What are the exceptions in the case of claiming an EDLI benefit?

While the EDLI scheme provides financial security to an employee’s nominees, there are certain exceptions where claims may not be granted. For example, if death occurred due to intoxication or participating in dangerous activities, nominees would not get EDLI benefits. Also, EDLI does not cover deaths due to suicide.

Can an employer opt out of the EDLI scheme?

Yes, an employer can opt out of the insurance plan. Employees can choose another high-paying scheme as per Section 17 (2A). For example, an employer can choose group insurance over EDLI to facilitate more insurance benefits for their employees.

Can an employee increase EDLI insurance coverage?

The EDLI scheme determines the maximum insurance coverage based on an employee’s basic salary and dearness allowance (DA). Therefore, a company provides each employee with a fixed salary amount, and they cannot increase this coverage. However, in case of a job change, if the basic salary increases, the total coverage also increases.

Can a nominee fill out Form 51F online?

Currently, there is no option to fill it out online. You need to physically submit the attested claim form to the commissioner of EPFO.

Employees Deposit Linked Insurance: Definition, Features and Claim Process

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The Indian government introduced the Employees Deposit Linked Insurance or EDLI in 1976, with the objective of providing life insurance coverage to private-sector employees.

According to this scheme, in case of an employee's demise, the nominee will receive a lump sum insurance amount upon insurance claim. The Employee Provident Fund Organisation, or EPFO, oversees and manages this scheme. Read this article to learn about EDLI in detail.

Definition of the EDLI Scheme

Companies registered under schemes like EPF and the Miscellaneous Provisions Act, of 1952, are covered by the EDLI scheme. Therefore, private organisations must subscribe to this scheme and facilitate the benefits of life insurance to employees.

The amount of insurance coverage is tied to an employee’s contribution to their Provident Fund (PF) account. Employers are responsible for paying a premium as a contribution to this account for the insurance coverage. This scheme does not have any exclusion criteria, and the maximum benefit is determined by the employee’s last salary.

How Do Contributions to Employees Deposit Linked Insurance Work?

Here is how the EDLI, as an insurance scheme for employees in a private organisation, works:

Contribution by Employees: 12% of an employee’s basic salary, including DA, goes into their EPF account.
Contribution by Employers: An employer’s contribution of 12% of basic salary and DA is divided as follows:

3.67% goes into employees’ EPF balance.
8.33% of the contribution goes into the Employee Pension Scheme (capped at ₹1250).
0.50% of this contribution goes into the EDLI account (capped at a maximum of ₹75.

Group Life Insurance: Employers choose group life insurance as an alternative to EDLI. For this purpose, the coverage benefits should be equal to or greater than EDLI benefits.

Features of Employees Deposit Linked Insurance

Below are some key features of the EDLI scheme for employees in the private sector:

The scheme is directly linked to an employee's Employees' Provident Fund (EPF) account, ensuring automatic coverage for all EPF members.
Employers bear the cost of the insurance by making premium contributions, so employees are not required to pay anything.
In the unfortunate event of an employee’s death during their service period, the registered nominee is entitled to receive a lump sum payout.

EDLI Scheme Eligibility Criteria

Take a look at applicable criteria and insurance benefit amounts under the Employees Deposit Linked Insurance scheme:

Employees with a basic salary of up to ₹15,000 are eligible for the scheme.
Employees with a basic salary that is more than ₹15000 can get a maximum benefit of ₹7 lakhs.
The claimable insurance amount is calculated as 30 times the average monthly salary over the last 12 months.
Employers or businesses operating with more than 20 employees can opt for the EDLI scheme.

Calculation of EDLI Benefits

As per EDLI, upon the untimely demise of an EPFO subscriber, a registered nominee can claim the insurance amount. If no nominee is registered, the legal heir can apply for the claim.

The insurance payout is determined using the following formula:

(Average basic salary of the last 12 months × 30)+₹2.5 lakh (bonus)

Calculations Example

For an employee with a basic salary of ₹15,000:

(₹15,000*30) + ₹2,50,000 = ₹7,00,000.

If the employee dies while in service, a claimant will get ₹700000 as an insurance claim.

For an employee with a basic salary of ₹12,000:

(₹12,000*30) + ₹2,50,000 = ₹6,10,000

If the employee dies while in service, a claimant will get ₹6,10,000 as an insurance claim.

Required Documents to Claim EDLI Benefits

To claim the Employees' Deposit Linked Insurance (EDLI) beneFits, nominees or legal heirs must submit the following documents:

Death Certificate: A copy of the deceased employee’s death certificate is required to validate the insurance claim.
Certificate of Guardianship: When claiming EDLI benefits on behalf of a minor, a legal guardian need to provide a guardianship certificate. This proves the relationship with the minor.
Certificate of Succession: When an heir is claiming EDLI benefits, they need to provide a succession certificate. This proves the entitlement of an heir to insurance benefits.
A Cancelled Cheque: The claimant, either the nominee or the heir, need to produce a cancelled cheque from the bank.

Claiming Procedure of Employees Deposit Linked Insurance Benefits

Here is the detailed process of how a nominee or an heir can claim the benefits of the EDLI scheme:

Fill out Form 51F with the necessary details to claim benefits.
After filling out this form, the employer needs to attest to this for further processing.
If the employer is unreachable, claimants can attest it from an authorised official like a gazetted officer, MP, MLA, etc.
The claimant needs to submit the form with the necessary documents to the local office of the EPF commissioner.
A claimant can also use EPF Form 20, Form 10C, or Form 10D to claim benefits from the Employees’ Provident Fund (EPF), Employees’ Pension Scheme (EPS), and EDLI simultaneously.
Claimants need to produce any other additional documents if asked.
After approval from the EPFO commissioner, a claimant will receive the insurance benefits in 30 days.

Final Word

The EPFO governs the Employee Deposit Linked Insurance for employees in the private sector as life insurance. A key advantage of EDLI is that nominees receive a lump sum payout, along with other EPFO benefits, offering crucial financial support in the event of an employee’s untimely demise.

Notably, EDLI benefits can also be claimed even if the employee passes away while working in a foreign country. This ensures financial security for the employee’s family, regardless of location.

EDLI, as an insurance scheme, greatly helps to secure financials in unexpected situations. You can further increase your savings for financial security by opening a Fixed Deposit account. Opening an FD account with Stable Money will get you higher FD interest rates over its tenure.