Do you work in the organized sector, and your EPF is deducted? If yes, you get free insurance cover of up to ₹7 lakh under the Employees’ Deposit Linked Insurance Scheme (EDLI). No money is deducted from your salary for this unique facility. Learn what the EDLI Scheme 1976 is, how the minimum amount of ₹2.5 lakh and the maximum limit of ₹7 lakh are determined, and what steps your family needs to take to claim in the absence of a nominee—this crucial information is essential for you and your family.
₹7 Lakh Security Cover
All subscribers/members of the Employees’ Provident Fund Organization (EPFO) are covered under the Employees’ Deposit Linked Insurance Scheme 1976 (EDLI). This scheme covers every EPF account holder and provides a powerful security cover. This scheme also provides full coverage to the families of employees who have worked for more than one company within the 12 months immediately preceding their death.
No money or premium is deducted from the employee’s account for this insurance cover. The company/employer contributes only 0.50% of the employee’s basic salary and dearness allowance (DA). Note that regardless of the employee’s actual basic salary, the maximum basic salary limit is ₹15,000. Claim payments under the EDLI scheme are made in a lump sum.
Amount of Insurance Cover
The minimum sum assured under this scheme is ₹2.5 lakh, and the maximum sum assured is ₹7 lakh. This amount is determined based on the employee’s average salary (basic salary + DA) for the last 12 months and the amount deposited in their PF account.
Claim Process and Nomination Rules
In the event of a member employee’s death due to any reason—whether it’s due to illness, accident, or natural death—their nominee can claim the insurance amount.
If the member employee has not made a nomination under this scheme, this cover is available to the deceased employee’s spouse, unmarried daughters, and minor sons. However, the deceased member employee must be an active EPF contributor, meaning they must continue contributing to the EPF account until death.
Contribution to EPF
For organized sector employees, 12 percent of their basic salary and DA goes into the EPF account, and the company/employer also contributes 12 percent. However, of the employer’s 12 percent contribution, 8.33 percent goes to the Employees’ Pension Scheme (EPS), and the remaining amount is deposited into the EPF account.
Simple Claim Process
If an EPF subscriber dies prematurely, their nominee or legal heir can claim the insurance cover. If the claimant is under 18 years of age, their guardian can file the claim on their behalf. Documents such as the employee’s death certificate, succession certificate (if there is no nominee), guardianship certificate (if there is a minor nominee), and bank statements are required to submit the claim to the insurance company. If there is no nominee for the PF account, the legal heir can file the claim.
To withdraw funds from an EPF account, you must submit Form 5IF of the insurance cover along with the form submitted to the employer. This form will be verified by the employer. If verification from the employer is not possible, the form must be attested by one of the persons like Gazetted Officer, Magistrate, Postmaster or Sub-Postmaster, Member of Parliament or MLA, Chairman of Gram Panchayat, Member of CBT or EPF Regional Committee, or Bank Manager (of the bank where the account is maintained) and Chairman/Secretary/Member of Municipality or District Local Board.