Now EPF offers Life Insurance of Rs.2.5 lakh to Rs.6 lakh Under EDLI !!

In earlier post we've covered the top 5 investment instruments to save tax this year. There is another tax saving instrument which is EPF (Employee Provident Fund), It is a good tax saving instrument and also offers Life Insurance ranging from Rs.2.5 lakh to Rs.6 lakh under ELDI (Employees Deposit Linked Insurance) !!
Many of us simply concentrate on EPF and EPS when it comes to monthly deduction towards the EPF. We concentrate on the interest rate changes on this EPF and tax deduction benefits under 80C; and usually forget the Life Insurance facility provided by EPF. The Ministry of Labour & Employment revised EDLI benefits to a maximum of Rs.6,00,000. Many of the salaried persons are unaware about feature of the EPF. 

What are benefits of EDLI or Employee Deposit Linked Insurance

  • If you are employee and members of EPF then you are automatically eligible for EDLI. 
  • You are covered against death occurred any time of day viz. working or non-working hours.  
  • EDLI offers insurance cover irrespective of a cause of death, no exclusions.
  • Your coverage will be dependent on your salary and not on age or gender
  • You are insured from very first day with no maximum age limit
  • You no need to add nominee separately. Your EPF nomination itself considered for this scheme and you can even add nomination online with E-Nomination.

    Know Your Premium for Employees Deposit Linked Insurance Scheme

    Under new changes, now EPF offers Life Insurance of Rs.2.5 lakh to Rs.6 lakh. As I pointed above, the employee will not contribute to EDLI. Only your employer will contribute to it. It is 0.5% of Rs.15,000 or Rs.75 per month to the maximum (based on your actual Basic+DA). The maximum amount payable by the employer is Rs.75. Refer the below image in that regard of notification.

    Know your Insurance Cover Under EDLI ?

    The average monthly salary (Basic+DA) drawn (subject to a maximum of Rs 15,000), during the last 12 months preceding the month in which the employee dies, is first multiplied by 30 times. This is added to 50% of the average balance in the account of the deceased in the provident fund during the preceding 12 months or during the period of his membership, whichever is less.

    We'll took an example

    Let us assume that Mr.A’s salary (Basic+DA) at the time of death is Rs.10,000. Then assume his last 12 months average salary was Rs.10,000. Then we have to multiply this by 30. This will be Rs.3,00,000.

    Now we have to add 50% of the average balance in the account of Mr.A during the preceding 12 months. Assume his EPF balance of last 12 months is Rs.1 lakh. Then 50% of this is Rs.50,000.

    So in total, he will receive Rs.3,00,000+Rs.50,000=Rs.3,50,000.

    How you can claim the EDLI Benefit

    • The nominee or nominees or other claimants will have to send a written application to the Commissioner through the employer in Form 5(IF), to claim payment under this Scheme.
    • The form has to be filled up separately by each claimant.
    • If the claimant is a minor, the form should be filled up by the guardian on minor’s behalf. If there are more than one minor the guardian should claim using one Form on their behalf.
    • Details of the deceased such as Name, Father’s Name (Husband’s name in the case of married woman), Date of Death (dd/mm/yyyy), Name and Address of the Factory/Establishment where the member was last employed and Provident Fund Account No has to be filled up in the form.
    • In addition to this, claimant/guardian has to fill their Name, Date of Birth (dd/mm/yyyy), Relation with the deceased, Claimant’s Full Postal address (in block letters).
    • If the claimant is a guardian, details of the ‘minor nominee/heir’ such as Name of the minor and Relationship with minor has to be furnished.
    • Mode of remittance also needs to be furnished and the claimant needs to attach a copy of cancelled/blank Cheque.
    • The required documents to be attached along with the form are death certificate of the deceased, guardian certificate if the claim is made by the person other than the natural guardian, succession certificate if legal heir makes the claim.
    • If the member was last employed with an establishment exempted under the EPF Scheme 1952, the employer has to furnish the PF details of the past 12 months under the certificate part and is also required to mail an attested copy of the Member’s nomination form.

    Note: The claims, completed in all respects submitted along with the requisite documents will be settled and paid to the beneficiaries within 30 days from the date of its receipt by the Commissioner.

    How will the EDLI Benefit be paid?

    Assurance benefit shall be payable as per the scenarios listed below:

    1. The nomination done by an employee under Employees Provident Funds Scheme, 1952, or as per the provident fund exempted under section 17 of the Act, based on the case, can be considered as the nominations under this Scheme and the assurance amount can be paid to such nominee or nominees.
    2. In the absence of nomination, or if the nomination relates only to part of the outstanding amount to the credit of the deceased employee in the Fund or of a provident fund exempted under section 17 of the Act, the entire amount or a part thereof to which the nomination does not relate, on the basis of the case, shall become payable to the members of the deceased employee’s family in equal shares, subject to the condition that no share will be payable to –
    (a) Sons of a deceased son who have attained majority;
    (b) Sons who have attained majority;
    (c) Married daughters of a deceased son whose husbands are alive;
    (d) Married daughters whose husbands are alive;

    In case of any member of the family other than those specified above; the child or children of a deceased son and the widow or widows, shall receive between them in proportionate parts only the share which that son must have received if he had survived the employee and had not achieved the age of majority at the time of his death.


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