## Group Employee's Deposit Linked Insurance(EDLI)

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Group employees deposit linked insurance policy offers the cover to the life of the employees and offers to protect their family members. In the event of the death of the employee, a lump sum amount is paid to the nominee of the employee in case he dies during his service period.

This group employees deposit linked insurance plan is an excellent opportunity for the employers to show recognition to his employees and to motivate them. This insurance policy not only benefits the employer but also benefits the employee. It protects the employee’s family by providing them with a mechanism of income after his death. The death, in this case, can be caused by any natural causes, illness or accident.

All the employees who are secured under ‘Employee Provident Fund’ are covered under group employees deposit linked insurance.

There are two ways in which the sum assured cab be defined under a group employees deposit linked insurance:

### Method: 1

The average basic pay of the employee for the past twelve months is considered. This amount is then multiplied by a multiple of 20 or 30. This multiple may vary according to the specifications in the insurance policy by different insurers. An additional amount of 1,50,000 is added to this and the sum insured is then calculated. Again, this amount may also vary according to different insurers.

If the last drawn salary for the 12 months is 8000, then the sum insured will be calculated as:

=(20 times of 8000 + 1,50,000)

=1,60,000+1,50,000

=3,10,000 Rupees

### Method: 2

According to this method, the sum insured equals to the average balance to the credit in the employee provident fund of the deceased employee. If this balance is more than a specified amount, then a certain percentage of the excess amount is added to the capped balance amount and the sum insured is calculated.

For example, the deceased employee has the average balance of 45,000 of last twelve months in his employee provident fund account. But the limit on the amount specified by the insurance company is 35,000. Thus the additional amount is 45,000 less 35,000 which comes to 10,000. The percentage multiple, in this case, is 25%. So, the sum insured in this case will be:

=35,000 + (25% * 10,000)

=35,000 + 2,500

=37,000

### Case Study:

Hemant, a 46-year-old man, residing in Mumbai was working for an IT company called ‘Intellectual Hub Inc’.  His employer had acquired a group employees deposit linked insurance policy for all his employees.

Hemant was prudent in his duty and lived a happy life. On 16th July 2009, while returning home from work, Hemant was hit by a fast approaching truck. He could not be saved and died on the spot. Hemant was the only support for his family and the sole earning member.

His wife had the knowledge of his employees deposit linked insurance policy provided to him by his firm ‘Intellectual Hub Inc’. She contacted the insurance company and explained them the entire scenario. Since his wife was the beneficial nominee mentioned in the insurance policy, she was liable to get the benefit of the sum insured in his Group EDLI scheme.

The insurance company calculated the sum insured for his last drawn salary for the twelve months. It was multiplied by a multiple of 20, and an additional amount of 1,50,000 was added to arrive at the sum insured value. Thus, his sum insured came to:

(10,000 * 20) + 1,50,000= 3,50,000 rupees

As Hemant’s wife submitted all the documents and completed the required procedure on time, she was able to claim the sum insured of three lakhs and fifty thousand rupees.

Thus, the group employees deposit linked insurance policy acted as a source of income for Hemant’s wife after his unfortunate death.

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