The beneficiaries of Employees Deposit Linked Insurance Scheme, also known as EDLI, include firms under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. This insurance cover works in conjunction with the Employees’ Provident Fund (EPF) and the pension scheme run by EPFO. The amount of the insurance determines the last salary of the insurance paid to the family of the survivor.
Employees Deposit Linked Insurance Scheme details
EDLI is applicable to employees who draw a basic salary + DA below Rs 15,000 per month. The maximum benefit available to those covered by this scheme is Rs 7 lakh. Another important feature is that no contribution is taken from any employee for the EDLI coverage. Only those organisations that employ more than 20 persons are covered under the EPF, and therefore, come under EDLI cover.
EDLI benefits
The scheme comes without any premium payment. In other words, it is free. It offers insurance coverage to the next of kin of an employee if he/she dies before retirement. The employee’s family members will be given the payment even if he/she passes away in a foreign country.
Calculation of benefit
The payout is made to the nominee in the EPF documents. It will be given as a lump sum. The legal heir will get it if the deceased employee hadn’t nominated anyone. The payout is calculated using a simple formula. It is: 30 days X average monthly salary of the Employee for the past 12 months (Rs 15,000 is the ceiling). Add to this a bonus of Rs 2.5 lakh.
Therefore, if an employee was getting paid Rs 15,000 a month, the total payout will be Rs (15000 X 30) + Rs 250,000 = Rs 7,00,000. Thus, the ceiling of Rs 7 lakh comes into play.
Documents needed to claim benefit
If an employee has died, his/her family members must provide the following documents to claim the benefit. These are death certificate of the employee, succession certificate from legal heir if none has been nominated, copy of cancelled cheque where the payment will be made and a completed form 5 IF.
The Employees Deposit Linked Insurance Scheme is a scheme about which most potential beneficiaries are not aware of. But it comes for free. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
