EDLI Scheme, Due to the uncertainties of modern life, it is now essential for everyone to have sufficient insurance coverage. For workers in the private sector who do not receive the same social security benefits as those in the public sector, this is particularly crucial. In 1976, the government launched the Employees Deposit Linked Insurance Scheme (EDLI) to provide life insurance coverage to workers in the private sector.
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Employees Deposit Linked Insurance Scheme
For paid employees in the private sector who are members of the Employees Provident Fund Organization (EPFO), the EPFO offers insurance coverage under the Employees Deposit Linked Insurance Scheme or EDLI. The EDLI program was launched in 1976. The registered nominee receives a lump sum payment in the event that the covered person (employee) dies while still working.
The EDLI plan covers all organizations that are registered under the Employees Provident Fund and Miscellaneous Provisions Act of 1952. They must provide life insurance coverage to their employees and take part in this scheme. This program functions in tandem with the Employees’ Provident Fund (EPF) and the Employees’ Pension Scheme (EPS). In the event that an employee passes away, EDLI’s goal is to guarantee that the family of the EPFO member receives financial support. This scheme does not have any exclusions. The employee’s most recent salary determines how much the benefit will be.
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Features Of Employees Deposit Linked Insurance Scheme
The following are the fundamental components of EDLI, administered consistently to each and every insurance beneficiary:
- All employees whose base pay is less than Rs. 15,000 per month are subject to EDLI. The maximum benefit is Rs. 6 lakh if the base pay exceeds Rs. 15,000 per month. The EPFO raised the maximum benefit to Rs. 7 lakh as of April 28, 2021.
- Up to a maximum of Rs 7 lakh, the claim amount under EDLI is 35 times the average monthly earnings over the previous 12 months.
- Employees are not required to make contributions to EDLI. Only the EPF requires their contribution.
- A bonus of Rs. 1,50,000 is offered under the EDLI. The incentive has been raised to Rs. 1.75 lakh as of April 28, 2021.
- In February 2018, the Ministry raised the minimum benefit amount to Rs. 2.5 lakh, which was good for two years. As of February 15, 2020, the EPFO has retroactively extended this minimum amount of Rs. 2.5 lakh.
- Any company with more than 20 workers must register for the Employee Provident Fund (EPF). As a result, any employee with an EPF account is immediately qualified for the EDLI program.
- The insurance coverage offered by EDLI is unconditional. It provides 24/7 global protection for the covered individual.
- A company may select a different group insurance plan, but the benefits must be at least as good as those offered by EDLI.
- According to the EDLI’s requirements, an employer’s monthly payment shall not exceed Rs. 75 per employee or 0.5% of the employee’s base pay. The highest monthly contribution, in the absence of any other group insurance plan, is Rs. 15,000.
- The base pay must be modified to account for the dearness allowance in all EDLI computations.
EDLI Scheme Eligibility
To be eligible for coverage under EDLI, an employee must meet the following requirements:
- The base pay for employees is up to Rs. 15,000 per year. The highest benefit under the EDLI that may be provided to an employee whose income exceeds Rs. 15,000 is Rs. 7 lakhs.
- To be eligible for the EDLI program, the employee’s company must employ more than 20 people.
Documents Required To Payout Under EDLI
The claimant must provide the following paperwork in order for the claim to be processed under EDLI:
- Filled out Form 5 IF
- certificate of death for the covered individual.
- certificate of succession in the event that the rightful heir makes the claim.
- Guardianship Certificate in the event that someone other than the minor’s natural guardian files the claim on their behalf.
- A duplicate of the canceled check for the account that will receive the money.
Benefits Of the EDLI Scheme
- In the event that an employee passes away while still employed, the EDLI program provides free insurance coverage to the surviving family members.
- Although the employer makes a little payment to EDLI, the reward handed out under the program is substantial and helps the family of the dead employee financially.
- The EDLI plan does not have any exclusions. Thus, every employee is protected, regardless of position or pay.
- Even if the employee passes away abroad, their family will still get the death benefit.
- The EDLI system, a government and employer-sponsored employee welfare program, ensures benefits from life insurance.
- By providing insurance coverage to workers and protecting their surviving family members, the EDLI plan raises employee morale.
The primary goal of the EDLI plan is to provide the policyholder’s (dead person) family members with financial stability. Male children under the age of twenty-five, unmarried daughters, and spouses are all regarded as family. The three plans—EPF, EPS, and EDLI—are transferable with any change in employment, but the employee is unable to select which one to use. Only the current account will continue to receive payments from the new job.
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Contribution By Employee & Employer To EPS, EPF And EDLI
On behalf of the workers, the employer contributes to these plans. The employee contribution is deducted prior to the salary being credited. These programs do not involve direct payment from employees. Employers and workers have contributed the following:
| EPFO Scheme | Employee Contribution | Employer Contribution |
| EPF | 12% of Basic + DA | 3.67% of Basic +DA |
| EPS | N/A | 8.33% of Basic + DA |
| EDLI | N/A | 0.5% (max Rs 75) |
However, if an employer chooses a better employee insurance coverage under a different plan, they may cease paying to the EDLI program under Section 17 (2A) of the Employees’ Provident Fund and Miscellaneous Provisions Act 1952.
Calculation Of EDLI Charge
The registered nominee will receive a lump sum payout in the event that the covered person dies. If no beneficiary or nominated person was submitted, the money would go to the legal heir. The following formula will be used to determine the dividend starting on April 28, 2021:
30 days * The employee’s average monthly wage for the previous 12 months, up to a maximum of Rs 15,000.
Additionally, a further incentive of Rs. 2,50,000 will be awarded.
A total of Rs 4,50,000 (15,000 * 30 days) plus Rs 2,50,000 (bonus) equals a benefit of Rs 7,00,000.
Therefore, the maximum compensation permitted under the EDLI is Rs. 7,00,000.
How To Claim Benefits Under EDLI
The following steps must be taken by the nominee or claimant in order to obtain the funds under EDLI:
- The insured individual may designate a nominee to receive the benefits. Family members or legal heirs may apply for the same if no nominee was filed.
- At the time of their passing, the dead individual needs to have been a regular contributor to the EPF plan.
- The claimant must properly fill out and submit EDLI Form 5 IF.
- The employer must sign and certify the claim form.
- The following people must certify the form if there is no employer or if the employer’s signature cannot be obtained:
- The management of the bank where the account was kept
- Local MP or MLA
- Gazetted Officer
- Magistrate
- Member of the EPF or CBT regional committee; member, chairman, or secretary of the local municipal board; postmaster or sub-postmaster
- For the claim to be processed, the claimant must provide the completed form and any supporting documentation to the regional EPF Commissioner’s Office.
- To claim all benefits under the three schemes—EPF, EPS, and EDLI—the claimant may additionally file Form 20 (for EPF withdrawal claim) and Form 10C/10D.
- In order to process the claim, any extra papers that are needed must be provided as soon as possible.
- The EPF commissioner has 30 days from the date of claim receipt to settle the claim when all supporting documentation has been submitted and it has been approved. If not, the claimant is entitled to interest at a rate of 12% per annum until the actual distribution.
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Faq’s
Q. Who is eligible to receive benefits under the EDLI program?
Ans: The advantages of the EDLI plan are available to the candidate. Family members or legal heirs may get benefits if an employee has not nominated anybody.
Q. Is there a minimum length of service required to qualify for EDLI coverage?
Ans: No. To enroll in EDLI, there is no minimum service requirement.
Q. Can an employer choose not to participate in the EDLI program?
Ans: Employers who enroll their employees in a higher-paying life insurance plan may choose to withdraw from the EDLI program in accordance with Section 17 (2A) of the Employees’ Provident Fund and Miscellaneous Provisions Act 1952.
Q. Under the EDLI, is it possible for an employee to choose a greater level of insurance coverage?
Ans: No, as the amount is set by the employee’s base pay, dearness allowance, and retention allowance (if any), they are unable to choose more insurance coverage under the EDLI.
Q. Is it possible to file Form 5 IF online?
Ans: No, you can only file Form 5 IF offline.
Q. Where can I find out how much EDLI coverage I have?
Ans: Your EPF passbook contains the amount of your EDLI coverage.
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