The Workers Deposit Linked Insurance Scheme, established in 1976, provides coverage to all employees who join the Employees’ Provident Fund. If the insured person passes away from a natural cause by sickness or an accident, EDLI will pay the designated beneficiary a lump amount.
What is EDLIS?
When an insured person passes away from natural causes, sickness, or an accident, their designated beneficiary will receive a lump sum payment from the Employee’s Deposit Linked Insurance Scheme (EDLI). It is a legal requirement for all employers covered by the Employee’s Provident Fund and Miscellaneous Provision Act of 1952 to join EDLI in order to offer life insurance to all of their workers.
More than 45 million subscribers actively use EPFO, and the organization directly administers more than Rs 6 lakh crore in assets. Additionally, exempted organizations or institutions administer more than Rs 2 trillion of PF funds under the general direction of the EPFO.
- Every employee who belongs to a provident fund is protected by EDLI.
- There is 24-hour coverage.
- Workers may be located anywhere. It is not required to be at work.
- Regardless of the cause, it covers employee deaths. This policy has no exceptions.
- No matter the employee’s age, gender, or any other variable, the coverage and premium are the same.
- With a maximum of Rs 15,000, insurance coverage is based on the employee’s basic salary plus a dearness allowance.
- To receive the EDLI benefit, no minimum amount of service is required.
Employees starting in 1971 were eligible for PF and a family pension plan under the EPF & MP Act, 1952. However, it was considered that issues resulting from the employee’s untimely demise went unresolved. Therefore, in 1976, the Act was revised to include an insurance program known as the Employees’ Deposit Linked Insurance or EDLI Scheme.
The goal of EDLI was to set up a system that would give families of employees economic stability when a member passed away while the individual was still employed. The EDLIS plan offers a lump sum payout to the insured’s designated beneficiary in the event of death from an accident, disease, or natural causes.
The Employee Deposit Linked Insurance Scheme provides how much insurance coverage?
Only subscribers who have continually worked for one year in the same organization are currently eligible for insurance coverage. The nominee of the subscriber receives a 20-time bonus on top of the average pay earned during the previous 12 months. This translates to a maximum sum insured of Rs 3.6 lakh based on a monthly payment cap of Rs 15,000.
However, in September 2015, the Employees’ Pension Fund of India (EPFO) announced an increase in the maximum sum insured under its Employees Deposit Linked Insurance Scheme (EDLIS) from Rs 3.6 lakh to Rs 6 lakh. The employee’s most recent wage is used to determine the EDLIS claim amount.
The amount of the claim is
- thirty times the wage.
- Salary is determined by adding the DA, or Dearness Allowance, to the basic wage. The EDL’s maximum salary is Rs 15,000 per month.
- Additionally, a bonus of Rs. 1.5 lakh is paid.
- Thus, Rs 6 lakh [(30 x 15,000) + 1,50,00] will be the highest EDLI claim amount.
A major issue for the EPFO is to increase the appeal of the Provident Fund and comparable programs within the laws governing them. especially in light of the government’s option to offer EPFO or NPS to employees in the formal sector.
The government has also added an extra income tax deduction of Rs 50,000 for donations from subscribers to a fund of their choosing in an effort to make NPS more alluring. Based on the success of the fund, the retiree receives a lump sum payment at retirement.
NPS was established in 2004 for new government employees; starting in 2009, it was made available to everyone on a voluntary basis.
Who is responsible for the EDLIS premium?
It is totally supported by the employer, who contributes 0.5% of monthly basic pay as payment for life insurance in the event that the company does not offer group insurance for its employees (up to a maximum of Rs 15,000).
Out of the 4.5 crore EPFO customers, it is predicted that roughly 80 lakh choose alternative private group insurance policies after requesting an EDLI exemption. Below is a breakdown of employee and employer contributions. EPF, EPS, and EDLIS are all covered in depth in the article Basics of Employee Provident Fund: EPF, EPS, EDLIS.
|Scheme Name||Employee contribution||Employer contribution|
|Employee provident fund||12%||3.67%|
|Employees’ Pension scheme||0||8.33%|
|Employees Deposit linked insurance||0||0.5%|
|EPF Administrative charges||0||1.1%|
|EDLIS Administrative charges||0||0.01%|
How does DLI differ from ESIS?
While an employer has the option to forego EDLIS, he is still required to provide group term insurance coverage to all of his employees, with the benefit being on par with or superior to EDLIS. The group term insurance plan, which replaces EDLIS, is approved by the EPFO itself.
There are other insurance providers who have submitted applications for this product under the IRDA and offer more coverage than EPFO. Additionally, the premium charged for the same is less than 0.5%. Another benefit of using an insurance firm for the business is the flexibility of flat coverage across all employees, regardless of salary (poor basic pay employees will benefit from higher coverage, which otherwise may not fulfill the EPFO coverage criteria/conditions).
This product can be renewed annually. Therefore, the aforementioned procedures need to be redone whenever the EPF-approved exemption’s validity expires. As an alternative to EDLIS, group-term insurance options include some of the following:
- LIC Group Term Life Insurance in lieu of EDLI
- ICICI Group Term Insurance
- Shriram Group Term Life Insurance in lieu of EDLI
- HDFC Life Group Term Insurance Plan
- Reliance Group Term Assurance Plan EDLI
- Bajaj Allianz Group Term Life
- Max Life Group Super Life Premier
What distinguishes EDLI from ESIS?
For Indian employees, ESIS, or Employees State Insurance, is self-supporting social security and health insurance program. This program covers employees who make less than Rs. 15,000 each year. ESIS-registered employees are eligible for medical care for themselves and their dependents, financial benefits for unemployment under specific conditions, and maternity benefits for female employees. There are provisions for a disablement benefit and a family pension in the event of an employment-related disability or death. ESIS covers all states with the exception of Manipur, Sikkim, Arunachal Pradesh, and Mizoram.
How Do You Claim Your EDLIS Amount?
- During the employee’s active service at the time of death, in the tragic event of a death.
- The insured sum may be recovered by the nominee. The legal heir may be able to collect the money if there is no nominee. If the claimant is a minor, the guardian must fill out the form on their behalf.
- Utilize form 5 to submit an EDLIS claim. Along with Form 20 and Form 10D/10C (for claiming the Provident Fund dues and Pension/Withdrawal Benefit as appropriate), the EDLIS claim form must be filed. It makes it easier to digest all of the scheme’s advantages at once.
- There should be no overwriting and all information should be written in BLOCK LETTERS.
- If the deceased member was a married woman, column 1 (b) of the form should include her husband’s name.
- Specifics of the bank account used to receive payments: Given that payment is sent directly to the Bank, the claimant’s bank account’s correct name, branch, and address must be provided.
- A copy of the blank or canceled check has to be included with the claim form in order to verify the accuracy of the bank information. Each claimant must fill out a separate copy of the form.
Documents are required to request an employee’s death certificate through the EDLI.
- If someone other than the natural guardian is making a claim on behalf of a minor family member, nominee, or legal heir, a guardianship certificate is required.
- a certificate of succession in case the legal heir makes a claim.
- a copy of a voided or blank check from the bank chosen for payment.
- The employer of such an establishment must provide the PF information of the previous 12 months under the Certificate portion and provide an authenticated copy of the Member’s Nomination Form if the members’ most recent employment was at a place of business that was exempt from the EPF Scheme of 1952.
Read more Articles
- Bitcoin price hits late-2020 levels as crypto market suffers fresh
- How to unzip tuples in the Ethereum chart?
- Top 3 Cryptocurrency Exchange Blue Chip DeFi tokens to buy for the long term
- How to Legally Reduce Tax on the Sale of Bitcoin and Cryptocurrencies in 2022
- What sets Blockchain solutions apart from conventional record-keeping solutions