EDLI: If you are employed and contribute to a Provident Fund (PF), this news will prove to be extremely useful for you. Did you know that this information comes as excellent news for PF subscribers? Upon becoming an EPF member, individuals are automatically provided with significant life insurance coverage. This coverage is known as the Employees’ Deposit Linked Insurance Scheme, or EDLI.
Under this scheme, the plan serves as a financial lifeline for the family in the unfortunate event of an employee’s death while still in service. In such a situation, a lump-sum insurance amount is provided to the employee’s nominee or legal heir. This is precisely why EDLI is considered one of the most significant social security schemes offered by the EPFO.
What is the EDLI scheme?
The Employees’ Deposit Linked Insurance Scheme (EDLI) is a government-sponsored insurance plan that provides life insurance coverage to EPF members. This scheme was launched specifically with the objective of providing financial security to the families of employees working in the organised sector.
If an employee passes away during their period of service, insurance benefits under EDLI are disbursed to their nominee or legal heir. This payout is distinct from the EPF balance and other retirement benefits. In other words, the family is entitled to receive the EPF corpus, EPS benefits, and the EDLI insurance amount as separate payouts.
Does the Employee Have to Pay Any Premium?
The most significant feature of the EDLI scheme is that the employee is not required to pay any additional amount out of their own pocket for this insurance coverage. EPF members are automatically brought under the purview of the EDLI scheme. The contributions required for the scheme are deposited by the employer. This means that the employee secures substantial life insurance coverage without having to pay a separate insurance premium.
The Insurance Coverage Amount
Under the EDLI scheme, a beneficiary is eligible to receive an insurance benefit ranging from a minimum of ₹2.5 lakh to a maximum of ₹7 lakh. This amount is determined based on specific parameters linked to the employee’s salary and their EPF account. Following the COVID-19 pandemic, the government increased the maximum insurance benefit under this scheme to ₹7 lakh, thereby providing additional security to the families of millions of employees.
Learn How the Insurance Amount is Determined
The amount payable under the EDLI scheme is determined based on the employee’s final salary structure and data linked to their EPF account. According to EPFO regulations, the insurance benefit is calculated by taking into account the employee’s average monthly salary and their EPF balance. The maximum payout limit is capped at ₹7 lakh. This is why different employees may receive varying amounts.
