Employed individuals, particularly those with responsibilities, often prioritise ensuring their family’s financial stability in the event of their sudden demise.
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To address this concern, the Employees’ Provident Fund Organisation (EPFO) has established the Employee Deposit Linked Insurance Scheme (EDLI), offering free insurance coverage to employees contributing to the Employees’ Provident Fund (EPF). Under this scheme, a nominee can receive up to 7 lakhs in the event of the employee’s sudden death.
The EDLI serves as a complimentary insurance scheme for employees, with nominated beneficiaries entitled to claim up to Rs 7 lakh in financial assistance. In the absence of a designated nominee, the amount is distributed equally among the employee’s legal heirs. Coverage under the scheme extends to instances of illness, accidents, or natural death of the employee.
The benefit amount under the EDLI scheme is determined based on the employee’s salary over the preceding 12 months. In the event of the employee’s demise, the nominee becomes eligible to receive 30 times the average salary of the last 12 months, supplemented by a 20 per cent bonus.
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Notably, of the monthly PF deduction, 8.3 per cent is allocated to the Employee Pension Scheme (EPS), 3.67 per cent to the EPF and 0.5 per cent to the EDLI scheme.
Beneficiaries can claim a minimum of Rs 2.5 lakh and a maximum of Rs 7 lakh from the account holder’s insurance coverage. To qualify for the minimum benefit amount, individuals must have maintained continuous employment for at least 12 months. Consequently, discontinuation of employment results in forfeiture of insurance benefits.
It is important to distinguish the EDLI scheme from PF insurance, which is only payable if the account holder passes away during their employment, before retirement. Notably, the location of work, whether in the office or on vacation, does not impact eligibility for PF insurance benefits.
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The EDLI scheme serves as a vital safety net for employees and their families, offering financial protection in the face of unforeseen circumstances. Understanding the scheme’s provisions and eligibility criteria is essential for individuals seeking to safeguard their loved one’s financial future.
