Do you know about EPF Life Insurance of Rs. 7 Lakh? How many of us aware that EPF (Employee Provident Fund) offers an inbuilt Life Insurance of Rs.2.5 lakh to Rs.7 Lakh? This scheme is called EDLI or Employee Deposit Linked Insurance.
Earlier the maximum ceiling was Rs.6 lakh. However, Government increased the maximum limit to Rs.7 lakh with effect from 28th April 2021.
Features of EDLI Scheme 2021
- All employees who are members of EPF are automatically eligible for EDLI.
- This Life Insurance coverage is irrespective of death occurred during working hours or non-working hours.
- It covers the death of an employee, irrespective of the cause of death.
- There are no exclusions under this plan.
- Coverage and premium will be purely based on your salary but not on age or gender.
- Earlier there was a condition that one must complete a year to be eligible for EDLI. Recently they removed such restrictions. Hence, you are covered from the first day itself.
- There is no maximum age set for this insurance.
- You no need to add nominees separately. Your EPF nomination itself considered for this scheme.
- Your Employers can also set up a separate insurance scheme for their employees with approvals from the EPFO if they find that the current coverage is low.
- You get covered even if you shift jobs and work for another employer covered by the EDLI scheme before you complete one year of service. Earlier, 12 months’ service was applicable under one establishment.
Who will pay the premium for EDLI or Employees Deposit Linked Insurance Scheme?
To understand this, let us go deeper and see how you and the employer EPF contribution split. I tried to show the same in the below image for your easy understanding.
You noticed that employee contribution is directly going to EPF. However, in the case of employer contribution, 8.33% will be towards EPS, and the remaining 12% minus EPS will go towards EPF. Along with this, the employer will contribute towards EPF and EDLI Admin Charges and also 0.5% towards EDLI.
Note:- Salary means Basic+DA.
EDLI Scheme 2021 – EPF Life Insurance of Rs. 7 Lakh
Under new changes, now EPF offers Life Insurance of Rs.2.5 lakh to Rs.7 lakh. As I pointed above, the employee will not contribute to EDLI. Only your employer will contribute to it. It is 0.5% of Rs.15,000 or Rs.75 per month to the maximum (based on your actual Basic+DA). The maximum amount payable by the employer is Rs.75. Below is the image of this new notification.
How is Employees’ Deposit-Linked Insurance (EDLI) calculated?
The average monthly salary (Basic+DA) drawn (subject to a maximum of Rs 15,000), during the last 12 months preceding the month in which the employee dies, is first multiplied by 35 times (Earlier it was 30 times). This is added to 50% of the average balance in the account of the deceased in the provident fund during the preceding 12 months or during the period of his membership subject to a ceiling limit of Rs.1.75 lakh (previously it was Rs.1.5 lakh), is also paid to the beneficiary family.
Note that Rs.15,000 is the ceiling under the EDLI scheme for the purpose of this calculation even if your basic salary exceeds this amount.
The minimum payable will now be Rs 2.5 lakh while the maximum will be Rs 6 lakh.
Let us assume that Mr.A’s salary (Basic+DA) at the time of death is Rs.10,000. Then assume his last 12 months’ average salary was Rs.10,000. Then we have to multiply this by 35. This will be Rs.3,50,000.
Now we have to add 50% of the average balance in the account of Mr.A during the preceding 12 months. Assume his EPF balance for the last 12 months is Rs.1 lakh. Then 50% of this is Rs.50,000. However, the maximum ceiling is Rs.1.75 lakh. Hence, his nominee will receive Rs.50,000 as a bonus but not Rs.1.75 lakh.
So in total, his nominee will receive Rs.3,50,000+Rs.50,000=Rs.4,50,000.
Now let us assume a simple calcualtion like one’s salary is Rs.15,000, then 35 times of Rs.15,000 is Rs.5,25,000 and the bonus added to the maximum is Rs.1,75,000. Hence, the total maximum benefit under the EDLI is Rs.7,00,000. The benefit will not go beyond this amount.
How to claim the EDLI Benefit?
- A nominee can claim the amount.
- In case there is no nomination, then the legal heir can claim the amount.
- If the nominee or legal heir is a minor, then a guardian of the minor nominee can claim the amount.
- You have to fill the forms like Form 20 (for EDLI), Form 10D/10C (for claiming the Provident Fund dues and Pension/Withdrawal Benefit as applicable).
- All details should be in BLOCK LETTERS.
- Provide bank details (better to attach a canceled cheque copy for accuracy of bank details).
- Attach the death certificate of a deceased employee.
- Guardianship certificate (If the claim is on behalf of a minor family member/nominee/legal heir is by other than the natural guardian.)
- Succession certificate (in case of a claim by the legal heir).
- In case the members were last employed under an establishment exempted under the EPF Scheme 1952, the employer of such establishment should furnish the PF details of the last 12 months under the Certificate part and also send an attested copy of the Member’s Nomination Form.
- You have to send such a filled application to the EPFO Commissioner through the employer.
- In case the company closed or they are not cooperating for a claim, then you have to get the claim form to be attested by any one of the following officials-Magistrate, A Gazetted Officer, Post/Sub-Post Master, President of the Village Panchayat, where there is not Union Board, Chairman/Secretary/Member of Municipal/District Local Board, MLA or MP, Member of CBT/Regional Committee EPF, Manager of the Bank in which the Bank Account is maintained or Head of any recognized educational institution.
- A claim must be settled with 30 days of such submission.
- However, if there is any fault in filling the form or processing, then you will receive the letter from EPFO for the same and that too within 30 days.
- If EPFO does not settle the claim within 30 days, then EPFO Commissioner will be liable to pay the 12% per annum interest on such claim amount from the date of the set period for claim settlement.
Conclusion:- For few, this Rs.2.5 lakh to Rs.7 lakh insurance may not be a small amount. However, for many families, in case of the sudden demise of an employee, this amount helps a lot. Hence, I sincerely request all readers to share this information as much as possible.