Employees Deposit Linked Insurance (EDLI)

Employee Deposit Linked Insurance Scheme (EDLI) is an insurance cover linked to the employee provident fund. All the organizations registered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 must subscribe to EDLI and offer life insurance benefits to their employees. The insurance cover depends on the last drawn monthly basic salary of the employee before death.

The top 5 features of an EDLI are:

• EDLI scheme applies to all the employees with a basic salary under INR 15,000/- per month and those who subscribe to PF
• Insurance benefits can be availed by the nominee, family members or legal heirs of the insured
• A member or his beneficiaries are eligible for under the EDLI scheme as long as he/she is an active member of the EPF. Claims become invalid if the employee discontinues service with an EPF registered company
• PF or EPF account holders are auto enrolled and become eligible for EDLI scheme benefit once they become an EPFO member
• There is no minimum service period for availing benefits with EDLI policy
• The maximum assured benefit to be paid to the nominee or legal heir is INR 7 lakhs if the EPF member dies during service
• The minimum assured benefit is INR 2.5 lakhs in case the deceased member was in continuous employment before his or her death.
• This is a life insurance benefit being given to the EPFO members. Employer will pay 0.50 per cent of the monthly wages with monthly basis salary ceiling of ₹15,000
• PF or EPF account holders are auto enrolled and become eligible for EDLI scheme benefit once they become an EPFO member
• The EDLI scheme benefits will be directly credited to the bank account of the nominee or legal heir of the EPF or PF account holder

Both the employee and the employer make contributions for all the three schemes run by the EPFO. While the employee doesn’t directly pay any amount, it is deducted from his/her salary. Employees cannot choose which of the three schemes (EPF, EPS, EDLI) they want to contribute to but the schemes are transferable and the new employer pays for the scheme then.

The EDLI contribution of an employer under EPFO is 0.5%, subject to a maximum of INR75 monthly. And the contribution towards EDLI scheme bought under a life insurance company depends on the data and lives covered as provided by the corporate.

Below is the calculation of EDLI under the EPFO. The registered nominee gets
lump-sum payout and in case there is no nominee then the amount is transferred to
the legal heir of the deceased. The insurance amount that the nominee/heir of a
deceased member gets is calculated as 35 times the monthly basic salary of
employment capped at INR 15,000:

35 X INR 15,000 = INR 5,25,000

Additionally, 50% of the average balance in the provident fund account of the
member during the preceding 12 months capped at INR1,75,000 is also paid to the
beneficiary family.

So, INR 5,25,000 + INR 1,75,000 = INR 7,00,000, is the maximum capping of the payout under the EPO based EDLI scheme.

This plan is availed by companies for their employees who are members of a Provident Fund Scheme. In order to avail this plan, the minimum and maximum age restrictions are similar to Provident Fund Scheme.

Below is a list of people who are eligible to claim benefits after demise of an EDLI scheme member

• Nominees - family members under   EPF Scheme
• If there is no nominee or no family member then legal heir
• Guardian of a minor nominee/family member/legal heir
• If nominee/legal heir isn’t available, one with a succession certificate can also claim for the benefits

Following documents are needed to avail group employee Deposit insurance (EDLI):

• Proposal Form
• Declaration Form
• Reports as required by the Insurer
• Any other Document as required by the insurer

Group EDLI policy arises only in the case of death of a member of the group. To file the claim following process should be adopted:

The Employer has to submit the following documents to the insurer within 30 to 90 days (depending on the insurer):

• Claimant’s statement/ Claim Form
• Death Certificate for the deceased
• Leave Records [from date of joining this scheme]
• Police Panchnama, Police Inquest Report and FIR copy where applicable
• Post Mortem Report in case of accidental deaths

Claims are paid to the nominee or legal heirs of the deceased member.

The following documents have to be submitted by the claimant for processing of claims under EDLI scheme:

• Duly filled form 5
• Death Certificate of the insured
• Succession Certificate in case a legal heir files for the claim
• Guardianship Certificate if the claim is filed on behalf of a minor
• Canceled cheque for the account in which the payment is to be received

Form 5 IF is an EPF form, to be filled by the nominee/heir of the deceased to claim the insurance amount under EDLI scheme. The form has to be filled offline, has to be individually filled by every claimant (filled by the guardian in case the claimant is minor), mode of fund transfer has to be mentioned and the employer has to furnish a death certificate mentioning the date of death of the member.

The filled form has to be submitted to the regional EPF Commissioner’s office along with the required document proofs. The claim has to be settled in 30 days and if the EPF commissioner is not able to settle the claim within 30 days, he will be liable to pay an interest of 12% per annum from the deadline date to the date of actual disbursal.

Claims can be rejected for various reasons. Below are the three primary reasons that can lead to a claim rejection:

• If a new joiner has not been enrolled with the insurer by his/her organization
• Employees on long leaves are not covered under this scheme, as the scheme necessities active employment of an employee
• Insurance non-renewed on time can be subject to claim rejections