The Employees’ Deposit-Linked Insurance Scheme (EDLI) is an insurance scheme launched by the Employees Provident Fund Organisation (EPFO) of India in 1976. It provides a safety net for employees who are members of the EPF and have their money deposited in it. The insurance coverage provided under EDLI can be used to pay out benefits to family members or dependents if the employee passes away due to any reason, including natural causes. This article aims to provide an overview of EDLI, discuss its features, eligibility criteria, premiums, and other important points related to this insurance scheme.

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  • What is Employees’ Deposit-Linked Insurance?

Employees’ Deposit-Linked Insurance (EDLI) is a group life insurance scheme administered by the Employees Provident Fund Organization (EPFO). The primary objective behind introducing this scheme was to provide financial protection against death due to any cause before retirement age or after retirement but within 60 months thereafter. In the case of death due to any cause before attaining 58 years of age, the beneficiary will receive the sum assured plus interest on the account balance as per the rate applicable from time to time till the date of payment, along with the bonus declared at the end of the year where membership has continued for 5 years or more. The benefit payable under EDLI would be an equal amount up to a maximum of Rs 6 lakhs, depending upon the total deposits made by the employee during his/her service period with the employer registered with EPFO, with a minimum amount not less than Rs 1 lakh in all cases. It also covers premature death even outside employment, i.e., accidental deaths occurring beyond the workplace, subject to certain conditions like having completed three continuous months of contributory membership prior to such accidents happening, etc.

  • Eligibility Criteria for Availing Benefits Under EDLI:

In order to avail benefits under EDLI, one must satisfy certain eligibility criteria:

  • Be employed with an establishment covered under the Employees Provident Funds & Miscellaneous Provision Act 1952.
  • Have a valid UAN number allotted by EPFO.
  •  Have contributed towards the PF Account regularly over a period of 3 months without a break.
  •  Not been dismissed from service on grounds of misconduct, dishonesty, theft, etc.
  • Age should not exceed 58 years.
  • Premium Structure Under EDLI

Premiums for availing cover under EDLI vary according to different categories based on contributions made into the provident fund account over a particular fiscal year. For example, Category A includes those establishments whose contribution does not exceed 12%, whereas Category B consists of establishments making contributions between 12% – 14%. The following table gives further details about the premium structure applicable across various categories:

Table 1: Premium Rates For Different Categories Of Establishments Covered Under EDLI

CategoryRate Per Thousand As on 01 April 2021
A0.30 Paise
B0.45 Paise
  • Level Of Coverage Provided By EDLI

The maximum level of coverage provided under EDLI is Rs. 6 lakhs to the beneficiary of the deceased employee in the case of death due to any cause before attaining 58 years of age or within 60 months after retirement. In cases where the total deposits made into the provident fund account by the employee are less than the mentioned amount, the benefit payable will be an equal amount contributed over the period of service up to a maximum of Rs. 6 lakhs. For example, if an employee has contributed a total amount of Rs. 3.5 lakhs towards the EPF Account during his/her employment period, the benefit payable to the nominee/beneficiary would be the same, i.e., Rs. 3.5 lakhs only, even though it’s lower than the maximum limit specified.

The amount received as benefits from the EDLI scheme is exempt from income tax under Section 10(10D) of the Income Tax Act, 1961, with certain conditions. These conditions include the premium paid should not exceed 1.5% contribution, and the nomination should have been registered at the time when the policy was taken out, etc.

  • Claim Procedure Under EDLI

To claim benefits under EDLI, the following steps need to be followed:

  • Complete Form-2, which can either be downloaded online or obtained from the concerned EPFO office.
  • Attach all required documents such as the death certificate, KYC details (Aadhar Card, PAN card, etc.), bank passbook showing the balance in the PF account, etc.
  • Submit the form along with the documents at the nearest EPFO office.
  • Once the application for claims is accepted, the payment will be credited directly into the bank account nominated by the deceased employee through Electronic Challan cum Return (ECR). In case there is no nomination registered at the time of death, the payment would be sent to the legal heir who needs to apply for the same separately.
  • Conclusion :

The Employees’ Deposit-Linked Insurance Scheme (EDLI) provides financial protection against untimely demise due to any reason before retirement age or within 60 months thereafter, up to a maximum sum assured of Rs. 6 lakhs, depending upon the contributions made by the employee towards the provident fund account over the period of service. It also offers tax exemptions on benefits availed, subject to the fulfillment of criteria specified under Section 10(10D) of the IT Act, 1961, and provides an easy claim procedure to enable beneficiaries to receive their dues without much delay or hassleldd-free manner.

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