EDLI – Employees Deposit Linked Insurance Scheme

The Employees Deposit Linked Insurance Scheme (EDLI) is an insurance scheme that was launched by the Government in 1976. This scheme was launched with the objective of providing social security benefits to the employees of the private sector for whom such benefits were not commonly provided by the employer. Today, the EDLI scheme is managed and administered by the Employees Provident Fund Organisation (EPFO) and the scheme provides term life insurance cover on the life of the member employee.

How does the EDLI scheme work?

Organisations that are eligible for EPF also become eligible for EDLI. Every month, the employer contributes to the EDLI scheme when a contribution to the EPF account is made. The EDLI charges in PF is as follows –

• Employee’s contribution – 12% of the basic salary + Dearness Allowance towards the EPF Account
• Employer’s contribution – 12% of the employee’s basic salary + dearness allowance which is apportioned as follows –

• 3.67% to the EPF Account
• 8.33%, subject to a maximum of Rs.1250, to the EPS (Employees’ Pension Scheme)
• 0.50%, subject to a maximum of Rs.75, to the EDLI Account

The employer can also opt for a group life insurance scheme on the life of its employees. In that case, the coverage under the group life insurance scheme should be equal to or more than that provided by the EDLI scheme. Moreover, the employer can opt-out of the EDLI scheme. However, if the group life insurance scheme is not chosen by the employer, the EDLI contribution limit can be enhanced. The employer can contribute up to Rs.15, 000 per month towards the EDLI scheme in the absence of a group life insurance scheme for employees.

Once the Employees Deposit Linked Insurance Scheme is applicable, it covers the risk of premature death. If the employee dies while he/she is a member of the EDLI scheme, a lump sum financial benefit is paid to the employee’s family to compensate them for the financial loss suffered.

Features of Employees Deposit Linked Insurance Scheme

EDLI has the following important features which you should know about – 

• EDLI contributions are made by the employer, not the employee. The scheme is, therefore, free for all employees
• The scheme is a part of the Employees Provident Fund and so it covers all employees who have an EPF account
• The coverage under the EDLI scheme is offered for the premature death of the insured employee. Death anytime and anywhere would be covered.

Benefit paid by the EDLI scheme

The coverage, which is paid on the death of the employee under EDLI calculation –

30 * Average monthly salary drawn by the employee over the last 12 months preceding the date of death, subject to a maximum of Rs.15,000

Furthermore, a bonus of Rs.2.5 lakhs (increased from Rs.1.5 lakhs with effect from September 2020) is also paid with the coverage.

So, the total benefit, considering the salary is more than Rs.15, 000, would be as follows –

(30*15000) + 150,000 = Rs.7 lakhs

If, the salary is below Rs.15, 000, say Rs.10, 000, the benefit payable under EDLI insurance would be as follows –

(30*10000) + 250000 = Rs.5.5 lakhs

How to make a claim under EDLI?

If the employee dies whilst being a member of EDLI, the scheme benefits would be payable to the nominee or legal heirs of the employee. To claim the benefit under the scheme, the following steps should be followed –

• The claimee/claimant should fill up and submit Form 5 IF. 
• The form should be signed as well as certified by the employer stating that the employee was an active member of the EPF scheme. If, however, there is no employer or if the employer is not available, the form needs to be attested by authorized individuals who can be any of the following –

• The local MLA or MP
• Bank manager where the employee’s bank account has been maintained
• Magistrate
• A gazetted officer
• A post-master or sub-postmaster
• Member of EPF, CBT or any regional committee

• Form 20 to withdraw the employee’s EPF, Form 10C/D for claiming benefits from all the employee benefit schemes and other documents should be submitted to the regional EPF Commissioners Office
• The submitted documents would be verified by the EPF commissioner and the claim would be paid within 30 days. 
• If the claim is delayed, interest would be payable on the delayed claim. The interest would be calculated @12% per annum for each day of delay till the date of actual payment of the claim.

EDLI Scheme Eligibility

For employees to avail coverage under EDLI and be enrolled under the scheme, the following criteria would have to be fulfilled –

• Employees whose basic salary is up to Rs.15, 000 can subscribe to this scheme. if the salary of the employee is more than Rs.15, 000, the maximum benefit paid by the cover would be limited to Rs.6 lakhs
• Organisations having more than 20 employees should opt for the EDLI scheme

Documents required for EDLI claim

To make a claim, besides the specified forms, the following documents would have to be submitted by the nominee or the legal heir of the employee –

• Death certificate of the employee
• Succession certificate if the legal heir is making the claim
• Guardianship certificate if the claim is being made on behalf of a minor by an individual who is not the natural guardian of the minor
• Copy of the cancelled cheque of the bank account where the claim should be credited 

Benefits of EDLI insurance

The Employees Deposit Linked Insurance Scheme offers various benefits to employees which are as follows –

• The EDLI scheme provides free insurance cover to employees if they die during the term of active service
• The employer’s contribution is minimal and yet the benefit payable under the scheme is decent enough to provide financial assistance to the deceased employee’s family
• There are no exclusions under the scheme and every employee is covered in a uniform manner
• Even if the employee dies internationally, the scheme would pay the death benefit to the employee’s family

The EDLI scheme is, therefore, an employee welfare measure promoted by the Government and employers. The scheme boosts employee morale by providing insurance coverage to employees. So, if you are a salaried employee working in the private sector, find out the details of the EDLI scheme offered under the EPF Act and enjoy the free insurance coverage offered by it.