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Uncertainties of life in the modern world have made getting adequate insurance cover imperative for every individual. This is especially important for private-sector employees who do not enjoy the same social security benefits as public sector employees. To extend the benefits of life insurance to private sector employees, the government has introduced the Employees Deposit Linked Insurance Scheme (EDLI) in 1976.
With effect from 28.04.2021, the EPFO has increased the maximum benefit to Rs.7 lakh for the registered nominees of the deceased member.
The Ministry had increased the minimum amount of benefit to Rs.2.5 lakh on Feb 2018 for two years. However, the EPFO has further decided to continue with the same minimum benefit of Rs.2.5 lakh with retrospective effect from 15th Feb 2020.
Also, with effect from 28.04.2021, the EPFO has extended the benefit to the nominees of the deceased member who have changed their establishment for employment within a period of 12 months preceding the month of their death.
Employees Deposit Linked Insurance Scheme or EDLI is an insurance cover provided by the EPFO (Employees Provident Fund Organisation) for private sector salaried employees. The registered nominee receives a lump-sum payment in the event of the death of the person insured, during the period of the service. EDLI applies to all organisations registered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. All such organisations must subscribe to this scheme and offer life insurance benefits to their employees. This scheme works in combination with EPF and EPS. The extent of the benefit is decided by the last drawn salary of the employee.
Here are the essential elements of EDLI, applied uniformly to all beneficiaries under the policy:
The registered nominee will receive a lump-sum payout in the event of the death of the insured person. If no nominee or beneficiary is registered, then the amount would be paid to the legal heir. With effect from 28.04.2021, the pay-out to be awarded will be calculated as under:
{Average Monthly Salary of the Employee for the last 12 months (capped at Rs.15,000/- p.m.) x 30 } + Bonus Amount (Rs.2,50,000/-)
Therefore, the maximum payout under EDLI is capped at Rs. 7,00,000/-.
To process the claim under EDLI, the following documents are to be submitted by the claimant: –
The process to be followed by the nominee or claimant to receive the amount under EDLI is as follows:
The employer makes the contribution to these schemes on behalf of the employees. The employee contribution is deducted from the salary before they credit the salary. Employees themselves need not make any direct payment to these schemes.
The contribution of employees is calculated as: –
The contribution of Employer is calculated as: –
The chief motive of the EDLI scheme is to offer financial security to the family members of the policyholder (deceased person). Family members mean spouse, unmarried daughter or male child up to 25 years of age. The employee cannot choose which of the three schemes, EPF, EPS or EDLI, that he/she wants to opt for, but they are transferable with any change in the job. The new employer will continue to make payment in the existing account only.