The Employees Deposit Linked Insurance Scheme (EDLI) is an insurance scheme that was launched by the Government in 1976. This scheme was launched with the objective of providing social security benefits to the employees of the private sector for whom such benefits were not commonly provided by the employer. Today, the EDLI scheme is managed and administered by the Employees Provident Fund Organisation (EPFO) and the scheme provides term life insurance cover on the life of the member employee.
Organisations that are eligible for EPF also become eligible for EDLI. Every month, the employer contributes to the EDLI scheme when a contribution to the EPF account is made. The EDLI charges in PF is as follows –
The employer can also opt for a group life insurance scheme on the life of its employees. In that case, the coverage under the group life insurance scheme should be equal to or more than that provided by the EDLI scheme. Moreover, the employer can opt-out of the EDLI scheme. However, if the group life insurance scheme is not chosen by the employer, the EDLI contribution limit can be enhanced. The employer can contribute up to Rs.15, 000 per month towards the EDLI scheme in the absence of a group life insurance scheme for employees.
Once the Employees Deposit Linked Insurance Scheme is applicable, it covers the risk of premature death. If the employee dies while he/she is a member of the EDLI scheme, a lump sum financial benefit is paid to the employee’s family to compensate them for the financial loss suffered.
EDLI has the following important features which you should know about –
The coverage, which is paid on the death of the employee under EDLI calculation –
30 * Average monthly salary drawn by the employee over the last 12 months preceding the date of death, subject to a maximum of Rs.15,000
Furthermore, a bonus of Rs.2.5 lakhs (increased from Rs.1.5 lakhs with effect from September 2020) is also paid with the coverage.
So, the total benefit, considering the salary is more than Rs.15, 000, would be as follows –
(30*15000) + 150,000 = Rs.7 lakhs
If, the salary is below Rs.15, 000, say Rs.10, 000, the benefit payable under EDLI insurance would be as follows –
(30*10000) + 250000 = Rs.5.5 lakhs
If the employee dies whilst being a member of EDLI, the scheme benefits would be payable to the nominee or legal heirs of the employee. To claim the benefit under the scheme, the following steps should be followed –
For employees to avail coverage under EDLI and be enrolled under the scheme, the following criteria would have to be fulfilled –
To make a claim, besides the specified forms, the following documents would have to be submitted by the nominee or the legal heir of the employee –
The Employees Deposit Linked Insurance Scheme offers various benefits to employees which are as follows –
The EDLI scheme is, therefore, an employee welfare measure promoted by the Government and the employers. The scheme boosts employee morale by providing insurance coverage to employees. So, if you are a salaried employee working in the private sector, find out the details of the EDLI scheme offered under the EPF Act and enjoy free insurance coverage offered by it.
Q1. Who can benefit from this scheme?
Benefits can be availed by the members of the family, legal heirs or nominees of the applicant.
Q2. Is there a minimum service period for availing EDLI?
There is no minimum service period for availing the benefits of EDLI.
Q3. How much bonus is applicable under the scheme?
Rs. 1.75 lakhs is applicable under the scheme.
Q4. When can I opt-out of this insurance?
You can opt-out of the scheme once you take up a higher-paying life insurance scheme for employees under Section 17 (2A).
Q5. Can the form 5 IF be filed online?
No. It has to be filed offline.