EPFO raises death insurance relief to Rs.7 lakh to the family of employees under the EDLI scheme

The Employees’ Deposit Linked Insurance Scheme (EDLI) is an insurance cover provided by the Employees’ Provident Fund Organization (EPFO). The government of India has introduced the Employees Deposit Linked Insurance Scheme (EDLI) in 1976 to help the employees particularly keeping in mind the private-sector employees who may not enjoy any social security benefits as normally public sector employees enjoy. EDLI applies to all organisations registered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. Any organisation that has more than 20 employees needs to register for EPF. Therefore, any employee who has an EPF account automatically becomes eligible for the EDLI scheme and his/her nominee is eligible for insured amount in addition to EPF/EPS claim.

The employer must subscribe to EDLI scheme and offer life insurance benefits to their employees in combination with EPF and EPS. The contribution of an employer must be 0.5% of the basic salary or a maximum of Rs. 75 per employee per month. There is no need for the employees to contribute to EDLI. Their contribution is required only for EPF. However, an employer can opt for another group insurance scheme in lieu of EDLI scheme, but the benefits offered must be equal to or more than those offered under EDLI.

EDLI applies to all employees with a basic salary under Rs. 15,000/- per month. If the basic salary goes above Rs. 15,000 per month, the maximum benefit is capped at Rs.6 lakh. With effect from 28.04.2021, the EPFO has increased this amount to the maximum benefit to Rs.7 lakh with effect from 28.04.2021. The nominee of the deceased employee will be given the insured amount if he/she dies while in employment continuous period of 12 months preceding the month in which he/she died, irrespective of change of establishment during the said period. If no nominee or beneficiary is registered, then the amount would be paid to the legal heir. This life insurance coverage is available for off working hours also. An Employee can be anywhere, it is not mandatory that the employee should be at the workplace at the time of death. Death can be natural or accidental; it covers the death of an employee irrespective of the cause.

The insurance amount that the heirs of a deceased member get is calculated as 30 times the average monthly salary in the last 12 months of employment. For all calculations under EDLI, the dearness allowance must be added to the basic salary. The pay-out to be awarded will be calculated as under:

[Average monthly salary including DA of the Employee for the last 12 months (capped at Rs.15000/- p.m.) × 30] + Bonus Amount of Rs.2.50 lakh

In the other words, if average salary including DA is capped at Rs 15000, the 30 times salary comes to Rs.45000 plus Rs.250000 means Rs.700000

Therefore the maximum payout under EDLI is capped at Rs. 7 lakh.

If, the salary is below Rs.15, 000, say Rs.12, 000, the benefit payable under EDLI insurance would be as follows –

(30×12000) + 250000 = Rs.6.10 lakhs

The minimum assurance payment payable under paragraph 22(3) of EDLI scheme is fixed at Rs.2.50 lakh.

Disclaimer: Contents and calculations in this article are for the reader’s knowledge purpose only and not for any claim reference. For the correct details, the claimant may contact the employer of the deceased or refer to circular/public notice reference from the official site of EPF.