The Employee Deposit Linked Scheme (EDLI) is an insurance cover for the life of the employees of the organized sector. A lump sum payment is provided to the beneficiary of the employee in case the employee dies during the service period. All the organizations that are covered under the Employee’s Provident Fund and Miscellaneous Provisions Act, 1952 are liable to subscribe to this scheme as well to provide life insurance benefits to all the employees. The EDLI Scheme is similar to the group life insurance cover, but the benefit is decided based on the employee’s salary.
Here are the key features of the EDLI Scheme that you do not know about:
- EDLI applies to employees with a Salary up to Rs. 15000 p.m. Once an employee’s basic salary goes beyond Rs. 15000, the EDLI benefit is capped to Rs. 600,000 which is the maximum benefit applicable.
- Employees need not contribute to the EDLI scheme, their contribution is limited to the EPF.
- The EDLI Scheme applies to all the employers that are covered under the EPF & MP Act, 1952. So, all the employees who have an employee’s provident fund account automatically become eligible for the EDLI Scheme; i.e. if your organization employs more than 20 workers you should have an EDLI benefit.
- The insurance cover provided under the EDLI scheme comes with no exclusions. It is applicable globally and provides coverage 24*7 to the employee.
- Another group life insurance schemes can be taken in place of EDLI by the employers, but the benefits should be either equal or better than EDLI. PFRDA itself approves such plans.
- As per the provisions of the EDLI, the employer or organization is required to contribute 0.5% of the monthly basic pay towards this scheme but capped at a maximum of Rs. 15,000, and where the group insurance scheme is not applicable.
- For EPFO, the salary refers to the basic pay plus the dearness allowance (i.e. Basic salary + D.A.). So, for all the calculations to be made under the EDLI scheme, the dearness allowance is added to the basic pay.
Under the EDLI Scheme, the nominee of the employee can get a maximum claim of 30 times of the last salary drawn. The maximum salary for this purpose is capped at Rs. 15,000. An additional bonus of up to Rs. 150,000 is also provided. So, the maximum claim under the EDLI scheme will come out to be Rs. 600,000 at a maximum salary of Rs. 15,000, i.e. calculated below:
30 times of Rs. 15,000 = Rs. 4,50,000 + Rs. 1,50,000 = Rs. 6,00,000
- The beneficiary can claim the insurance amount in case of the death of the employee. If there is no beneficiary registered by the employee, the legal heir becomes eligible for the amount. There is a form 5 to make a claim under the EDLI scheme that can be submitted along with the provident fund withdrawal form and other required documents.
The following persons are eligible to claim the EDLI amount:
- Members of the family registered as a nominees under the EPF scheme.
- In case there are no nominees registered, then all the family members except the major son, married daughters having a living husband and major son).
- In case there is no family member and no nominee registered, then the legal heir.
- Guardian of the minor nominee, family member, or legal heir.
The primary objective of the EDLI scheme is to provide sufficient protection for the life of the employee. It makes sure that requisite compensation is paid to the family members in the case of the death of the employee for their financial independence.
Subscribing to EDLI has been made easy with the help of a web portal, where you can present your requirements and compare quotes from different insurers. SecureNow offers faster processing, 24×7 support and robust administration of the scheme.
About The Author
Shashank
MBA Finance
With seven years of dedicated experience in the insurance industry, Shashank has become a recognized expert in Employee Deposit Linked Insurance (EDLI). As a committed writer for SecureNow, he crafts insightful blogs and articles that demystify the complexities of EDLI, helping employers and employees understand the benefits and importance of this essential coverage. Throughout his career, Shashank has developed a deep understanding of the intricacies of EDLI, including policy details, regulatory requirements, and best practices for implementation. Their ability to translate complex insurance topics into clear, practical advice makes their content invaluable for those looking to protect their workforce with comprehensive insurance solutions.
