EPFO EDLI Scheme: If you are employed, this news may be important for you. An EPF account is a safe investment vehicle for employed individuals. It provides financial support after retirement. However, very few employees are aware that their EPF account also comes with a free life insurance plan. This benefit is provided under the EPFO’s EDLI scheme. Under this scheme, the employee’s family receives insurance cover of up to ₹7 lakh. The special feature is that the employee does not have to pay a single penny for this.
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What is the EDLI Scheme and its Benefits?
The EDLI scheme is a life insurance plan offered by the EPFO to all its members. It is the third major benefit available along with the Employees’ Provident Fund (EPF) and Employees’ Pension Scheme (EPS). As long as an employee’s PF account is active, they are automatically covered under this insurance scheme.
It should be noted that no premium is charged from the employee under this scheme. The entire premium is paid by the employer, i.e., the company. The company contributes 0.5% of its employees’ basic salary and dearness allowance to this scheme every month.
When is the insurance benefit available?
This insurance benefit is available only when an employee dies during their service period, whether they are in the office, at home, or on leave. This benefit is available while they are actively on the job. Upon the employee’s death, the nominee or family can claim this insurance.
The minimum insurance amount covered by the EPFO is ₹2.5 lakh, with a maximum of ₹7 lakh. The insurance amount is determined based on the employee’s average salary for the previous 12 months and the balance in their PF account.
Employer’s Responsibility and Rules
The EPFO has clearly stated regarding this scheme that it is the company’s responsibility to deposit the EDLI contribution on time for its employees every month. If an employer fails to comply with this rule or is negligent, a penalty of 1% per month is imposed.
The insurance claim process is very simple. Upon application by the employee’s nominee or legal heir, the amount is disbursed within 20 days, providing immediate financial relief to the family.