In the year 1976, the Indian Government launched a new insurance cover provided by the Employee’s Provident Fund Organization (EPFO), known as Employees Deposit Linked Insurance Scheme (EDLI). Life by itself is a mystery and very unpredictable. And this scenario has indispensably given rise to individuals enrolling for an insurance policy to make sure that their loved ones are secured. But unlike the public sector workforce, private sector employees are not entitled to many privileges.
Hence, the significant objective of EDLI is to provide social security and expand life insurance benefits to the employees of the private sector to facilitate and financially support the dependents in times of any uncertainty that may arise. Under this scheme, the nominee of the employee is entitled to a lump-sum amount of up to ₹ 6 lakhs in case of the death of the EDLI member during his service period.
The EDLI scheme works in combination with EPF and EPS, thus making it mandatory for any organization registered under the Employee Provident Fund and Miscellaneous Provisions Act, 1952, to enroll for Employees Deposit Linked Insurance Scheme. The extent of benefit to this scheme is decided on the basis of the employee’s last drawn salary. The EDLI scheme is also transferable, i.e., in case the employee shifts to a new job, his EDLI account can be transferred too, and the employer can continue contributing to the employee’s existing account.
The year 2020 has become challenging for every individual. The pandemic has created such a precarious atmosphere worldwide that each one is worried and confused about the new normal that is remote working and how he can secure things for himself and the family. In this crisis, the Employees’ Provident Fund Organization has come up with an extended benefit under EDLI.
In the month of September 2020, The Central Board of Trustees of EPFO approved an amendment of paragraph 22(3) of the EDLI scheme to enhance the maximum assurance benefit to ₹7 lakhs from the present benefit of ₹6 lakhs, mentioned the ministry of labour and employment in a statement. (Although the update is almost accepted, it’s still a matter of discussion)
Some of the notable and salient features of Employees Deposit Linked Insurance Scheme are as follows:
It’s simplified. There are only two criteria to fulfill in order to enroll and avail coverage under EDLI. Here they are:
The EDLI scheme doesn’t require any contribution from the employee. But it’s the employer who is the contributor. This contribution is made along with the EPF, based on the Basic salary + Dearness allowance. The bifurcation is shown below:
The insurance amount is calculated as 30 times the average monthly salary in the last 12 months of employment. Which can be formulated as,
Average Monthly Salary x 30 + Bonus Amount
– The average salary of the insured may be capped up to 15,000 per month.
– The bonus amount will be 1,50,000
– Therefore, amounting 6 lakhs as the maximum coverage to be paid under the EDLI scheme.
The contribution is made during the payroll, depending on the organization’s policy.
To claim the insurance amount, the claimant is required to submit the following documents.
As mentioned earlier, the nominee mentioned in the document has to claim the EDLI. In case there if the nominee is not specified, the legal heir or one of the family members can put forward the claim. The insured member, being an active EPF member at the time of uncertainty, is mandatory.
The steps in claiming the insured amount by the nominee are as follows:
If at all, getting the Form certified and approved by the employer isn’t possible, along with Form 5, any of the following can be attested-
– Local MLA or MP
– Gazetted Officer
– Bank Manager (in the branch where the insured account was maintained)
– Postmaster or Sub Poster
– President of Village Panchayat
– Member of CBT or Regional Committee of EPF
Surely there are. As mentioned in the features, if an employer wishes to choose any other group insurance scheme apart from the EDLI, he can. But, under the condition that the benefits covered by the scheme chosen should be equivalent to or more than that of the EDLI. In recent days, many group life insurance terms have come up offering better benefits to the employees. And therefore, many private employers and employees opt for them. Some of these alternatives include:
In the present scenario, it’s mandatory that the employers fulfill the social responsibility towards their stakeholders. And the employees are also called the first customers; hence, making them feel secure is a major issue. The EDLI scheme provides an opportunity to secure the employees to a certain extent, and it offers benefits that are worth opting for. Therefore, It will be a wiser choice to subscribe for the scheme and avail the benefit, which is disbursed in a maximum of 30 days. Because it benefits not just the insured but also the family of the EDLI member.