Group Employees Deposit Linked Insurance Policy

Group Employees Deposit Linked Insurance (EDLI)

Today’s modern world is full of uncertainties, making it imperative for an individual to get adequate insurance coverage. This is especially crucial for employees working in the private sector since they do not enjoy the same facilities and privileges as public sector employees. 

Therefore, the government launched the Employees Deposit Linked Insurance Scheme (EDLI) in 1976 to boost the participation of private sector employees in life insurance policies that can benefit them in the long run. This post will highlight some of the most important aspects that one should know before enrolling themselves in the EDLI scheme.

What Is EDLI (Employees Deposit Linked Insurance) Scheme?

The EDLI (Employees Deposit Linked Insurance) scheme is specifically designed for private sector salaried employees and provided by the Employees Provident Fund Organization (EPFO). The primary objective of EPFO behind offering this scheme is to ensure that the family members of the insured get financial assistance in case of any unfortunate event. In case of the death of the insured, the registered nominee gets a lump-sum payment during the service period. 

All organizations that are listed under the Employees Provident Fund and Miscellaneous Provisions Act, 1952, must comply with the EDLI scheme. All of these businesses are required to participate in this program and provide life insurance coverage to their staff members.

The insurance coverage is based on the salary received in the last 12 months of work before death. This program functions best in combination with EPS and EPF. Moreover, there are no exclusions available under the plan.

Key Features Of Employees Deposit Linked Insurance Scheme

Here are some of the fundamental characteristics of the EDLI scheme that are received by all beneficiaries covered by the insurance:

  • The minimum assurance benefit under the EDLI scheme is Rs. 2.5 lakhs if the deceased member had been employed continuously for the 12 months previous to death.
  • All employees who receive a monthly basic salary of less than INR 15,000 are qualified for the EDLI program. If the benefit surpasses INR 15,000, it is capped at INR 6,00,000 of the basic salary.
  • If a member of the EPF passes away while still employed, the nominee or legal heir will receive the maximum guaranteed benefit of Rs. 7 lakhs.
  • Under the EDLI, a bonus of Rs. 1,50,000 is offered. The bonus is raised to Rs. 2.5 lakhs as of 28.04.2021.
  • A company must apply for EPF if it employs more than 20 people. As a result, every employee who has an EPF account is immediately qualified for the EDLI program.
  • The employer contribution must be 0.5% of the basic salary, or a limit of Rs. 75 per employee per month, in accordance with the EDLI’s provisions. The maximum contribution is limited to Rs. 15,000 per month if there is no other group insurance plan.
  • If the insured individual passes away while their service term is still ongoing, the document’s designated nominee will receive the lump sum payment. The eligible legal heir will receive the proceeds if the nominee is not present or is not named.

How Does The Employees Deposit Linked Insurance Scheme Function?

Organizations that qualify for the EPF also qualify for the EDLI. When an EPF account payment is made, the employer also makes a monthly contribution to the EDLI scheme. The following are the EDLI charges in PF:

  • 12% of the basic salary + dearness allowance
  • 12% of the employee’s basic salary + dearness allowance, which are distributed as follows:
  • 3.67% to the EPF account
  • 8.33%, subject to a maximum of Rs.1250, to the EPS (Employees’ Pension Scheme)
  • 0.50%, subject to a maximum of Rs.75, to the EDLI account

The EDLI scheme covers the risk of premature death once it is in effect. A lump sum financial benefit is given to the employee’s family in the event of death while he or she is a member of the EDLI plan to make up for the financial loss.

Contributions To EDLI Scheme

On behalf of the employees, the employer contributes to these plans. Before they credit the wage, the employee contribution is subtracted from the salary. No direct contributions from employees are required for these programs.

Following are the contributions made for each scheme:

EPFO SchemeEmployee’s ContributionEmployer’s Contribution
EPF12 % of Basic + DA3.67% of Basic + DA
EPSN/A8.33 % of Basic + DA
EDLIN/A0.5% (subject to a maximum of Rs. 75)

EDLI Calculation

In the EDLI calculation, the nominee, family member, or legal heir will receive a lump-sum payment equal to 30 times the deceased employee’s annual base wage (plus dearness allowance).

Let’s use an illustration to better comprehend this:

  • The typical monthly salary cap for the previous 12 months is listed as being 15000 INR.
  • 30 times the typical monthly wage equals 15,000 X 30 = 4,50,000 INR as a result.
  • The recipient will also receive a gratuity of 1,50,000 INR.
  • The recipient will receive a benefit totalling 6,00,000 INR after adding both amounts.

How To Claim Benefits Under EDLI Scheme?

The nominee or the employee’s legitimate heirs would receive the benefits of the plan if the employee passed away while a member of EDLI. The actions listed below should be taken to claim the benefit under the scheme:

  1. The claimant must complete and send Form 5 IF.
  1. The employer must sign the form and certify that the employee participated actively in the EPF program. However, if the employer is unavailable or not present, the form must be attested by authorized parties, such as a magistrate, gazetted officer, and so on.
  1. Form 20 to withdraw an employee’s EPF, Form 10C/D to collect benefits from all employee benefit programs, and other supporting documentation should be filled and submitted to the regional EPF Commissioners Office.
  1. The EPF commissioner would verify the provided documentation, and payment would be made within 30 days.

Required Documents For EDLI Claim Process

To receive the money disbursed under the EDLI scheme, the claimant must send the supporting documentation listed below with Form 5 IF:

  • Death certificate of the member
  • If someone other than the natural guardian files a claim on behalf of a minor family member, nominee, or legitimate heir, they must provide a guardianship certificate.
  • A copy of the succession document in case the legal heir makes a claim.
  • A photocopy of a cancelled check from the bank account chosen for payment.

Frequently Asked Questions

Here are some of the frequently asked questions that you must know.

Certainly, the EPF wages must be disclosed because they will be used to calculate the inspection fees. Additionally, since the EPS wages cannot be greater than EPF wages, they cannot be inputted if the wages are displayed as 0.

Yes. Every employee who receives a monthly basic wage of INR 6,500 or more is required by law to enroll in EPS and EPF. 

No. There is no minimum service period for receiving the benefits of EDLI.

You can opt out of the insurance once you purchase a higher-paying life insurance scheme under Section 17 (2A).

No. At present, the form can be filled out offline only.

Only while a current EPF member, the EPFO member is protected by the EDLI scheme. After he leaves employment with a business that is registered with the EPF, his family, heirs, or nominees cannot make a claim.

No. It is only admissible in the event of death while in service.

The following algorithm is used to determine the EDLI:

{Average Monthly Reward/Salary of the Insured Employee for the Previous Twelve Months (Up to INR 15,000/- Per Month) x 30} + Bonus Amount (INR. 1,50,000).

Beginning on April 1, 2017, there are no EDLI management fees that apply to provident funds.

You should keep the following 3 things in mind while filling out the claim forms for the EDLI scheme:

  • You should always fill the form in a block letter only.
  • In case there is a canceled cheque, it should be attached to the claim forms.
  • The application must be attested by the employer.

The claim must be resolved within 30 days, and if the EPF commissioner is unable to do so, he will be required to pay interest at a rate of 12% per year from the date of the deadline to the date of the real disbursement.

Yes. EPFO members are automatically enrolled in the EDLI scheme.