EPFO: Many of us view our Provident Fund (PF) as a crucial source of savings, yet not everyone is aware that it also offers a complimentary safety net during tough times. The EPFO provides its members not just a pension or savings, but also free life insurance coverage up to Rs 7 lakh. This benefit is part of the EDLI (Employees’ Deposit-Linked Insurance) scheme.
Obtain a protective shield at no cost
The standout feature of this scheme is that it doesn’t require the employee to spend a single rupee. The entire insurance premium under the EDLI scheme is covered by your employer. Once your PF account is established, you are automatically enrolled in this insurance program. There’s no need to rush to fill out a separate application or form. The primary aim of this scheme is to safeguard an employee’s family from unexpected financial hardships in the event of an unfortunate incident while they are working.
How is the Rs 7 lakh insurance amount calculated?
Now, you might wonder how the insurance sum is determined. This calculation is entirely based on the employee’s salary. According to the guidelines, the employee’s basic salary and dearness allowance (DA) for the past 12 months are taken into account. The insurance coverage is calculated as 35 times the average salary. Additionally, a bonus of Rs 1.75 lakh is included in this total. The EPFO has established a maximum salary cap of Rs 15,000 for this calculation. When you multiply Rs 15,000 by 35, you get Rs 5.25 lakh. Adding the bonus of Rs 1.75 lakh brings the total to Rs 7 lakh. This is the highest amount available under this scheme.
What steps should you take to file a claim?
In the event that a PF account holder passes away while still employed, their nominee or legal heir is eligible to claim the funds. The process has been made easier. The nominee needs to fill out and submit EDLI Form 5 IF to the EPFO regional office. Required documents include a death certificate, Aadhaar card, bank account information, and proof of date of birth to accompany the claim.
The comforting thing is that the EPFO has relaxed the rules, allowing claims to remain unrejected even if the employee has spent a period of time without pay (a non-contributory period). The department strives to settle claims within 30 days. Any delays require the EPFO to pay 12% annual interest to the claimant.
Who gets the money?
The nominee registered in the PF account has the first right to this money. If there is no nominee, your spouse (husband or wife), sons up to 25 years of age, or unmarried daughters can also claim it. Therefore, it is very important that you complete e-nomination in your PF account, so that in your absence, your family does not have to run around government offices and can easily receive their rights.