The uncertainties of the world have made it important for everyone to get the insurance that covers every imperative. And this is especially important for employees in the private sector who do not get the same access to social security as the public sector employees. Hence, to increase the benefits of insurance to the employees in the private sector, the Government launched EDLI in the year 1971. EDLI stands for Employees Deposit Linked Insurance Scheme. The EDLI Scheme is an insurance content for private-sector employees provided by the Employees Provident Fund Organization (EPFO).
What is EDLI Scheme for Private Sector Employees?
Understanding the EDLI meaning is important for everyone in order to know how it can benefit them and the ways to claim it when needed. EDLI or Employees Deposit Linked Insurance Scheme is clubbed as well as linked under the EPFO scheme and EPS scheme provided for the private sector employees. When an employee enrolls in the EPFO scheme, they are automatically subscribed to the EDLI scheme as well. As the employees cannot choose any one of the schemes, they still get the freedom to transfer the schemes when they shift to a new company. The contribution from their new employer will be continued in the same account.
In EDLI, the nominee registered for the scheme receives a lump-sum amount in the event if the person is injured or dead during their period of work in any private firm. All the organizations registered under Employee Provident Fund and Miscellaneous Act, 1952, have access to the EDLI scheme. All these organizations are required to subscribe to this scheme as well as others which can be beneficial for their employees. Also, the benefit extent of this scheme is decided by the last drawn salary of the employee.
Contributions Made to EDLI Scheme
As already mentioned, that an employee can directly not be a part of contributions made towards the EDLI Scheme. If they are subscribed to EPF, they will automatically be a part of the EDLI Scheme. As the employees enjoy an insurance content under this scheme, the contributions made to it are made by the employer. Below mentioned are how the contributions are done to EDLI:
- The contribution made to this scheme is done in line with the formula of the fixed percentage from the salary and DA.
- The contribution of an employee in the Employee Provident Fund (EPF) - 12%.
- The contribution of the employer for the Employee Provident Fund - 12% excluding the contribution made to EPS.
- The contribution made by an employee in the Employee’s Pension Scheme (EPS) - None.
- The contribution made by the employer in the Employee’s Pension Scheme (EPS) - 8.33%, which is subject to the maximum contribution of ₹ 1,250.
- Contribution to EDLI by the employee - None.
- Contribution to EDLI by the employer - 0.50%, which is subject to a maximum of ₹ 75.
Attributes and Benefits of EDLI Scheme
Here are a few of the features as well as benefits of the Employees Deposit Linked Insurance Scheme (EDLI) which is applied to all the beneficiaries under this scheme:
- EDLI Scheme is applicable for all the employees with a basic salary under the amount of ₹ 15,000. And if the basic salary is more than ₹ 15,000, then the maximum benefit for the applicable employees will be capped at ₹ 6,00,000. As of 28/04/21, the maximum benefit the employees can get is ₹ 7,00,000.
- The employees only need to contribute to EPF and there is no need for them to contribute to EDLI.
- A bonus of ₹ 1,50,000 is available under EDLI. And with the effect from 28/04/21, this bonus amount has been increased to ₹ 2,50,000.
- The increment in minimum amount for benefit was ₹ 2.5 lakhs made by the ministry and was valid for only two years. But, as of 15 February 2021, the EPFO has extended the amount to ₹ 2.5 lakhs with the retrospective effect.
- Organizations that extend the mark of 20 employees need to register for EPF. Hence, the employee who has subscribed to an EPF account will automatically become eligible and automatically gets registered for the EDLI Scheme.
- Under the EDLI Scheme, no exceptions are made for anyone to the insurance contentage. EDLI protects the insured people interminably no matter where they are in the world.
- As per the scheme’s provisions, the employers must contribute 0.5% from the basic salary of the employee or a maximum amount of ₹ 75 per month. If for the employee, there is no other group scheme for insurance, then the maximum contribution amount of₹ 15,000 can be capped per month.
- To the basic salary, the dearness allowance should be added for every EDLI calculation done.
- The premium payable amount is similar for all the private organization employees.
- The EDLI Claim amount is 30 times that of the salary of the employee (Salary is calculated as D.A + Basic Salary).
- Age or any other individual factor won’t affect the eligibility of employees’ EDLI benefits.
- In accordance with Section 17 (2A) of the Act, the employer has the right to opt-out from this scheme if the employer has already chosen a better insurance policy under a different scheme for its employees.
- Alternatively to the EDLI Scheme, the employer has the right to go for other schemes, such as LIC Group Insurance Scheme.
EDLI Calculation for EDLI Charges
If there is a registered nominee, then the lump-sum amount will be received by them in the event of the death of the insured individual. But if in case, there is no registered nominee, then the insurance amount will be paid to the legal heir of the insured person. With the effect from 28/04/21 onwards, the pay-out of the insured person will be calculated as per the EDLI calculation formula in case of death:
[Average salary (monthly) of the employee from the past 12 months (which is capped at ₹ 15,000 per month) * 30] + the bonus amount of ₹ 2.5 lakhs.
Hence, the maximum pay-out of insurance content under EDLI will be ₹ 7 lakhs.
FORM 5 Of EDLI
The EDLI Form 5 will be filled by the nominees, heirs, or family members of the insured person after their death, so that they can claim the insured amount of the individual under the EDLI Scheme. Each claimant has to separately fill the form. If the claimant is a minor, then, the guardians will fill the form on behalf of the minor claimant. If there is more than one minor claimant from the same guardians then, they will need to fill a single form, on behalf of all the claimants.
This form will be filled offline along with the certificate furnished by the employer, which mentions the date of death of the insured person. The employer also needs to mention the mode of transfer of money as well.
The form will be submitted to the regional EPF Commissioners office. The claimant will submit the form along with the documents required for proof. The claim needs to be settled within 30 days and if the EPF Commissioner fails to settle the claim within 30 days then he/she is liable to pay an interest rate of 12% per annum which is from the deadline date to the actual date of disbursement.
Required Documents to Claim EDLI Benefits
Below is the list of documents that the one needs to claim the EDLI benefits:
- Certificate of death of the member.
- Certificate of guardianship when the claim is made on behalf of a minor member of the family/heir/nominee is done by another guardian than the natural one.
- Certificate of succession if the claim is made by a legal heir.
- Canceled cheque copy of the bank account in which the payment is made to have opted.
- In case if the family member was previously employed under any establishment exempted under the scheme of EPF, 1952 then the employer of such establishment will need to furnish the PF details of the past 12 months under the certificate part, along with an attested copy of the Nomination form of the member.
How Can You Apply for EDLI Scheme?
EDLI is beneficial for private-sector employees to get insurance cover benefits while working in any private organization. Applying for EDLI is quite easy as you do not need to do anything. To subscribe under EDLI Scheme, you do not need to register for it specifically. If you have an EPF account, you will automatically get registered under the EDLI Scheme. Also, employees will not need to make a contribution to this scheme. The employer will make a contribution to the EDLI of their employee.
Step-By-Step Guide for Claiming for EDLI Benefits
The amount pay-out can be claimed by the nominee. If there is no nominee for the claim, then the family members can claim the amount under the EDLI scheme. If the surviving family member is making a claim, then the oldest son or married daughters whose husbands are alive cannot claim the amount. If there is neither a nominee nor any family member, then the legal heir can claim it.
Here is The Step-By-Step Process to Claim the Amount Under EDLI:
- Fill Form 5 after the death of the member in order to get the insurance benefits provided by EDLI.
- At the time of death, the member should have an active contributor in the EPF Scheme.
- The claim form needs to be certified as well as signed by the employer.
- If there is no employer, then the form needs to be attested by any of the following:
- Gazette Officer
- Secretary/ Chairman/Municipal or District Local Board Member
- Village Panchayat President
- Postmaster or Sub Postmaster
- MLA or MP
- CBT Member or Regional Committee of EPF Member
- Manager of Bank in which the account was opened and maintained
- Attest the application form along with the required documents and submit it to the commissioner.
- After submitting, the verification process will take place of the application form and documents submitted to the commissioner. After verification, the EDLI claim amount will be sanctioned by the commissioner.
Along with Form 5, claimants can also fill Form 20 for EPF withdrawal for claiming in case of the deceased member, and also Form 10C/Form 10D can be filled to claim the benefits of EDLI, EPF, and EPS (all the three schemes) at once.
Eligibility Criteria for EDLI Claims
Below is the criteria that are applied to apply for claims of insurance benefits under the EDLI Scheme:
- Family member/ the nominees nominated by the member under the EPF scheme.
- In case if there are no nominees, then all the family members except for the oldest sons, married daughters, and married granddaughters with husbands (who are alive).
- If there is no nominee or no family member, then the legal heir.
- Also, the guardians of minor nominees/legal heir/family members.
Steps To Check EDLI Claim Status
- Go to the official website of EPFO. There you will find the option “Our Services”, Click on it.
- Then click on “Know Your Claim Status”
- You will be redirected to a window where you will be asked to enter your UAN details and the captcha. Enter these details.
- Then, click on the “Submit” button. The details of your claim and status will appear on the screen.
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Frequently Asked Questions (FAQ's)
What are EDLI Inspection Charges?
In the case exempted Establishment under this scheme, the inspection costs at 0.005% that is a minimum of ₹ 1 needs to be paid in place of the charges for admin.
What is EDLI Meaning?
EDLI stands for Employees Deposit Linked Insurance Scheme which provides insurance content for private sector employees. The employee does not need to make a contribution to the EDLI Scheme as it will be done by the employer.