Did You Know That Your PF Comes With Up to Rs 6 Lakh Life Insurance Coverage?
As a salaried employee of a company, you may be aware of some benefits like provident fund (EPF), health insurance, transport and entertainment allowances etc that you receive from your employer but many do not know that they are covered for life insurance under the Employees' Deposit Linked Insurance (EDLI) scheme of 1976 within EPF.What is EDLI?
As per the EPFO's (Employees' Provident Fund Organisation) official website, an "Assurance benefit" which "means a payment linked to the average balance in the Provident Fund Account of an employee, payable to a person belonging to his family or otherwise entitled to it in the event of death of the employee while being a member of the Fund" shall be given to the employees of all factories and other establishments that come under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. This assured benefit is provided under the Employees' Deposit Linked Insurance Amendment Scheme or EDLI. In simpler words, if your employer has enrolled you in the EPF, you be getting the benefits of EDLI.
However, if your employer has opted to provide you insurance advantage through other schemes, they are exempt from making contributions towards EDLI.
The best part about the scheme is that unlike EPF, only the employer has to make contributions towards the scheme and no deductions are to be made from one's salary.
Who is eligible for EDLI?
- The age limitations and the type of business of the employer criteria for EDLI are the same as EPF.
- Employees (both retired and working) of all factories and other establishments under the EPF scheme are liable to it except tea factories in the State of Assam.
- There is no need for a salaried employee to separately apply for it.
Benefits and sum assured under EDLI
- The life insurance coverage is based on an employee's basic salary (along with dearness allowance) and not their tenure of employment. This means that you are liable for the coverage from day 1 of your employment.
- After the amendment to the scheme in February 2018, the minimum life insurance coverage is extended to Rs 2.5 lakh and the maximum cover one can receive is Rs 6 lakh.
- The nominations for the insurance will be the same as EPF, you do not need to fill a separate form.
- The EDLI scheme covers the death of the employee irrespective of whether it took place during the working hours or not and irrespective of the cause of death.
Contribution towards EDLI
You already know that you as well as your employee contributes 12 percent of your basic salary (plus DA, if any) towards your EPF. While the whole of your contribution goes towards it, the employer's contribution is distributed as follows:
|% of Contribution||Scheme|
|8.33%||Employees' Pension Scheme|
|3.67%||Employees' Provident Fund|
|0.51%||Employees' Deposit Linked Insurance premium|
|0.85%||EPF admin charges|
|0.01%||EDLI admin charges|
How is the EDLI sum assured calculated?
For the calculation, the average of basic salary+ DA drawn by the employee for 12 months preceding the month in which the employee dies is considered as the monthly salary (subject to a maximum of Rs 15,000). This amount is then multiplied by 30 and added to 50 percent of the average balance in the account of the deceased's PF during the preceding 12 months or during the period of his membership, whichever is less.
Suppose an employee's average basic salary+DA at the time of death is Rs 10,000 for the last 12 months and that is multiplied by 30, it would be Rs 3 lakh. Now assuming that the employee has accumulated Rs 50,000 in his/her PF account in the 12 months preceding his/her death, 50 percent of it, that is, Rs 25,000 will be added to it. So the total amount liable to be received by the employee's nominees is Rs 3,25,000.
How can the nominees claim insurance sum under the EDLI scheme?
The nominees mentioned by the employee for the EPF scheme will need to submit a written application along with Form 20 and 10D/C to the commissioner through the employer as the commissioner may specify along with required documents like death certificate. The benefit amount shall be paid to the beneficiaries within 30 from the date of its receipt.
Mention the correct bank details on the application. In case of discrepancies in the claim made, it will be informed and communicated to the applicant within 30 days from the date of receipt of the application. If the commissioner fails to settle the claim within 30 days, the commissioner will be liable to pay penal interest at the rate of 12 percent per annum from his/her salary.