If you are a subscriber or member of the Employees’ Provident Fund (EPF), you are covered for up to Rs 7 lakh free of cost. This insurance is available to all EPF subscribers and employees. It is provided under the Employees’ Deposit Linked Insurance Scheme (EDLI), 1976, and every EPF account holder is automatically covered.
The EDLI scheme provides protection to the family members of the employee who has worked in more than one company during the 12 months prior to the employee’s demise.
The employee’s nominee can apply for benefits payable under this insurance in case of morbidity, accidental or natural death. The minimum insurance amount under this scheme is Rs 2.5 lakh, and the maximum limit is Rs 7 lakh. The maximum insurable amount is based on an average salary for the previous 12 months and balances in the DA and PF account of the employee.
Based on this scheme, no deduction is being made from the employee’s account.
Employee Contribution and EDLI Coverage
Employees do not pay any money or premium for the EDLI scheme. The company contributes 0.50% of the employee’s basic salary and dearness allowance. The maximum basic salary considered is Rs 15,000, regardless of the actual salary. Claims under the EDLI scheme are paid in a lump sum.
What Happens If There Is No Nominee?
If the employee has not nominated any nominee, the wife, unmarried daughters, and minor sons of the deceased can receive the insurance. The employee must be an active EPF contributor at the time of death.
In the organised sector, 12% of the employee’s basic salary plus DA goes to EPF as their contribution. The employer also contributes 12%. Out of this, 8.33% goes to the Employees Pension Scheme (EPS), and the rest goes to EPF.
How to Claim the Insurance
If an EPF member dies, the nominee or legal heir can claim the insurance. If the claimant is under 18, their guardian can claim on their behalf. The insurance company requires:
- Death certificate of the employee
- Inheritance certificate
- Guardianship certificate (if a guardian claims for a minor)
- Bank details of the claimant
- If there is no nominee for the PF account, the legal heir can claim the insurance.
To withdraw money from the EPF account, Form 5 IF (Insurance Cover Form) must be submitted along with the form given to the employer. The employer will verify the form. If the employer cannot verify, one of the following persons can verify it:
- Gazetted Officer
- Magistrate
- Postmaster or Sub-Postmaster
- MP or MLA
- Chairman of Gram Panchayat
- Member of Regional Committee of Central Bank of India (CBT) or EPF
- Bank Manager (of the account)
- Chairman/Secretary/Member of Municipal or District Local Board