The Employees’ Provident Fund Organization (EPFO) offers a valuable life insurance facility to all its members through the Employees Deposit Linked Insurance (EDLI) scheme.
Every EPFO member is entitled to an insurance cover of up to 7 lakhs under this initiative.
This insurance scheme has been in operation since 1976 and aims to provide financial support to the families of employees in the event of an unfortunate incident.
Let’s explore the scenarios in which this scheme can be availed and how the claim amount is determined.
Claiming Financial Help in Case of Demise
The primary objective of the EDLI scheme is to ensure the financial security of an employee’s family.
If, in any unfortunate circumstance, an EPFO member passes away, their legal heir or nominee can claim the insurance amount.
Remarkably, this insurance cover comes at no cost to employees working in private companies.
The company contributes 0.50 percent of the employee’s basic salary and dearness allowance towards this scheme.
Calculating the Claim Amount
You might be curious about how the claim amount is calculated in a scheme that provides free insurance up to 7 lakhs.
Well, the insurance amount depends on the employee’s last 12 months’ basic salary and dearness allowance.
The claim for insurance cover will be 35 times the last drawn Basic Salary+DA, with an additional bonus of up to 1,75,000.
For instance, if an employee’s last 12 months’ basic salary + DA amounts to Rs 15,000, then the insurance claim amount will be (35 x 15,000) + 1,75,000 = Rs 7,00,000.
Claiming Procedure
In the unfortunate event of the untimely demise of an EPF subscriber, their nominee or legal heir can claim the insurance cover.
The nominee must be at least 18 years old; otherwise, a guardian can make the claim on their behalf.
Essential documents, such as the death certificate and succession certificate, are required during the claim process.
If the claim is being made on behalf of a minor, guardianship certificate and bank details will be necessary.
Key Rules and Eligibility for EDLI
The EDLI scheme can be claimed in cases of illness, accidents, or natural death of the employee while on the job.
However, the EPFO member is covered by the EDLI scheme only as long as they remain employed.
After leaving the job, their family, heirs, or nominee cannot claim the insurance amount.
If an EPFO member has been continuously employed for 12 months, the nominee is entitled to receive a minimum benefit of 2.5 lakhs upon the employee’s death.
In the absence of a nomination under the EDLI scheme, the spouse, unmarried daughters, and minor sons of the covered deceased employee are considered beneficiaries.
Claiming the insurance cover requires submitting Form 5IF for insurance cover withdrawal along with the appropriate form to the employer.
The employer will verify the details before processing the claim.
