New Delhi: The Employees’ Provident Fund Organisation (EPFO) has increased the minimum and maximum death insurance cover for subscribers of its employees’ deposit-linked insurance (EDLI) scheme amid the growing number of Covid-19-induced deaths.
According to a gazette notification released by the EPFO recently, the minimum death insurance has been increased to Rs 2.5 lakh and the maximum to Rs 7 lakh, from the earlier limits of Rs 2 lakh and Rs 6 lakh, respectively.
According to the notification, these new limits will be effective for three years starting from April 28, 2021.
What is Employees’ Deposit-Linked insurance (EDLI) scheme?
The Union Government launched the Employees’ Deposit Linked Insurance Scheme in 1976 to provide financial relief to the family of a private sector employee in the event of his/her death.
The scheme covers all active members of EPFO.
For availing the insurance cover, employees need not contribute any amount. However, according to the scheme details, the employer should pay a nominal amount.
Notably, this scheme is not mandatory for all private sector organisations.
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The Employees’ Provident Fund Act, 1952 allows some organisations to opt out from this scheme only if an organisation chooses life insurance policies for their employees from other insurers that are more attractive than the EDLI.
Generally, firms that opt for group term insurance plans tend to opt out of this EDLI Scheme.
According to an estimate, out of 5 crore active subscribers of EPFO, over 20 lakh are EDLI subscribers.
How does the EDLI Scheme work?
Employees who get a basic salary below Rs 15,000 per month are eligible for availing the EDLI scheme.
As per the provisions of the scheme, the contribution of an employer must be 0.5 per cent of the basic salary or a maximum of Rs.75 per employee per month.
In the event of death of an EDLI subscriber, family members receive assured financial benefits based on the monthly wages of the subscriber, which includes basic plus dearness allowance and/or the average balance in the member’s provident fund account.
As per the revised guidelines, the dependants of the subscriber will get an amount between Rs 2.5 lakh and Rs 7 lakh.
If the dead person doesn't have a nominee, then the legal heir can claim the amount.
Notably, the scheme benefits are applicable only when the subscriber was in employment for a continuous period of 12 months preceding the month in which the death occurred. This is irrespective of any change of establishment during this 12-month period.
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