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EDLI Scheme: If you are employed and contribute to EPFO every month, then you should know that the Employees Provident Fund Organization provides free insurance up to Rs 7 lakh to EPFO members. This insurance scheme is known as Employees Deposit Linked Insurance (EDLI). This scheme is run to provide financial security to the employee’s family.
If due to any reason the EPFO member dies then his heir or nominee can claim this insurance amount. However, the claim amount of Rs 7 lakh is not given to everyone. Its calculation is done through a formula. Know here some rules related to EDLI and the formula for determining the claim amount.
The employee does not have to pay the premium
This insurance cover is absolutely free for any employee working in a private company. The contribution for this scheme is made by the company, which is 0.50 percent of the employee’s basic salary and dearness allowance. Generally people know about PF money and pension scheme, but do not know about EDLI scheme.
The amount is decided by this formula
In this scheme which provides free insurance up to a maximum of Rs 7 lakh, the claim amount is calculated according to a fixed formula. The sum insured depends on the basic salary and DA of the last 12 months. The claim for insurance cover will be 35 times the last basic pay + DA. Along with this, a bonus amount up to Rs 1,75,000 is also given to the claimant. For example, if an employee’s basic salary + DA for the last 12 months is Rs 15000, the insurance claim amount will be (35 x 15,000) + Rs 1,75,000 = Rs 7,00,000.
How to claim?
If an EPF subscriber dies untimely, his nominee or legal heir can claim for insurance cover. For this, the age of the nominee should be at least 18 years. If the amount is less than this then the guardian can claim on his behalf. While making a claim, documents like death certificate, succession certificate are required. If the claim is being made on behalf of the guardian of the minor, then guardianship certificate and bank details will have to be given.
Rules related to EDLI
- EPFO member gets the benefit of EDLI scheme only as long as he is in job. After leaving the job, his family/heir/nominee cannot claim it.
- If the EPFO member has been working continuously for 12 months, then after the death of the employee, the nominee will get a benefit of at least Rs 2.5 lakh.
- EDLI can be claimed in the event of illness, accident or natural death of the employee while at work.
- If there is no nomination under the EDLI scheme, the spouse, unmarried daughters and minor son/sons of the deceased employee are considered beneficiaries.
- To withdraw money from the PF account, the employer has to submit Form 5IF of insurance cover along with the form to be submitted. This is verified by the employer.