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written by | May 2, 2022

Employees Deposit Linked Insurance (EDLI) Scheme

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Employees deposit linked insurance (EDLI) scheme is an insurance plan provided through Employees Provident Fund Organisation (EPFO) for private-sector employees who do not have the financial and social security offered to public sector workers. To extend the benefits of life insurance to those employed in those working in private companies, governments launched EDLI in 1976.

EDLI scheme is a valid option for all registered organisations as part of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. The nominee of EPFO is entitled to an unspecified amount that can be as high as ₹6 lakhs in case of the employee's death in the course of their service. Now, let's check out the EDLI benefits, eligibility and other important factors.

Did You Know?

According to the provisions of the EDLI scheme, the employer contribution must not exceed 0.5% or ₹75 per employee per calendar month. The maximum contribution to an employer's group insurance plan is ₹15,000 per month.

Also Read: Everything You Need to Know about EPF Challan

EDLI Scheme

The nominee registered with the insurance company will get the payment as a lump sum if the person with insurance dies. If no beneficiary or nominee registers, the money gets distributed to the legal inheritor.

Beginning on 28.04.2021, the pay-out amount gets distributed and is calculated according to:

Employee's average monthly salary for last 12months (₹ 10,000 per month) x 30 + bonus amount (₹2,50,000). Hence, the maximum payable amount as per EDLI's calculation is capped at ₹5,50,000.

EDLI Cover

In this uncertainty-filled world, insurance has become essential for everyone, especially those who feed their families. Employers within the private industry might not be eligible for benefits from social security that employees employed in the government or public sector get.

The EDLI scheme was created in 1976 to make sure that families of employees in the private sector do not suffer financial loss upon the employee's death in the course of their employment.

Under the EDLI scheme, if an employee died in employment and was employed for a minimum of 12 months following the death date, the beneficiary will receive an assurance benefit paid in one lump sum.

It is possible to change places of employment throughout the employment's duration. The insurance benefit is contingent on the employee's salary, and it ranges from ₹2.5 lakhs (minimum) and ₹7 lakhs (maximum). Up until recently, the maximum insurance benefit of the EDLI scheme was set at ₹6 lakhs. The limit was raised to ₹ 7 lakhs following the publication of a gazette notice on 28th April 2021 by EPFO and the Ministry of Labour due to the Covid-19 pandemic.

Eligibility Criteria

The following individuals are eligible to claim coverage under insurance as part of the EDLI scheme:

  • Family members are nominated under the EPF Scheme.
  • Legal succession is the only option if family members are absent and without any nominees.
  • Guardian of minor family members/nominees/legal heirs.

Who isn't eligible to receive insurance benefits? 

A person who is the nominee will directly receive the benefits. If there is no nominated spouse, minor daughters or sons (unmarried) can be eligible for benefits.

But, those who are below cannot claim benefits:

  • A son or daughter of those who have reached the age of 18.
  • The son of the deceased father, who is now the majority.
  • The daughter of the insured one whose husband has passed away.
  • The daughter of a deceased son.

 EDLI Scheme Specifications

  • EDLI applies to every employee who earns an annual salary of below ₹15,000 each month. If the salary is over ₹15,000 per month for a full year, the amount is limited to ₹6 lakhs.
  • There is no reason for personnel to contribute to EDLI. The contribution they make is only necessary to fund EPF.
  • There is a bonus of ₹1,50,000 available in the EDLI.
  • Every company with over 20 workers has to sign up for EPF. So, every employee with an EPF automatic account qualifies to join EPF's EDLI scheme.
  • There are no restrictions on the coverage of insurance offered by EDLI. The insured has security throughout the day across the globe.
  • Employers can choose to use another insurance policy for group members. However, the benefits provided must be equivalent to or greater than the benefits offered inside the EDLI.
  • In accordance with the EDLI rules, the contribution from an employer is required to be 0.5% of the base salary, or the highest of ₹75 per employee every month. If there isn't a group insurance plan, the maximum contribution is limited to ₹15,000 per month.
  • In all calculations you make under EDLI, the dearness permission must contain the base salary.

EDLI Scheme Benefits

Employees covered by the different schemes of benefits of the act contain the following benefits.

  1. Employees can take advance payments or cash out.
  2. The PF amount of the deceased member's PF is due to the nominees or heirs.
  3. The employer does not just contribute to the PF but also contributes the required contributions to the employee's pension plan, which the employee could use after retirement.
  4. In the EDLI scheme, employees get proper insurance to receive the lump sum benefit if they die while working.
  5. Tax deduction in the Income Tax Act enables tax-free returns for employees.
  6. Employees get particular benefits in an additional income stream to their savings, in an interest rate.
  7. You can transfer the PF account when a member moves from one company to another, provided that the EPF scheme is in place.

Also Read: Employees' Provident Fund Organisation - EPFO Login Portal & EPFO Latest News

EDLI Claim

To complete the EDLI claim, the following documents need supplying from the applicant: 

  • Finish form 5 in the correct manner.
  • The death certificate of the person with insurance.
  • Succession certificate if a legal heir files for the claim.
  • Guardianship certificates if you submit the claim on behalf of minors by someone, not the guardian.
  • Copy of the cancelled cheque for an account from the payment is due.
  • The claimant may also file the form 20 along with form 10C/D for all advantages offered by the 3 schemes, i.e., EPS, EPF and EDLI.
  • Additional documents need submissions before the time of processing the claim.

EDLI Claim Procedure

The nominee can file the EDLI claim by giving away EDLI form 5 at the local EPF commission's offices. Also, we suggest that the person submitting the claim submit form 20 and form 10C/D to avail of all advantages under the EPS or EPF schemes. You must file these forms along with any other documents required:

  • To initiate a claim under the rules of the EDLI scheme, the nominee needs to provide the death document of an employee. 
  • A succession certificate is crucial if the claimant does not have the initial nominee's signature. 
  • A guardianship certificate is necessary when you place the claim on behalf of the minor. 
  • Also, the bank information for the account where the assured amount will be transferred and the completed form 5 when attested by the bank manager or magistrate, MP, MLA or sub-postmaster is needed.  

After you complete and hand over all the documents, the EPF commissioner accepts the claim to pay the claim within 30 days of the date of receipt in writing of the demand. In case the claimant does not settle, they receive the interest at 12% p.a. up to the actual disbursement date.

Conclusion

The primary purpose behind the insurance scheme for employees linked to deposits is to provide financial protection to the relatives of a policyholder who is a reduced person. Family individuals should be those who have not married daughters or sons until the age of 25 or spouse. You can transfer the schemes to new job changes, and the new employer must pay the employee's current account.
Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: Is EDLI mandatory?

Ans:

EDLI is compulsory for all registered organisations under the Employees' Provident Fund & Miscellaneous Provisions Act 1952.

Q: What is the process to claim EDLI after death?

Ans:

In the case of an EPF member's death, an EDLI claim for provident funds refund, pension, and EDLI can either be made by filling out and submitting the composite claim forms in death cases to the regional EPFO office or online via the EPFO portal.

Q: What is the EDLI eligibility?

Ans:

EPF registration is necessary for any organisation with more than 20 employees. Any employee with an EPF account automatically qualifies for the EDLI program. No exceptions exist to the insurance coverage offered by EDLI.

Q: What are the EDLI scheme benefits?

Ans:

The biggest EDLI death benefit is that a lump-sum payment is made to the registered nominee if the insured dies during the service period.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.