Most salaried employees are familiar with the Employees’ Provident Fund (EPF) — a retirement savings plan where both employer and employee contribute every month to build a secure future.
But what many don’t know is that EPF also includes a life insurance benefit through a scheme called the Employees’ Deposit Linked Insurance (EDLI) scheme.
This hidden benefit can provide crucial financial support to your family if something unfortunate happens during your service period.
What Is the EDLI Scheme?
The EDLI scheme offers life insurance coverage to all EPF members.
If an employee passes away while still in service, their nominee (or legal heir) receives an insurance payout ranging from ₹2.5 lakh to ₹7 lakh, depending on the employee’s salary and provident fund balance.
The best part — employees don’t have to pay anything for this coverage.
The employer contributes 0.5% of the employee’s wages toward the scheme.
Who Can Avail EDLI Benefits?
The scheme covers all employees working in factories and establishments that are registered under the EPF Act.
Membership is automatic for anyone enrolled in the EPF.
However, there’s one exception — tea factories in Assam are not covered under this scheme.
Key Benefits and Claim Process
The EDLI scheme ensures that the nominee or legal heir of an EPF member gets a life insurance payout of up to ₹7 lakh in case of the member’s death during employment.
Additionally, an assurance benefit is provided based on the average PF balance of the last 12 months.
The claims are usually processed within 20 days, ensuring quick financial relief to the family.
Employers are required to contribute regularly for both direct employees and contract workers and must submit the payment within 15 days of the month’s end via bank draft, cheque, cash, or online transfer.
What If Employers Default on Contributions?
If an employer delays or fails to make contributions, penalties are imposed at 1% per month on the pending amount.
However, in certain situations such as a merger, change in management, or financial hardship, the Central Board may reduce or waive the penalty — sometimes even up to 100%.
How to Get Maximum Benefit from EDLI
The total insurance amount is calculated based on your average monthly PF balance over the past 12 months.
The benefit can be up to:
35 times the average monthly wages (up to ₹15,000 per month), plus
50% of the average PF balance, capped at ₹1.75 lakh.
To get the maximum benefit, employees should maintain consistent PF contributions, as a higher balance increases the assurance amount.
Why It Matters
While many focus only on the retirement benefits of EPF, the EDLI scheme acts as a built-in life insurance plan at no extra cost.
It’s an important safety net that ensures your family stays financially protected if life takes an unexpected turn.
