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Here's all you want to know about EDLI scheme under EPF

Here's all you want to know about EDLI scheme under EPF

Nominees or heirs of the deceased member can get a maximum benefit of Rs 7 lakh under the EDLI Scheme. Irrespective of the salary, the minimum insurance benefit under the scheme is Rs 2.50 lakh, if the employee has continuously worked for 12 months

What is EDLI scheme? All you need to know What is EDLI scheme? All you need to know

The Employees' Deposit Linked Insurance Scheme 1976 (EDLI Scheme) is an insurance scheme which provides life insurance benefits to all employees who are members of the government-backed  Employees' Provident Funds (EPF) Scheme, 1952. The EDLI Scheme is supported by a nominal contribution at 0.5% of monthly wages, upto the maximum wage limit of Rs 15,000 by the employers. Employees do not make any contribution for availing insurance cover under this Scheme. How big is the claim, who can claim the benefit under EDLI Scheme and how.

Here's all you need to know about the government-backed EDLI Scheme:

  • There is no need for employees to enroll separately for EDLI. Any employee who is a member of EPF scheme, automatically gets subscribed to the EDLI Scheme. EPF has three parts to it, apart from provident fund, part of employer's contributions go towards Employee Pension Scheme (EPS) and part of it towards EDLI.
  • The maximum benefit as per the EDLI cover is Rs 7 lakh. Minimum benefit, irrespective of the salary, is Rs 2.50 lakh.
  • The employer makes the contribution towards the scheme.
  • Insurance benefit under the EDLI Scheme is available to the eligible family members of the deceased member who has been in employment for a continuous period of over twelve months, irrespective of whether the member served the same employer or switched jobs during the twelve months preceding his or her death.
  • The EDLI scheme benefits can be availed by a nominee, family member or legal heir.

Insurance benefit under EDLI

Nominees or heirs of the deceased member can get a maximum benefit of Rs 7 lakh under the EDLI Scheme. Irrespective of the salary, the minimum insurance benefit under the scheme is Rs 2.50 lakh, if the employee has continuously worked for 12 months.

As per the recent amendment, the insurance benefit is calculated using the following formula:

Average monthly wages drawn during the preceding 12 months x 35 plus 50 per cent of the average PF balance during the last 12 months, subject to a cap of Rs 1,75,000; where, average wages means basic salary plus dearness allowance and monthly wages are capped at Rs 15,000.

Irrespective of the formula, the minimum benefit will not be less than Rs 2,50,000.

Let's understand with an example. Suppose Raghu was earning an average monthly wage worth Rs 18,000 in the 12 months preceding his death and the average PF balance in this period is Rs 2 lakh, the benefit in this case will be Rs 7 lakh (Rs 15,000 x 35 + Rs 1,75,000).

Who can claim insurance benefit?

The benefits under the scheme will be payable to the nominee mentioned by the employee. The nomination under the EPF scheme will be applicable for the EDLI scheme also. If no nomination is made, his spouse, unmarried daughters and minor sons will be beneficiaries.

The following family members are not eligible to claim the benefit:

  • Sons who have attained majority
  • Sons of a deceased son who have attained majority
  • Married daughters whose husbands are alive
  • Married daughters of a deceased son whose husbands are alive

How to claim insurance benefit?

In order to claim the insurance benefit by the nominee or beneficiary in case of the member's death, he or she has to fill the form 5 IF. The claim form should be attested by the employer. Attested copy of application form along with all supporting documents need to be submitted to commissioner. After verification of application form and supporting documents, the Commissioner will sanction the EDLI claim amount. The benefit amount will be directly credited to the beneficiary's account.

The claimant has to submit the given documents along with Form 51F:

  • Death certificate of the employee
  • Guardianship Certificate -- If the EDLI claim is being made on behalf of a minor family member or nominee, the legal guardian has to submit the guardianship certificate
  • Succession certificate -- In case a claim is being made by a legal heir of the employee
  • Bank account details in which the claim funds are to be deposited

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