Did you know that the Employees’ Provident Fund Organisation (EPFO) operates three schemes—the EPF Scheme, 1952; Pension Scheme, 1995 (EPS); and the Employees’ Deposit-Linked Insurance (EDLI) scheme? EDLI scheme is available to all employees who contribute to the provident fund. The scheme provides death benefits of Rs 7 lakh to nominees of employees in case of untimely demise. While in the case of EPS and EPF schemes, employees have to make contributions, for the EDLI scheme, the employee doesn’t have to make any contributions. Only the employer contributes to the scheme.
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Amjad Khan, Director of Employee Benefits Practice and International Business, Anand Rathi Insurance Brokers, said, “It is one of the benefits provided by the EPFO as an insurance protection to the family members of any employee in case of his unfortunate death. This was launched in 1976, and all organisations covered under the Employee Provident Fund Act 1952 get enrolled for EDLI benefits by default. However, you can opt out of the scheme if you want to take a higher-paying life insurance scheme.”
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EDLI Contribution: There is a contribution from the employee and the employer in the case of the EPF benefit. However, under the EDLI scheme, the contribution only comes from the employer at 0.5% of Basic + DA, limited to a maximum of Rs 75. Further, there is no restriction on companies you work with. However, the scheme kicks in only if you have continuously worked for one year. You have to be an active member of the EPF.
EDLI Calculation: The calculation is made by taking 35 times the average monthly income of an employee in the last 12 months of his employment. Khan said, “The maximum average monthly salary is capped at Rs. 15,000. Thus, 35 times the maximum threshold is 35 x Rs 15,000 = Rs 5.25 lakh. The organisation adds a bonus amount of up to Rs 1.75 lakh to make the total payable under this scheme to Rs 7 lakh.”
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Documents required for the claim process: In the case of untimely demise, the nominees must claim the PF, pension withdrawal, and EDLI claims via composite claim form. The nominee must have the employee’s death certificate or succession certificate. Besides, a copy of a cancelled bank account cheque in which payment is opted.
