EPFO Insurance Scheme – The Employees’ Provident Fund Organisation (EPFO) provides an extremely valuable benefit to salaried employees through the Employees’ Deposit Linked Insurance (EDLI) Scheme. Under this scheme, EPF members are eligible for a life insurance cover of up to ₹7 lakh, without any premium payment.
This initiative ensures financial security for the family members of employees in the unfortunate event of their death during employment. In this article, we will understand how the scheme works, who is eligible, and the process to claim the insurance benefit.
What is the EPFO EDLI Insurance Scheme?
The EDLI Scheme is a life insurance initiative automatically linked to an employee’s EPF (Employees’ Provident Fund) account. If an EPF member passes away while still in service, the nominee or legal heir is entitled to claim the insurance amount. One of the biggest advantages of this scheme is that the employee does not have to pay any separate premium. The coverage is automatically activated when an employee becomes a member of the EPF, ensuring life insurance protection without any additional burden on their salary.
Key Features of the EDLI Scheme
The EDLI Scheme offers life insurance coverage of up to ₹7 lakh. Employees are not required to pay any premium to avail of this benefit. It is available to all active EPF members without the need for any separate enrollment. Coverage remains valid as long as the employee is employed and contributes to the EPF. There is no requirement for a medical examination or additional paperwork to enroll under this scheme, making it a seamless and automatic insurance coverage for all EPF members.
Eligibility Criteria for Claiming EDLI Insurance
To claim the insurance under the EDLI scheme, certain basic conditions must be fulfilled. Firstly, the employee must have been an active EPF contributor at the time of death. Secondly, the employer must be registered under the Employees’ Provident Fund Act. Ideally, the employee should have contributed to EPF for a minimum of 12 months prior to death, although this is not strictly mandatory. It is also essential that the nominee or legal heir is properly recorded in the EPF records to simplify the claim process.
How the EDLI Insurance Amount is Calculated
The insurance benefit under EDLI is calculated based on the employee’s average basic salary over the 12 months preceding their death. The minimum assured benefit under the scheme is ₹2.5 lakh, and the maximum benefit is ₹7 lakh. The calculation is done by multiplying the average monthly basic salary by 35, with the salary capped at ₹15,000 per month. Additionally, a bonus amount of up to ₹1.75 lakh is added to the final calculated amount, enabling the nominee to receive the maximum payout of ₹7 lakh in most cases.
Also Read:
Ration Card E-KYC Update : Ration Card Holders Beware! No E-KYC Means No Free Rice or Wheat
For example, if an employee named Rajesh Kumar had a basic monthly salary of ₹15,000, the calculation would be 35 times ₹15,000, amounting to ₹5.25 lakh. Adding the bonus of ₹1.75 lakh would bring the total payout to ₹7 lakh. Thus, Rajesh’s nominee would receive ₹7 lakh under the EDLI scheme.
How to Claim the ₹7 Lakh EPFO Insurance Benefit
In the event of the unfortunate demise of an EPF member, the nominee or legal heir must follow a straightforward claim process. First, the claimant must fill out Form 5IF, which is the official claim form for the EDLI insurance benefit. Along with the form, necessary documents must be collected, including the death certificate of the employee, proof of identity and address of the nominee or legal heir, bank account details (such as a cancelled cheque or a copy of the bank passbook), and employer’s certification on the claim form if available.
Once the form and documents are ready, they must be submitted to the nearest regional or sub-regional EPFO office. After submission, the claimant can track the status of the application online through the EPFO portal. Generally, the claim is processed and the amount is transferred within 15 to 30 working days from the date of document submission.
Documents Required for EDLI Claim
To complete the EDLI insurance claim, the nominee must submit a duly filled Form 5IF, the death certificate of the employee, identity and address proof of the nominee, bank account proof (either a cancelled cheque or a copy of a bank passbook), and employer certification if available. Ensuring all documents are accurate and complete can help speed up the processing time.
EPFO EDLI Scheme vs Other Life Insurance Options
The EDLI scheme stands apart from private life insurance and employer-provided group insurance plans. Under EDLI, no premium is required to be paid by the employee, whereas private life insurance usually involves premium payments by the policyholder. Group insurance provided by employers may or may not involve employee contributions depending on company policies.
The maximum benefit under the EDLI scheme is capped at ₹7 lakh, while in private insurance and group insurance plans, the coverage amount may vary widely. Claiming the EDLI insurance is done through the EPFO office, while claims for private or group insurance are processed through insurance companies or the employer’s HR department. Furthermore, EDLI coverage is valid only during the employee’s period of active EPF membership, unlike private policies which are governed by the policy term.
Also Read:
Employees Pension Scheme : Government Proposes ₹7,500 EPS Pension Hike – Big Relief for Retirees
Important Points to Keep in Mind
Employees do not have to apply separately for EDLI coverage, as it is automatically included with EPF membership. It is crucial for employees to ensure that their nominee details are always updated in the EPF records, as this will make the claim process simpler and faster for the family. In the case of a claim, the benefit amount is directly transferred to the nominee’s bank account, offering immediate financial support during difficult times. Since no medical tests or additional paperwork are required, the process of availing the insurance benefit is extremely simple.
The Employees’ Deposit Linked Insurance (EDLI) Scheme offered by EPFO is a critical financial safety net for salaried employees in India. With a maximum insurance benefit of ₹7 lakh available at no cost to employees, it ensures that families are supported during the most challenging times. Keeping EPF and nominee records updated is essential to fully utilize this benefit. Every salaried employee covered under EPF should be aware of this life insurance provision and ensure that their loved ones can easily claim it when needed.
