution under this scheme is capped at Rs. 15,000 each month.
  • Employees’ Contribution: Under the EDLI scheme, there is no need for the employees to make any contribution. They just need to contribute to the EPF.
  • Alternative Scheme: The employer has an option to opt for another alternative group insurance scheme, but the benefits offered to employees under such scheme must be equal to or more than those offered under the EDLI scheme.
  • No Exception: Under the EDLI scheme, there are no exceptions as this scheme protects the insured person in all situations and all around the world.
  • No Minimum Service Period: Under the EDLI scheme, there is no minimum service period for availing the benefits of the insurance coverage.

What are the documents required to claim under EDLI?

To make a claim under the EDLI scheme, the following documents are required to be submitted by the claimant:

  • Duly completed Form 5 IF, which is filled by the nominees, heirs, or the family members after the death of the employee to claim the insurance amount. The employer needs to furnish the certificate mentioning the date of death of the member and the mode of fund transfer.
  • Death Certificate of the person insured under this scheme.
  • Succession Certificate in the event when the legal heir files the claim.
  • Guardianship Certificate if the claim on the behalf of a minor family member or nominee or legal heir is by anyone other than the natural guardian.
  • Copy of the canceled cheque for the account in which the insurance claim amount is to be received.

How to Claim the EDLI Benefits

The nominee or the claimant should adhere to the following process to claim the benefits under the EDLI scheme:

  • The nominee or the claimant must duly fill the Form 5 IF to get the insurance benefits after the death of the employee. The employee must have been, at the time of the death, an active contributor to the EPF scheme.
  • The benefit under this scheme can be claimed by the nominee named by the employee. In an event where no nominee is declared, the surviving family members shall be eligible for claiming the benefits. In the absence of any surviving member, the insurance benefits can be claimed by the legal heirs of the deceased employee. For the purpose of this scheme, a family member includes a spouse, unmarried daughters, and sons up to 25 years of age.
  • The claim form needs to be duly signed and certified by the employer of the deceased employee. In the absence of any employer or if the signature of the employer cannot be obtained, the form must be attested by any one of the following: Bank manager of the branch in which account is maintained, Local MP or MLA, Magistrate, Postmaster or sub-postmaster, Gazetted Officer, member of the regional committee of EPF or CBT or the Member / Secretary / Chairman of Municipal or District Local Board.
  • The claimant needs to submit all the documents along with the completed form with the regional EPF commissioner’s office for the processing of the claim.
  • The claimant also can submit Form 20, for the EPF withdrawal claim and Form 10 C/D to claim the benefits under all the 3 schemes namely EPF, EPS, and EDLI.
  • Post submission of all the documents and acceptance of the claim, the EPF commissioner must settle the claim within 30 days from the receipt of the claim, failing which the claimant becomes eligible for interest at 12% p.a. on the outstanding amount till the actual disbursal of the claim amount.

EPFO Scheme Contribution Comparison

EPFO Scheme Employee’s Contribution Employer’s Contribution
EPF 12% of Basic + D.A. 3.67% of Basic + D.A.
EPS N.A. 8.33% of Basic + D.A.
EDLI N.A. 0.5% of Basic + D.A. subject to a maximum of Rs. 75

Summary

The primary aim of the EDLI scheme is to offer social security to the family members of the deceased employees. This scheme offers several benefits to the employees and their families and is also transferrable from one employer to another. Employees automatically hold this policy and must make sure that their family members or the nominee are fully aware of this scheme so that they can avail its benefits if and when the need arises.

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