How many of us aware that EPF (Employee Provident Fund) offers an inbuilt Life Insurance of up to Rs.6,00,000? This scheme is called EDLI or Employee Deposit Linked Insurance. Let us discuss more about this.
Update:-Please refer my latest post on this issue “Now EPF offers Life Insurance of Rs.2.5 lakh to Rs.6 lakh!!“.
Many of us simply concentrate on EPF and EPS when it comes to monthly deduction towards the EPF. We concentrate on the interest rate on this EPF and when we get the pension from EPS. But we forget the Life Insurance facility provided by EPF.
The reason for such negligence is, earlier this life insurance was too small. But recently The Ministry of Labour & Employment revised this to a maximum of Rs.6,00,000. I feel this is a good amount as you will get it without DIRECTLY paying for this.
Features of EDLI or Employee Deposit Linked Insurance
- All employees who are the members of EPF are automatically eligible for EDLI.
- This Life Insurance coverage is irrespective of death occurred during working hours or non-working hours.
- It covers the death of an employee, irrespective of a cause of death.
- There are no exclusions under this plan.
- Coverage and premium will be purely based on your salary but not on age or gender.
- Earlier there was a condition that one must complete a year to be eligible for EDLI. Recently they removed such restrictions. Hence, you are covered from a first day itself.
- There is no maximum age set for this insurance.
Who will pay the premium for this EDLI or Employees Deposit Linked Insurance Scheme?
To understand about this, let us go deeper and see how you and the employer EPF contribution split. I tried to show the same in below image for your easy understanding.
From the above image, you noticed that the premium and management charges will be payable by your employer. But do note that the maximum limit set for this premium payment is 0.5% of Rs.15,000 (Whatever may be your actual EPF contribution from an employer or whatever may be your salary).
How much is the benefit or life insurance under EDLI or Employee Deposit Linked Insurance?
As per EPFO, salary means only Basic+DA. Also, for EDLI the maximum salary for contribution or for arriving at your insurance coverage, the maximum limit is Rs.15,000.
Currently, the maximum benefit of life insurance set under EDLI is Rs.6,00,000. It is based on your last 12 months average salary. It is calculated at 30 times of your last 12 months average salary. Along with that Rs.1,50,000 is also payable as a bonus.
Hence, under this scheme the maximum salary limit set as Rs.15,000, we can assume that the maximum ceiling of benefits under this scheme will be as below.
30 times of Rs.15,000=Rs.4,50,000+Bonus of Rs.1,50,000=Rs.6,00,000.
Who can claim the benefit in EDLI or Employee Deposit Linked Insurance?
This insurance exactly works like term insurance. Hence, after employee death, his nominee can claim the amount and below are a few points to consider.
- A nominee can claim the amount.
- In case there is no nomination, then the legal heir can claim the amount.
- If the nominee or legal heir is minor, then a guardian of minor nominee can claim the amount.
How to claim for EDLI or Employee Deposit Linked Insurance?
- You have to fill the forms like Form 20 (for EDLI), Form 10D/10C (for claiming the Provident Fund dues and Pension/Withdrawal Benefit as applicable).
- All details should be in BLOCK LETTERS.
- Provide bank details (better to attach a cancelled cheque copy for an accuracy of bank details).
- Attach death certificate of a deceased employee.
- Guardianship certificate (If the claim is on behalf of a minor family member/nominee/legal heir is by other than the natural guardian.)
- Succession certificate (in case of claim by the legal heir).
- In case the members were last employed under an establishment exempted under the EPF Scheme 1952, the employer of such establishment should furnish the PF details of last 12 months under the Certificate part and also send an attested copy of the Member’s Nomination Form.
- You have to send such filled application to the EPFO Commissioner through the employer.
- In case the company closed or they are not cooperating for claim, then you have to get claim form be attested by any one of following officials-Magistrate, A Gazetted Officer, Post/Sub-Post Master, President of the Village Panchayat, where there is not Union Board, Chairman/Secretary/Member of Municipal/District Local Board, MLA or MP, Member of CBT/Regional Committee EPF, Manager of the Bank in which the Bank Account is maintained or Head of any recognized educational institution.
- A claim must be settled with 30 days of such submission.
- However, if there is any fault in filling the form or processing, then you will receive the letter from EPFO for the same and that too within 30 days.
- If EPFO not settles the claim within 30 days, then EPFO Commissioner will be liable to pay the 12% per annum interest on such claim amount from the date of the set period for claim settlement.
The major motive to set EDLI or Employee Deposit Linked Insurance is to protect the life risk of an employee. Hence, if employers can go for group term insurance also. If employers opted for group term insurance to their employees, then they can opt out of EDLI or Employee Deposit Linked Insurance. However, it must be approved by EPFO and the benefit must be equal or more than the benefit available in EDLI.
Note-Now you can withdraw EPF without your employer signature. Read my latest post on the same “New EPF Withdrawal Forms-Withdraw without employer signature“