This cover is free for EPFO subscribers!

Employees who are members of EPFO are provided with various benefits apart from pension. Among these, is the the Employee’s Deposit Linked Insurance Scheme (EDLI). Many people are unaware of this scheme. Under EDLI, if an employee dies for any reason during his service period, his nominee receives a insurance benefit of up to 7 lakh rupees. The special thing is that this insurance is available for free. The employee does not have to pay any premium.

So how does this work?
For employees whose PF is deducted, their organisation deposits 0.5% of their basic salary plus DA,  as a premium every month . The maximum limit of the basic salary is set at 15,000 rupees. So, the company deposits  75 rupees every month for EDLI coverage. Based on this premium, employees get insurance coverage of up to 7 lakh rupees.

If a subscriber dies, then his nominee will receive the benefit of the insurance. This benefit is given in case of natural death, accidental death, or death due to illness. However, the benefit of this insurance will only be given if the employee has worked for at least 12 months before his death. Plus, he must have also regularly deposited PF. Even if he has worked with one or more companies, it doesn’t matter. If no nominee has been registered under the EDLI scheme, then the employee’s legal heir will have to produce legal documents to claim the benefit.

Amount of insurance
There is a formula to calculate the insurance cover. The average basic salary of the employee for the previous 12 months is taken into account, subject to a maximum of 15,000 rupees. The amount of insurance is 35 times the basic salary. A bonus of up to 1.75 lakh rupees is included in this amount. This bonus is determined based on the employee’s average PF balance during the last 12 months. However, the maximum benefit of insurance will be only 7 lakh rupees. The minimum amount of insurance coverage under EDLI is 2.5 lakh rupees.

For example, if an employee’s average monthly basic salary is  15,000 rupees. And if he dies during service period, the insurance will be calculated this way…15,000 x 35 = 5,25,000 rupees. In addition, 1,75,000 rupees will be added as a bonus. So, his family will receive seven lakh rupees of insurance coverage.

Claim filing
In case of the death of an EPF subscriber, his nominee or legal heir can file a claim to get the insurance cover. The nominee must be at least 18 years of age. In case, the nominee is younger, a claim can be made by his guardian. Documents such as the death and succession certificates will be required. To withdraw money from the PF account, two forms are required. One is the Form which was submitted with the employer. And other is form 5IF of insurance cover. Once this simple process is completed, the family of the victim will receive the insurance coverage.

If you are a member of EPFO and your PF is being deducte, share the UAN number with your family members. If the nominee has not yet been registered in the PF account, then complete this work soon. Update the nominee after marriage. Discuss about PF, EPS, and EDLI with your spouse from time to time. Make a note in your diary. If the nominee has complete information about this, then, he will not have to wander to get the claim amount.