Now EPF offers Life Insurance of Rs.2.5 lakh to Rs.6 lakh!! Earlier the limit of minimum insurance benefit was Rs.1.5 lakh and the maximum was Rs.6 lakh. Many of the salaried unaware this part that their EPF also offers insurance coverage of up to Rs.6 lakh.
Earlier I wrote a post when EPFO increased the maximum limit from the existing Rs.3.6 lakh to Rs.6 lakh (Refer the post “Do you know EPF offers up to Rs.6 lakh of Life Insurance (EDLI)?“.
Now as I said above, EPFO increased the minimum limit also from the existing Rs.1.5 lakh to Rs.2.5 lakh.
This Life Insurance which offered by EPFO is called EDLI (Employees’ Deposit Linked Insurance Scheme).
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 the first day itself.
- There is no maximum age set for this insurance.
- You no need to add nominee separately. Your EPF nomination itself considered for this scheme.
Who will pay the premium for 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).
Note:-Salary for this purpose is Basic+DA only.
EPF offers Life Insurance of Rs.2.5 lakh to Rs.6 lakh
Under new changes, now EPF offers Life Insurance of Rs.2.5 lakh to Rs.6 lakh. As I pointed above, the employee will not contribute to EDLI. Only your employer will contribute to it. It is 0.5% of Rs.15,000 or Rs.75 per month to the maximum (based on your actual Basic+DA). The maximum amount payable by the employer is Rs.75. Refer the below image in that regard of notification.
How is EDLI calculated?
The average monthly salary (Basic+DA) drawn (subject to a maximum of Rs 15,000), during the last 12 months preceding the month in which the employee dies, is first multiplied by 30 times. This is added to 50% of the average balance in the account of the deceased in the provident fund during the preceding 12 months or during the period of his membership, whichever is less.
The minimum payable will now be Rs 2.5 lakh while the maximum will be Rs 6 lakh.
Let us assume that Mr.A’s salary (Basic+DA) at the time of death is Rs.10,000. Then assume his last 12 months average salary was Rs.10,000. Then we have to multiply this by 30. This will be Rs.3,00,000.
Now we have to add 50% of the average balance in the account of Mr.A during the preceding 12 months. Assume his EPF balance of last 12 months is Rs.1 lakh. Then 50% of this is Rs.50,000.
So in total, he will receive Rs.3,00,000+Rs.50,000=Rs.3,50,000.
Hope this is the good news for those who are the member of EPF.