In India, EPFO launched the Employees Deposit Linked Insurance (EDLI) Scheme in 1976. This scheme remains a big support for lakhs of private sector employees. If a private company employee dies while working, their family receives financial help under this scheme.
What is the EDLI Scheme and Its Benefits?
Under the EDLI scheme, the legal heir or nominee of a deceased employee receives a large sum of money. According to the new EPFO rules after changes in 2021, the amount can go up to Rs 7 lakh based on the employee’s last month’s salary before death. All EPFO members are eligible for this benefit.
The scheme does not get direct contributions from EPFO. The employee’s company contributes 0.5% of the employee’s basic salary, with a maximum of Rs 75 per month.
Benefits of the EDLI Scheme
- Uniform Coverage: Applies to all employees with a basic salary up to Rs 15,000.
- Maximum Benefit: 35 times the average monthly salary or a maximum of Rs 7 lakh.
- Bonus Portion: An additional Rs 1.75 lakh is added to the prescribed amount.
- Minimum Amount: A minimum insurance benefit of Rs 2.5 lakh is provided, effective from 15 February 2020.
- Automatic Inclusion: Employees covered under EPF automatically get EDLI benefits.
- Alternative Option for Employers: Companies can choose another group life insurance policy instead of EDLI, but the benefits must be equal to or higher than EDLI.
- Calculation Example: 30 × average monthly salary (up to Rs 15,000) + Rs 2.5 lakh bonus = maximum Rs 7 lakh.
Eligibility and Claim Rules
Companies with 20 or more employees must be registered under the EPF Act, and all employees are automatically included in the EDLI scheme.
Eligible family members are husband or wife, unmarried daughter, and son up to the age of 25 years.
Required Documents for Claim:
Death certificate of the deceased employee
Guardianship or inheritance certificate (if needed)
Cancelled cheque
If the employer’s signature is not available, the form can be attested by a public representative (MP/MLA), bank manager, or gazetted officer
Claims must be settled within 30 days of submission to the regional EPF office.
If payment is delayed, 12% annual interest is payable.
Exemption from EDLI
Any company can get exemption from the EDLI scheme under section 17(2A) of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
The condition is that the company must provide a better group life insurance scheme for its employees.
