EPFO: Individuals frequently perceive the Employees’ Provident Fund Organization (EPFO) merely as a retirement savings mechanism or a safeguard for their later years. Nevertheless, many are unaware that their Provident Fund (PF) account includes a complimentary life insurance coverage. This provision is known as the Employees’ Deposit Linked Insurance (EDLI) Scheme, which ensures that in the unfortunate event of an employee’s death, their family is entitled to an insurance payout of up to Rs 7 lakh. Notably, the employee is not required to pay any extra premium for this benefit.
Scheme Features
The sum insured under the EDLI scheme is calculated based on the employee’s average salary and dearness allowance (DA) over the preceding 12 months. The minimum insured amount is Rs 2.5 lakh, while the maximum is capped at Rs 7 lakh. The entire premium is borne by the employer, meaning the employee incurs no costs whatsoever.
Beneficiaries of the Scheme
In the event of an EPF member’s death while still in service, their designated nominee or legal heir is eligible to claim the insurance benefit. This advantage is accessible to all employees in the organized sector whose PF contributions are deducted.
Claim Procedure
To obtain the insurance payout, the nominee must fill out and submit Form 5 IF. This form is forwarded to the EPFO office via the employer. Additionally, a death certificate and documents verifying the nominee’s identity must be included. Once the process is finalized, the insurance amount is directly deposited into the nominee’s bank account.
Significance of the Scheme
Countless working individuals in India view their PF account solely as a means of saving for retirement. However, the EDLI scheme offers an extra layer of security for their families. This insurance serves as financial assistance in the case of an unexpected death and can be invaluable during challenging times.
The EDLI scheme provided by EPFO is an often-overlooked advantage for employees that deserves recognition. This initiative safeguards not only the employee but also their family. Therefore, if you have PF deductions, it is essential to be informed about this scheme and ensure that your nominee’s details are current, as this feature could be crucial for your family’s well-being.
The EDLI scheme was launched in 1976 with the primary objective of providing social security to private sector employees. Once an employee becomes an EPFO member and their PF deductions begin, they automatically become eligible for this insurance scheme. The premium is paid by the employee’s company or employer, which amounts to 0.50% of the employee’s basic salary. If the employee dies while on the job, their family or nominee receives the insurance amount.