If you are a salaried employee and money is deducted from your salary for Provident Fund (PF), you may also be covered under a life insurance scheme that can provide financial support to your family.
The scheme is called Employees’ Deposit-Linked Insurance (EDLI). It provides an insurance benefit of up to ₹7 lakh to eligible family members or nominees if an EPF member dies while in service.
The best part? Employees do not have to pay a separate premium for this insurance cover.
Here is everything you need to know about the EDLI scheme, how the benefit is calculated and how your family can claim it.
What Is the EDLI Scheme?
The Employees’ Deposit-Linked Insurance Scheme (EDLI) is an insurance scheme linked to the Employees’ Provident Fund (EPF).
Eligible EPF members are covered under this scheme without needing to purchase a separate insurance policy.
If an eligible employee dies while in service, the nominee or eligible family members may receive a lump-sum insurance benefit. The maximum benefit under the scheme is ₹7 lakh.
The purpose of EDLI is to provide financial support to the employee’s family during a difficult time.
Do You Need to Pay Extra for EDLI Insurance?
No. Employees do not pay a separate premium for EDLI.
The scheme is funded through contributions made by the employer. Therefore, employees do not need to make an additional payment from their salary to receive this coverage.
However, the benefit depends on the employee’s eligibility under the scheme.
How Is the ₹7 Lakh EDLI Benefit Calculated?
The amount payable under EDLI depends on the applicable scheme rules, the employee’s average monthly wages and the average PF balance.
For eligible cases, the calculation broadly includes:
- Salary-based component: 35 times the average monthly wages, subject to the applicable wage ceiling.
- PF balance component: 50% of the average PF balance, subject to a maximum of ₹1.75 lakh.
The total benefit is subject to the scheme’s minimum and maximum limits.
For example, if the average monthly wage considered for calculation is ₹15,000, the salary-based component would be ₹5.25 lakh. If the PF balance component reaches its maximum of ₹1.75 lakh, the total would be ₹7 lakh.
This is how the maximum insurance benefit can reach ₹7 lakh. The actual amount may be lower, depending on the applicable rules and the employee’s circumstances.
Is Everyone Eligible for the Full ₹7 Lakh?
No. ₹7 lakh is the maximum benefit, not a fixed payout for every employee.
The amount payable depends on factors such as average wages, PF balance, employment history and the eligibility conditions under the scheme.
For the enhanced benefit under the applicable rules, continuous service requirements may also apply. The scheme provides a minimum assurance benefit of ₹2.5 lakh in qualifying cases, while the maximum benefit is ₹7 lakh.
Families should check the applicable eligibility conditions before assuming that the full amount will be payable.
How Can the Family Claim EDLI Benefits?
If an eligible EPF member dies while in service, the nominee or other eligible beneficiary can apply for the insurance benefit through the Employees’ Provident Fund Organisation (EPFO).
The claim generally involves the following steps:
1. Obtain the employee’s death certificate.
2. Arrange the claimant’s bank details and relevant nominee or legal-heir documents.
3. Complete the applicable EDLI claim form, traditionally Form 5IF, or follow the current EPFO death-claim process.
4. Submit the required documents through the appropriate channel, with employer verification where required.
The exact documentation and process may vary depending on the circumstances. Families can contact EPFO or the employer for assistance with filing the claim.
Why Is EPF Nomination Important?
Updating your EPF nomination is an important step in financial planning.
The nomination under the EPF scheme also applies to EDLI benefits. Keeping your nomination details accurate can help establish who is entitled to receive the benefits and make the claim process easier.
Check your nomination details and update them if your family circumstances have changed.
Final Thoughts
EPF is not just about building retirement savings. For eligible members, it can also provide insurance protection to their families through the EDLI scheme.
You do not need to pay a separate premium for this benefit, and the maximum insurance amount can be ₹7 lakh.
Take a few minutes to check your EPF nomination and make sure your family knows about this benefit. Sharing this information with other salaried employees may also help them understand the financial protection available through EPF.
Important: The actual EDLI payout depends on the applicable scheme rules and individual eligibility. Always verify the latest requirements with EPFO before making a claim.
