EPFO Insurance (EDLI Scheme 2021) – Features, Benefits and How to Claim
EDLI Scheme 2021 – Features, Benefits and How to Claim
Employee Deposit Linked Insurance or EDLI, is the insurance cover provided by the EPF Office to all private sector salaried employees. Recently, Govt of India has enhanced this EDLI Scheme (EPFO Insurance Scheme) from Rs 6 Lakhs to Rs 7 Lakhs. Due to covid-19, there are several deaths happening now in 2021. In case of death of an employee, the nominee would get the insurance amount up to Rs 7 Lakhs. Many employees are not aware that there is one such scheme exists. What is Employee Deposit Linked Insurance (EDLI Scheme) all about? What are EDLI scheme benefits? How EDLI calculations done? What is EDLI calculation formula in case of death of the employee? How to do EDLI Claim Online or Offline?
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What is Employee Deposit Linked Insurance (EDLI Scheme)?
All members of EPF are automatically covered under EDLI scheme. EDLI Scheme is an insurance scheme from EPFO which is provided to employees of private organization. When an employer covers employee on EPF, the employee is automatically covered under EDLI scheme. The Employees’Deposit-Linked Insurance Scheme (EDLI), 1976 provides for an “Assurance benefit” where an insurance cover to be paid to the employees nominee on death during their working life.
There are several salaried employees who are affected with covid in 2020 and in 2021 too. Deaths happening due to covid would cover under EDLI scheme.
Many employees are not aware that such a scheme exists.
Who is covered under EDLI Scheme / EDLI Scheme Eligibility?
All members of the Employee Provident Fund (EPF) are covered under EDLI scheme.
Employee Deposit Linked Insurance (EDLI Scheme) Benefits and Features
EDLI scheme is applicable to employees (private organizations) registered under the Employee Provident Fund (EPF).
Employees are automatically covered under EPFO insurance EDLI scheme once they are enrolled into EPF by their employers.
Generally we take a term insurance plan. However, in this case, employees need not pay any insurance premium for this EPFO insurance scheme. This is paid directly by employers.
No separate nomination required for EDLI scheme. EPF nomination would apply for EPFO insurance also.
An insurance claim would be paid if the employee is in employment in the last 12 months. If he is less than 12 months, insurance is not applicable.
In case of death of the employee, the nominee or legal heir would get 35 times of average basic salary in the last 12 months (earlier this was 30 times). This scheme also pay 50% of EPF balance as insurance with a maximum limit of Rs 1.75 Lakhs.
The minimum assured amount is increased now to Rs 2.5 Lakhs which would be valid for 3 years from 28-April-2021.
In case of death of the employee, the nominee would get EPFO insurance up to Rs 7 Lakhs.
How EDLI Calculation done?
EDLI calculation formula in case of death case of employee would be based on last 12 months average basic salary + EPF balance.
The formula for EDLI calculation = 35 times of average monthly basic salary in the last 12 months + 50% of EPF Balance.
Part-1 – Average Basic salary in the last 12 months
Part-2 – 50% of EPF Balance subject to maximum of Rs 1.75 Lakhs.
EPFO Insurance – Explained with examples
1) Mr. Selva is an employee in X Company. He was drawing a monthly basic average wage of Rs 10,000 and his provident fund balance was Rs 5 Lakh. In case of unfortunate death of Mr. Selva, his nominee would get the following.
Part-1 – 35 times x Rs 10,000 = Rs 350,000
Part-2 – 50% of Rs 5 Lakhs = Rs 2.5 Lakhs. However, maximum payable is only Rs 175,000.
Total Insurance amount = Rs 350,000 + 175,000 = 5,25,000.
2) Mrs. Ramya is an employee in Y Company. She was drawing a monthly basic average wage of Rs 15,000 and her provident fund balance was Rs 10 Lakh. In case of unfortunate death of Mrs. Ramya, nominee would get the following.
Part-1 – 35 times x Rs 15,000 = Rs 525,000
Part-2 – 50% of Rs 10 Lakhs = Rs 5 Lakhs. However, maximum payable is only Rs 175,000.
Total Insurance amount = Rs 525,000 + 175,000 = 700,000.
You can do these EDLI calculations in excel or even on the calculator.
What is the process for EDLI Claim Online?
This process works if the employee has registered nominee. If no nominee registration done, go to EDLI claim offline process.
1) Visit EPF portal
2) Visit “Death Claim Filing by Beneficiary” link
3) You can fill the EPFO claim form with relevant details
What is the process for EDLI Claim Offline?
Here is the step-by-step process to claim EDLI offline.
1) Nominee needs to download Form 5 IF EDLI from EPF portal
2) Need to fill all relevant details like, deceased employee name, provident fund number, address etc.,
3) This form needs to be attested by the employer. In case employer is not available for some reason, this can be attested by gazetted officer, a magistrate, local municipal board secretary, member or chairman, postmaster/sub-postmaster or member of EPF committee.
5) This Form 5 IF along with necessary documents needs to be submitted to EPF office.
6) EPF Office would review the application form and process the insurance claim amount along with the EPF balance within 30 days. If there is delay beyond 30 days, the nominee would get 12% interest per annum on the eligible amount.
What about taxation of EDLI Insurance amount received by nominee?
Amount received under EDLI scheme by the nominee is tax free. Means, nominee need not pay any income tax on this amount.
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