EPFO: What is EDLI? Employees Deposit Linked Insurance Scheme, explained

The Employees Deposit Linked Insurance Scheme aka EDLI is an insurance cover provided by the Employees Provident Fund Organisation (EPFO) for salaried individuals hired in the private sector. It works in combination with the EPF (Employees' Provident Fund) and EPS (Employees' Pension Scheme).

Under the scheme, the registered employee's family receives a lump sum payout from the retirement fund body in case of death of the subscriber during the period of service. The extent of the payout is determined by the insured employee's last drawn salary.

Employees Deposit Linked Insurance Scheme: Key highlights

• Minimum assurance benefit of ₹25 lakh, if deceased member was in continuous employment for 12 months prior to his/her death.

• To benefit families of contractual/ casual workers, the condition of continuous employment in only one establishment has been liberalized, with benefit being made available to families of even those employees who may have changed jobs in the last 12 months preceding his death.
• Auto-enrollment of PF members in EDLI Scheme.
• Benefit directly credited to bank account of nominee or legal heir.

Who is eligible for EDLI scheme?

• Employees who basic salary is up to ₹15,000.
• In cases where the employee's salary exceeds ₹15,000, the maximum benefit paid under the EDLI will be ₹7 lakh.

How does EDLI scheme work?

The employee's organisation should have more than 20 employees to opt for the EDLI scheme. Employer contribution has to be 0.5% of the basic salary or a maximum of ₹75 per month for each employee. If there is no other group insurance scheme, the maximum contribution is capped at ₹15,000 per month.

When calculating EDLI payout, the dearness allowance (DA) component is added to the basic salary.

Family for this scheme includes spouse, unmarried daughters, and sons up to 25 years of age.

Even if an employee changes jobs, the account remains the same and is transferred from employer to employer, similar to EPF and EPS.

Once a claim has been made, the EPF commissioner must settle it within 30 days from date of receipt. Otherwise, the claimant is entitled to interest @12% p.a. till the date of actual disbursal.

How is EDLI payout calculated?

According to Clear Tax, the nominee receives a lump sum payment in case of the insured subscriber's death. If there is no registered nominee, the amount is paid to the legal heir.

The EDLI payout is calculated as follows, it added:

• 30 days x Average monthly salary of the employee for the last 12 months (capped at ₹15,000).
• Plus additional bonus of ₹2.5 lakh
• This brings the total payout to ₹7 lakh. Breakdown: ₹4,50,000 (15,000x30 days) + ₹2,50,000 (Bonus)

Steps to claim EDLI

• Fill and submit the EDLI Form 5 IF.
• This has to be submitted by the claimant with signature and certification of the employer.
• If there is no employer or the signature of the employer cannot be obtained, the form must be attested by either a bank manager (in whose branch the account was maintained), local MP or MLA, a Gazetted Officer, a Magistrate, a Member / Chairman / Secretary of Local Municipal Board, a Post Master or Sub-Postmaster, a Member of the regional committee of EPF or CBT.
• The claimant must submit all the documents along with the completed form to the regional EPF Commissioner’s Office for processing of the claim.
• The claimant can also submit Form 20 (for EPF withdrawal claim) as well as Form 10C /10D to claim all the benefits under the three schemes, EPF, EPS and EDLI).

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