EPFO Free Insurance: You Get ₹7 Lakh Insurance with PF, Learn the Claim Process

EPFO Free Insurance: If you are employed and PF is deducted from your salary every month, this information is extremely important for your family. Most employees focus only on their PF balance and the interest earned on it, but they are unaware that PF also comes with insurance protection.

Employees receive this insurance cover under the Employees’ Provident Fund Organisation (EPFO)’s EDLI (Employees’ Deposit Linked Insurance) scheme. This facility is applicable alongside EPF and EPS, and employees do not have to pay any separate premium. It is important to note that the ₹7 lakh amount is not fixed; instead, a maximum of ₹7 lakh can be covered as per the established rules.

What is the EDLI Scheme?

The EDLI scheme was launched in 1976. This scheme applies when an employee dies while on the job. In such a situation, financial assistance is provided to the nominee or legal heir. Its purpose is to support the family in case of sudden financial difficulties.

Key Points of This Scheme

This insurance cover is automatically provided to the EPF member. No separate premium is charged from the employee. The employer contributes 0.50 percent of the salary limit. This cover is applicable only in case of death during service.

How the Insurance Amount is Determined

The insurance amount under EDLI is calculated using a fixed formula. As per the rules, 35 times the average monthly salary (basic + DA) for the last 12 months is given. An additional bonus amount up to a maximum of Rs 1.75 lakh is also added. The maximum salary limit for the calculation is Rs 15,000. According to this formula, the total insurance amount can be up to Rs 7 lakh.

For example, if an employee’s average salary is ₹15,000, multiplying ₹15,000 by 35 equals ₹525,000. Adding a bonus of ₹175,000 to this, the total sum insured can reach approximately ₹7 lakh. If the salary is less than this, the sum insured will be proportionately lower.

Is the minimum ₹2.5 lakh guaranteed?

The government has amended the scheme to provide for a minimum benefit, but not everyone receives the same amount. The final payment depends on the employee’s length of service and salary. An automatic ₹2.5 lakh is not guaranteed in every case.

Who can claim?

After the employee’s death, the amount is first disbursed to the nominee registered in the EPF account. If no nominee is registered, the legal heir can claim. If the nominee is a minor, the guardian can claim on their behalf. Therefore, it is extremely important to keep the e-nomination updated.

Claim Process

Form 5IF is typically filled out to claim EDLI. This form is submitted to the relevant regional EPFO office. Partial digital processing is available in some cases, but the entire process is not fully online everywhere.

Know the required documents

Required documents include a death certificate, nominee’s identity and bank details, the employee’s UAN and service-related information, and, if required, an employer’s certification.