EPFO's insurance scheme explained: Here's how members can file EDLI claims, avail up to ₹7 lakh benefit at no extra cost

The Employees Provident Fund Organisation (EPFO), provides insurance cover for salaried individuals in the private sector under its Employees Deposit Linked Insurance (EDLI) scheme, which functions in compliment to the Employees' Provident Fund and Employees' Pension Scheme (EPF and EPS, respectively).

It provides families with a lumpsum payout in case of the EPF subscriber's death during the period of service and is calculated on basis of the insured individual's last drawn salary.

Today, we explain how you can avail the benefit with no additional charges, and file claims with the retirement organisation:

How to enroll for EDLI scheme?

Eligible EPF members are auto enrolled in the EDLI scheme at no additional cost if more than 20 employees from a firm opt for it. Notably, even if you change jobs, the account remains the same and is transferred from employer to employer, similar to EPF and EPS.

The corpus comprises minimum employer contribution of 0.5% of the basic salary or a maximum of ₹75 per month for each employee. Further, if there is no other group insurance scheme, the maximum contribution is capped at ₹15,000 per month.

Further, the EDLI contributions are subject to similar tax benefits as monthly EPF contributions.

What is the payout under EDLI scheme?

EPF subscribers can claim up to ₹7 lakh benefit from the EDLI scheme, with minimum assurance of ₹2 lakh, in cases where the deceased was in continuous employment for at least 12 months prior to their death. The insurance payout at time of demise if exempt from tax for your nominee(s) / legal heir.

Further, minimum payout provision for nominee(s) in case a subscriber dies before completing one year of continuous service is ₹50,000 regardless of the PF account balance.

Notably, for contract / casual workers, the condition of continuous employment in only one establishment has been liberalised, with benefit being made available to families of even those employees who may have changed jobs in the last 12 months preceding their demise.

The benefit is directly credited to bank account of the nominee or family (legal heir). Family here includes spouse, unmarried daughters, and sons up to 25 years of age. It is thus important to add nomination details through the EPFO website and make appropriate updates in case of marriage, childbirth or changes in nominee details.

How is EDLI payout calculated?

According to Clear Tax, the nominee / legal heir receives a lumpsum payment, which is calculated as follows:

• 30 days x average monthly salary of the employee for the last 12 months (capped at ₹15,000) + additional bonus of ₹2.5 lakh = ₹7 lakh (total payout).
• Breakdown: ₹4,50,000 (15,000 x 30 days) + ₹2,50,000 (bonus) = ₹7 lakh (total payout).

Please note that for purpose of calculation, dearness allowance (DA) is added to the basic salary.

Here's how to claim EDLI — Stepwise guide

• The claimant must fill and submit the EDLI Form 5 IF 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 Postmaster 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).
• Once a claim has been made, the EPF commissioner must settle it within 30 days from date of receipt.
• In case of delay, the claimant is entitled to interest at 12% per annum till the date of actual disbursal.