Employees Deposit Linked Insurance Scheme or EDLI is an insurance cover provided by the EPFO (Employees Provident Fund Organisation) for private sector salaried employees. The registered nominee receives a lump-sum payment in the event of the death of the person insured, during the period of the service. EDLI applies to all organisations registered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. All such organisations must subscribe to this scheme and offer life insurance benefits to their employees. This scheme works in combination with EPF and EPS. The extent of the benefit is decided by the last drawn salary of the employee.
Objectives:
The primary objective of the EDLI scheme is to provide financial security to the family members of the deceased employee by offering a lump-sum payment in the event of the employee’s death while in service.
Coverage:
- The scheme is applicable to all employees who are members of the EPF.
- The insurance cover is provided without any additional contribution from the employee.
Features:
- EDLI applies to all employees with a basic salary under Rs. 15,000/- per month. If the basic salary goes above Rs. 15,000 per month, the maximum benefit is capped at Rs. 6,00,000/-. With effect from 28.04.2021, the EPFO has increased the maximum benefit to Rs.7 lakh.
- There is no need for the employees to contribute to EDLI. Their contribution is required only for EPF.
- There is a bonus of Rs. 1,50,000/- available under the EDLI. With effect from 28.04.2021, the bonus is increased to Rs.2.5 lakh.
- The Ministry had increased the minimum amount of benefit 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.
Administration of the Schemes:
The administration of the EDLI scheme involves several key steps and authorities to ensure its smooth operation:
1. Central Board of Trustees (CBT):
- Role:
Central Board of Trustees, constituted under the EPF Act, is responsible for the overall administration and management of the EDLI scheme.
- Composition:
The CBT consists of representatives from the government, employers, and employees, ensuring a balanced approach to policy and administration.
2. Regional Provident Fund Commissioner (RPFC):
- Role:
RPFC oversees the implementation of the EDLI scheme at the regional level. This includes processing claims and ensuring compliance with the scheme’s provisions.
- Duties:
The RPFC is responsible for monitoring contributions, maintaining records, and resolving disputes related to the scheme.
3. Employers:
- Role:
Employers play a crucial role in the administration of the EDLI scheme by ensuring timely contributions and maintaining accurate records of employees’ provident fund accounts.
- Duties:
Employers must enroll eligible employees in the EPF and EDLI schemes, remit contributions to the EPF, and facilitate the claims process in the event of an employee’s death.
Key Features and Provisions
1. Contributions:
- Employer’s Contribution:
The employer contributes 0.5% of the employee’s monthly basic salary (subject to a wage ceiling) towards the EDLI scheme.
- No Employee Contribution:
The scheme does not require any contribution from the employees.
2. Insurance Benefit:
- Calculation of Benefit:
The insurance benefit is calculated based on the employee’s last drawn salary and the number of years of service. The benefit amount is typically 30 times the average monthly salary in the last 12 months, plus a bonus amount, subject to a maximum limit.
- Maximum Benefit:
As of the latest amendments, the maximum benefit payable under the EDLI scheme is capped, which is periodically revised by the government.
3. Claim Process:
- Submission of Claim:
In the event of an employee’s death, the nominee or legal heir can submit a claim for the insurance benefit. The claim must be submitted in the prescribed form (Form 5 IF) along with necessary documents such as the death certificate, proof of relationship, and bank details of the nominee.
- Processing:
The RPFC processes the claim after verifying the details and documents. Upon approval, the insurance amount is directly credited to the nominee’s bank account.
4. Amendments and Updates:
The government periodically reviews and updates the EDLI scheme to enhance benefits and ensure it remains relevant to the needs of employees. Recent amendments have included increases in the maximum payable amount and simplifications in the claim process.