EDLI - Features, Benefits, Eligibility Criteria & How Does it Work?

What is EDLI?

The Employees Deposit Linked Insurance Scheme (EDLI) is a life insurance cover managed by the Employees' Provident Fund Organisation (EPFO) in India. It is designed to provide financial security to private-sector salaried employees who are members of the EPFO. In case of the employee's untimely death during service, a lump sum amount is paid to the nominee or legal heir as financial support. The scheme works in combination with the Employees’ Provident Fund (EPF) and Employees’ Pension Scheme (EPS).

How Does the EDLI Scheme Work?

Under the EDLI scheme, the employer contributes a small portion of the employee's basic salary towards the insurance cover. The employee does not contribute separately to this scheme. The contribution is 0.5% of the basic salary or a maximum of Rs. 75 per month per employee. The insurance cover is calculated based on the last 12 months’ average salary (basic + dearness allowance), subject to a maximum cap.

If an insured employee dies while in service, the nominee receives a lump sum insurance amount. The calculation is typically 35 times the average monthly salary, capped at Rs. 7 lakh. Additionally, a bonus amount may be added to the claim. Employers must have at least 20 employees to be eligible to subscribe to this scheme.

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Key Features of EDLI Scheme

Coverage:

The EDLI scheme provides insurance coverage to all employees whose basic monthly salary is up to Rs. 15,000. For employees earning more than Rs. 15,000, the insurance benefit is capped at Rs. 7 lakh. This ensures that the insured amount is proportionate to the salary, with an upper limit to maintain fairness.

Automatic Enrollment:

All members of the Employees’ Provident Fund Organisation (EPFO) are automatically covered under the EDLI scheme. Employees do not need to apply separately; coverage begins as soon as they become EPF members. This seamless enrollment protects all eligible workers from day one.

Contribution:

The contribution towards the EDLI scheme is borne entirely by the employer. Employees do not have any deductions from their salary for this insurance benefit. The employer contributes 0.5% of the employee's basic wage, subject to a maximum limit, ensuring a cost-effective way to provide insurance.

Minimum and Maximum Benefits:

The scheme guarantees a minimum assured benefit of Rs. 2.5 lakh to the nominee in case of the employee’s death while in service. The maximum payable amount under the scheme is Rs. 7 lakh. This range ensures financial support tailored to different salary levels of employees.

No Age or Service Limit:

The EDLI scheme covers employees regardless of their age or length of service. There is no minimum service duration required to be eligible. This means employees receive protection from the very start of their employment without any waiting period.

Worldwide Coverage:

The benefits of the EDLI scheme are valid even if the employee dies outside India. This worldwide coverage ensures that families of employees working abroad still receive financial support under the scheme.

Benefits Paid by EDLI

• A lump sum payment to the nominee/legal heir in the event of the employee’s death while in service.
• Financial support to employee families for immediate needs.
• Life insurance coverage without additional cost to employees.
• Quick claim settlements facilitated by the EPFO system.
• The combination of EPF, EPS, and EDLI provides comprehensive social security for employees.

Eligibility Criteria for EDLI

• The employing organization must be registered with the EPFO and have more than 20 employees.
• The employee must be an active member of the Employees’ Provident Fund.
• There is no minimum service period required to avail the benefits.
• Employees with a basic salary above Rs. 15,000 are eligible, but the benefit amount is capped.
• Employees who die within six months of their last EPF contribution while still on payroll are eligible

How to Make a Claim Under EDLI?

To claim EDLI benefits, the nominee or legal heir must submit:

• Death certificate of the deceased employee.
• EPF account details of the employee.
• Filled claim form for EDLI (available on the EPFO portal).
• Identity and address proof of the claimant.
• A nomination certificate or legal heir certificate (if no nomination is available).

The claim is processed by the EPFO, and the amount is transferred directly to the nominee’s bank account, usually within 30 days of verification.

Documents Required for EDLI Claim

• Death certificate of the employee.
• EPF passbook or account details.
• Nomination form submitted by the deceased employee.
• Identity proof and bank details of the nominee.
• Claim application form (UAN linked).

Benefits of EDLI Insurance

• Provides life insurance cover to employees at minimal cost.
• Helps families of deceased employees maintain financial stability.
• Ensures peace of mind for employees knowing their loved ones are protected.
• Acts as a supplementary social security scheme along with EPF and EPS.
• Encourages employers to secure employees’ financial future.

Conclusion

The Employees Deposit Linked Insurance Scheme (EDLI) is a vital social security net for millions of salaried workers in India under the EPFO framework. With minimal employer contribution, it offers substantial life insurance benefits to employees' families, ensuring financial protection during challenging times. It complements other EPFO schemes and is crucial for comprehensive employee welfare.