Employees Deposit Linked Insurance (EDLI) Scheme - Meaning, Features & Calculation

With an objective to provide social security benefits to employees of the private sector, the government of India launched the Employees Deposit Linked Insurance Scheme (EDLI) in 1976. The scheme is managed by Employees’ Provident Fund Organization (EPFO).All the organizations that are registered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 need to compulsorily provide EDLI facility to all its employees to broaden the benefit of life insurance to its employees.Whether your employer contributes for the Employees’ Provident Fund (EPF) or Employee Pension Scheme (EPS) , you will be automatically covered EDLI. Under the EDLI scheme, the nominee/family member / legal heir is eligible to receive lump sum pay-out of up to Rs.6,00,000 in case the insured person dies due to natural cause or accident or illness.

1. The employer makes the contribution towards the scheme.
2. An employer is required to contribute 0.5% of basic salary or Rs. 75 per employee per month as part of the EDLI scheme. If an employer has not subscribed to any other group insurance, the maximum EDLI contribution is capped at Rs.15,000 each month.
3. There is no need for employees to enrol separately for EDLI. The EPF or EPS amount get deducted directly from the salary by the employer.
4. The EDLI scheme benefits can be availed by a nominee, family member or legal heir.
5. You receive the EPFO benefits as long as you are an active EPF account member.

In the event of the death of an insured employee, the nominee is eligible to get the death benefit. If a nominee is not mentioned under the insurance scheme, a legal heir gets the lumpsum pay-out.

• To calculate the pay-out, the EDLI facility considers 30 times the average monthly salary in the last 12 months of employment.
• The Average Monthly Salary of the Employee for the last 12 months is capped at 15,000 per month.
• Plus, a bonus amount of Rs.1,50,000 is also provided under the scheme.

[Average Monthly Salary of an Employee for the last 12 months] x 30 + Bonus Amount of Rs. 1,50,000/-So, the calculation would be (15,000 x 30) + 1,50,000 = 6,00,000

The following documents need to be submitted by the applicant to file for a claim under EDLI :

1. Death certificate of an insured person
2. Copy of cancelled cheque where you want to receive the payment
3. Duly filled form 5 IF
4. Succession Certificate in case the claimant is a legal heir
5. 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

1. Gazetted Officer
2. Bank Manager
3. Magistrate
4. Sub Postmasteror Post-Master
5. Any member of the CBT of EPF regional committee
6. Local MPA or MLA

1. The nominee can claim for the death benefit. In case a nominee is not registered by the insured person, a legal heir or family member is eligible to get the lumpsum pay-out
2. The pay-out is given on the condition that the insured person is an active contributor to the EPF Scheme.
3. The claimant must submit Form 5 IF to avail the proceeds from the insurance cover.
4. The claim form needs to be signed and certified by the employer.
5. In case the employer is not able to provide the signature, the form should be attested by the following members:
6. To process the claim, the claimant needs to submit the claim form along with the necessary documents to the regional office of the EPF Commissioner.
7. For EPF withdrawal, the claimant should also submit Form 20 and Form 10C/D to claim benefits under EPF, EPS and EDLI.
8. Once all the documents and claim form is verified & accepted by the regional EPF Commissioner’s Office, the claim needs to be settled within 30 days. In case there is a delay in payment, an interest rate of 12% p.a is applicable till the date of actual payment of the claim.

• Any employee who has a basic salary of up to Rs.15,000 can subscribe to the EDLI Scheme.
• In case an employee earns a salary that is more than Rs. 15,000, then the maximum benefit as per the EDLI cover is capped at Rs.6,00,000
• Any company that has more than 20 employees must register for the EPF facility to provide insurance benefit to the employees.

Every month, an organization that contributes to EPF or EPS accounts become eligible for the EDLI scheme. Here’s how the EDLI contribution is made:

1. EPS Account: 8.33% or Rs.1250
2. EPF account: 3.76%
3. EDLI Account: 0.5% or a maximum of Rs.75 per employee per month.

1. Employer Contribution: 12% of an employee’s Basic Salary including Dearness Allowance or DA that is as follows for the below accounts:
2. Employee Contribution: 12% of the basic salary + Dearness Allowance towards the EPF account

Now that you know what all is covered under an EDLI Scheme, you can check with your employer whether you are covered under the scheme to avail of the free insurance benefits when needed.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.