Employees' Deposit Linked Insurance (EDLI) Scheme

The Employees' Deposit Linked Insurance (EDLI) Scheme provides life insurance cover to private sector employees. Introduced by the Government of India in 1976, the scheme extends social security to private sector employees who may not have the same financial benefits as public sector employees. EDLI is managed by the Employees' Provident Fund Organisation (EPFO).

Key Features of EDLI:

• Eligibility: Available to employees of all organisations registered under the EPF and Miscellaneous Provisions Act, 1952.
• Coverage: Nominees of EPF members receive a lump sum payment of up to ₹6 lakhs in the event of the employee's death during the service period.
• Employee Contribution: No contribution is required from employees, as only the EPF contribution applies.
• Employer Contribution: Employers must contribute 0.5% of the employee's basic salary, up to a maximum of ₹75 per month per employee. If no other group insurance is provided, the contribution is capped at ₹15,000 per month.
• Bonus: A bonus of ₹1.5 lakhs is added to the insured amount.

Payout Calculation:

The payout under the EDLI scheme is calculated as:

(Average monthly salary of the last 12 months, capped at ₹15,000 x 30) + ₹1.5 lakhs bonus

This formula caps the maximum payout at ₹6 lakhs.

Additional Information:

• Salary Cap: Employees earning above ₹15,000 per month are eligible for a maximum payout of ₹6 lakhs.
• Alternative Schemes: Organisations can opt for other group insurance schemes, provided the benefits are equal to or greater than those of EDLI.

EDLI offers financial protection to employees' families, ensuring a lump sum benefit in case of unfortunate circumstances during their employment.

Frequently Asked Questions (FAQ)

Q. How does an employee nominate a beneficiary under the EDLI scheme?

A. An employee can nominate a beneficiary under the EDLI scheme through their EPF account. The nomination is made by filling out Form 2, which allows employees to specify their nominee details. This form is submitted to the employer, who then forwards it to the EPFO. Employees should ensure that their nominee information is up to date to avoid complications during claims. If an employee does not nominate anyone, the legal heir will receive the benefits.

Q. What is the process for the nominee to claim the insurance amount under the EDLI scheme?

A. To claim the EDLI amount, the nominee must submit a claim form (Form 5 IF) to the employee's organisation. The form, along with supporting documents like the employee's death certificate and nominee’s identification proof, is then sent to the EPFO. After verifying the documents, the EPFO processes the claim and disburses the lump sum amount to the nominee. Therefore, ensuring proper documentation is essential for a smooth claim process.

Q. Can employees choose to opt out of the EDLI scheme if their employer provides a different group insurance plan?

A. Employees do not have the option to opt out of the EDLI scheme directly. However, if the employer offers a separate group insurance plan with benefits equal to or better than EDLI, the company may choose to opt for that plan. Therefore, employees automatically become part of the alternative scheme, which must provide at least the same level of protection as EDLI.