EPFO Insurance Rules: Most people working in India have an EPF (Employees’ Provident Fund) account. People usually associate PF with retirement savings or a pension. However, very few people know that an important life insurance facility is also available with the EPF account. EPFO provides its members with insurance cover of up to approximately Rs 7 lakh, the benefit of which goes to the employee’s family.
It is important to note that an EPF account holder is automatically covered under EPFO’s EDLI (Employee Deposit Linked Insurance) scheme. This is a life insurance facility provided by EPFO. After EPF and EPS, it is considered the third major social security benefit for employees.
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Insurance Cover Without Premium
The most special thing about this scheme is that the employee does not have to pay any premium for it. The entire cost of the EDLI scheme is borne by the employer, i.e., the company. According to the rules, the company deposits 0.5 percent of the employee’s basic salary and dearness allowance into this insurance scheme every month. This amount is paid directly by the company, so it does not affect the employee’s salary.
When is the Insurance Benefit Available?
The benefit of the EDLI scheme is available in case of the employee’s death during employment. Whether the death occurs at the workplace, at home, or during leave, the circumstances do not matter. If the employee dies during their service, this insurance remains fully applicable, and the family or nominee receives financial assistance.
How Much Insurance Amount is Provided?
There a minimum and maximum limits for the insurance amount provided under EDLI. This scheme provides a cover of at least Rs 2.5 lakh and a maximum of Rs 7 lakh. While determining the insurance amount, the employee’s average salary for the last 12 months and the amount deposited in the PF account are taken as the basis.
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Who Gets the Benefit of the Scheme?
The benefit of the EDLI scheme is available to every employee whose PF account is active. This includes permanent employees as well as employees working on a contract basis. As soon as an individual’s Provident Fund (PF) contributions begin, they are automatically covered under this insurance scheme. This facility is applicable in almost all organised sectors of the country and provides security to millions of families.