PF Account Insurance: Millions of people in India work in the private and government sectors, and a portion of their salary is deducted every month for PF (Provident Fund). For most employees, PF has become an automatic process, deducted as soon as the salary is credited. Very few people know that this PF account not only saves for retirement but also provides life insurance coverage.
PF: Not Just Savings, but also Security
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Employees often consider PF as just a sum of money saved for the future. But it also comes with free life insurance, for which no separate form needs to be filled out, nor is any premium required. As soon as an employee becomes an active PF member, this insurance coverage automatically comes into effect.
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What is the EDLI Scheme and How Does it Work?
This insurance for employees is provided under the EPFO’s Employee Deposit Linked Insurance Scheme (EDLI). It is considered an important facility of EPFO after EPF and EPS. As soon as the PF account becomes active, the employee comes under the purview of this scheme.
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The Employee Does Not Have to Pay Anything
The most special thing about the EDLI scheme is that not a single rupee is deducted from the employee’s salary for it. The entire cost of this insurance is borne by the company. The company deposits 0.5 percent of the employee’s basic salary and DA into the EDLI fund every month, which provides this insurance cover.
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Under What Circumstances is the Insurance Benefit Available?
The benefit of EDLI is available only if the employee dies during their employment. Whether the incident occurs at the office, at home, or during a holiday, this insurance remains applicable in all situations. In such a situation, the employee’s family or nominee is provided with financial assistance to help them during difficult times.
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How Much Insurance Coverage is Provided?
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Under the EDLI scheme, the minimum insurance amount can be Rs. 2.5 lakh and the maximum up to Rs. 7 lakh. The salary of the last 12 months and the contributions made to the PF are used as the basis for determining the insurance amount. Employees whose salaries and PF contributions are regular receive better coverage.
Why is this information important?
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Surprisingly, most PF members are unaware of this benefit. However, it is a crucial safety net for salaried individuals. If someone in your family or among your acquaintances is a PF member, you should definitely inform them about this insurance cover so that their family can receive financial assistance in case of an unfortunate event.