EPFO members get insurance up to Rs 7 lakh without paying premium, know how to get benefit
3 min read
EDLI Scheme: If you are a salaried person and contribute to EPFO every month, then you should know that the Employees’ Provident Fund Organization provides free insurance of up to Rs 7 lakh to EPFO members.
This insurance scheme is known as Employees Deposit Linked Insurance (EDLI). This scheme is run to provide financial security to the employee’s family.
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If due to any reason an EPFO member dies, then his heir or nominee can claim this insurance amount. However, the claim amount of Rs 7 lakh is not given to everyone. Its calculation is done through a formula. Here know some rules related to EDLI and the formula for determining the claim amount.
The employee does not have to pay the premium
This insurance cover is absolutely free for any employee working in a private company. The contribution for this scheme is made by the company, which is 0.50 percent of the employee’s basic salary and dearness allowance. Usually people are aware of PF money and pension scheme, but are not aware of the EDLI scheme.
The amount is decided by this formula
In this scheme, which provides free insurance up to a maximum of Rs 7 lakh, the calculation of the claim amount is decided under a fixed formula. The insurance amount depends on the basic salary and DA of the last 12 months. The claim for insurance cover will be 35 times the last basic salary + DA. Along with this, a bonus amount of up to Rs 1,75,000 is also paid to the claimant. For example, if the basic salary + DA of an employee for the last 12 months is Rs 15,000, then the insurance claim amount will be (35 x 15,000) + 1,75,000 = Rs 7,00,000.
How to claim
If an EPF subscriber dies prematurely, his nominee or legal heir can claim for insurance cover. For this, the nominee should be at least 18 years of age. If the age is less than this, the guardian can claim on his behalf. While making a claim, documents like death certificate, succession certificate are required. If the claim is being made by the guardian of a minor, then guardianship certificate and bank details will have to be given.
Rules related to EDLI
- An EPFO member is covered by the EDLI scheme only as long as he is employed. After leaving the job, his family/heirs/nominee cannot claim it.
- If the EPFO member has been working for 12 months continuously, then after the death of the employee, the nominee will get a benefit of at least Rs 2.5 lakh.
- A claim can be made for EDLI in case of illness, accident or natural death of the employee while on duty.
- If there is no nomination under the EDLI scheme, then the spouse, unmarried daughters and minor son/sons of the deceased employee are considered as beneficiaries for coverage.
- For withdrawing money from the PF account, along with the form submitted to the employer, Form 5 IF of the insurance cover also has to be submitted. This is verified by the employer.
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