Employees Deposit Linked Insurance (EDLI) Scheme

What is EDLI Scheme?

An Employees Deposit Linked Insurance Scheme (EDLI) is a social security benefit that the Government of India provides to private sector employees. Under this scheme, the employer contributes a certain percentage of the employee's basic salary to a common fund, which is used to pay a lump sum amount to the nominee of the employee in case of his or her death while in service. The EDLI scheme is administered by the Employees Provident Fund Organization (EPFO) and covers all employees who are members of the Employees Provident Fund (EPF) scheme.

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What are the features of the EDLI Scheme?

EDLI scheme benefits:

• It is a group-term insurance scheme that covers employees who are members of the Employees' Provident Fund (EPF).
• The employer contributes 0.5% of the monthly wages of each employee, subject to a maximum of ₹ 15,000 per month, to the EDLI fund.
• The employee does not have to pay any contribution to the scheme.
• The minimum assurance benefit under the scheme is ₹ 2.5 lakh, and the maximum is ₹ 7 lakh, depending on the average balance in the employee's provident fund account in the last 12 months.
• It provides a lump sum payment to the nominee of the employee in case of death due to any cause, whether natural or accidental.
• The nominee can claim the benefit by submitting a prescribed Form along with the death certificate and other relevant documents to the regional provident fund commissioner.
• The Employees' Provident Fund Organisation (EPFO) regulates the scheme and applies to all establishments covered under the EPF Act, 1952.

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Documents required for a claim under EDLI

To claim under EDLI, the nominee is required to submit the following documents:

• Duly filled form 5 IF
• Death certificate of an insured person
• Copy of canceled cheque of bank account in which nominee wants to receive the payment.
• Succession Certificate in case the claimant is a legal heir
• Guardian Certificate in case the claim is made on behalf of a minor by a person who is not the natural guardian of the minor

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How to avail benefits under EDLI?

• The nominee specified by the insured person or the legal heir can claim the benefits under EDLI if the nominee is not registered.
• At the time of death, the deceased person should have been a contributor to the EPF scheme.
• Fill in the EDLI Form 5 IF after the member's death to get the benefits under EDLI.
• The claim form is required to be certified and signed by the employer.
• In case of no employer, Form 5 can be certified by any of the following:
  • Magistrate
  • Gazetted Officer
  • Village Panchayat President
  • Postmaster or Sub Postmaster
  • MLA or MP
  • Member of the regional committee of CBT or EPF
  • Chairman/Member/Secretary of Local Municipal Board
  • Manager of the Bank in which the account was maintained
• Submit the Form with the required documents to the regional EPF Commissioner’s Office.
• The claimant can submit Form 20 along with Form 10C/D to claim all benefits under EPF, EPS, and EDLI Schemes.
• The EPF office will verify the claim and process the payment within 30 days of receiving the claim form.

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How do employees and employers contribute to the EPF, EPS, and EDLI?

EPF: The employee contributes 12% of his/her basic salary to the EPF account. The employer also contributes an equal amount, of which 8.33% contributed as EPS and 3.76% contributed as EPF.

EPS: The employee does not contribute anything to the EPS account. The employer contributes 8.33% of the employee's basic salary, subject to a maximum of ₹ 1,250 per month, to the EPS account. The EPS account provides pension benefits to the employee after retirement or death.

EDLI: The employee does not need to contribute anything to the EDLI scheme. The employer contributes 0.5% of the employee's basic salary, subject to a maximum of ₹ 75 per month, to the EDLI scheme. The EDLI account provides insurance benefits to the nominee of the employee in case of death while in service.

The main objective of the Employees Deposit Linked Insurance (EDLI) scheme is to provide financial help to the family member of an employee in case of death. The employee should register the nominee when opting for EPF, EPS, and EDLI schemes.

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Formula of EDLI calculation

EDLI Calculator Formula:

EDLI benefit = (Average monthly salary x 30) capped at Rs. 15,000 + Bonus (subject to change)

Explanation:

1. Average Monthly Salary: This is calculated by considering the employee's salary in the last 12 months of employment. There's a cap, however. Only a maximum of Rs. 15,000 per month is considered for the calculation.
2. Multiplication by 30: The average monthly salary is then multiplied by 30.
3. Capping: The resulting figure is capped at a maximum limit. As of May 22, 2024, this maximum limit is Rs. 7 lakh.
4. Bonus: There's an additional bonus amount added to the capped figure. This bonus amount can change, but it's currently included in the final payout.

Example:

Let's say an EPF member's average monthly salary in the last 12 months was Rs. 12,000, and the current bonus amount is Rs. 2.5 lakh.

EDLI benefit = (12,000 x 30) capped at 15,000 + 2.5 lakh = Rs. 3,60,000 (capped at 15,000) + Rs. 2,50,000 = Rs. 6,10,000

Since the total benefit cannot exceed Rs. 7 lakh, the nominee would receive Rs. 6,10,000.

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