The Employees’ Deposit-Linked Insurance Scheme (EDLI) is a social security benefit launched on August 1, 1976, for the employees enrolled under the Employees’ Provident Fund Organisation (EPFO). The scheme’s unique feature allows an EPFO member to automatically become an EDLI subscriber while the employer is the sole contributor to the plan. The employer’s share is calculated based on the employee’s salary, or 0.50 per cent of the pay.
The scheme also offers death cover to the employees in case of their demise during the job, and the nominee or the legal heir will get the insurance amount, up to Rs 7 lakh, depending on the employee’s last 12-month salary. The scheme works in conjunction with the Employees’ Provident Fund (EPF) and Employees’ Pension Scheme (EPS) under EPFO.
What Does EDLI Offer To The Nominee Or Legal Heir?
Effective April 28, 2021, EPFO increased the maximum limit from Rs 6 lakh to Rs 7 lakh. However, at the time, there was no minimum limit. So, on February 15, 2018, the minimum limit was set at Rs 2.5 lakh, and further, it was extended retrospectively on February 15, 2020.
- If an employee has worked for less than 12 months in the organisation, the insurance amount will be the average balance of the provident fund in the preceding 12 months, up to Rs 50,000; if it is more than Rs 50,000, the amount will be “Rs 50,000 plus 40 per cent of the amount above Rs 50,000 for a maximum Rs 1 lakh,” as per EPFO.
- If the employee worked in the same establishment for over 12 months and died between 15-02-2018 and 28-04-2021, the amount will be paid as part of the calculation under Part A and Part B, whichever is higher.
Part A: The insurance benefit will be calculated as mentioned above.
Part B: The average of the last 12 months’ salary (a maximum of Rs 15,000) multiplied by 30 and 50 per cent of the average monthly balance (a maximum of Rs 1.5 lakh) added together. So, the maximum amount could be Rs 6 lakh. However, if the total amount comes to be less than Rs 2.5 lakh, even then, the minimum of Rs 2.5 lakh will be paid.
- If the employee died on or after 29-04-2021 and has been working for more than 12 months in one or more establishments, the payment will be 35 times the average of the last 12 months’ salary (a maximum of Rs. 15000), and 50 per cent of the monthly average balance in previous 12 months (a maximum of Rs 1,75,000). So, the maximum amount can be Rs 7 lakh, and the minimum will be Rs 2.5 lakh.
If the member dies without declaring any nominee, the payment is made to the family in equal proportion, including spouse, unmarried daughter, and son up to the age of 25 years.
Any establishment with more than 20 employees is required to register for EPF. Thus, anybody working in such organisations automatically becomes a member of EPF and EDLI without paying anything extra from salary.