EPFO Free Insurance: If an EPF subscriber, or member employee, dies prematurely, their nominee or legal heir can claim insurance cover. No payment or premium is required for EDLI.
If you work in the organized sector and your Employees’ Provident Fund (EPF) is deducted, you are covered under free insurance up to Rs 7 lakh. This insurance is available to all subscribers/member employees of the Employees’ Provident Fund Organization (EPFO), which manages EPF. This is under the Employees’ Deposit Linked Insurance Scheme 1976 (EDLI), and every EPF account holder is covered under the EDLI scheme. The EDLI scheme also covers the families of employees who have worked for more than one company in the 12 months immediately preceding their death.
The nominee of a member employee can claim insurance in the event of the employee’s death due to illness, accidental death, or natural death. The minimum insurance amount under the EDLI scheme is ₹2.5 lakh (250,000 rupees). The maximum amount is ₹7 lakh (700,000 rupees). The average salary, DA, and PF balance for the last 12 months are considered when determining the insurance amount.
No money is deducted from the employee for insurance
The employee does not contribute any money or premiums to the EDLI scheme. The company contributes only 0.50 percent of the employee’s basic salary and dearness allowance. However, keep in mind that the maximum basic salary limit will be ₹15,000, regardless of the employee’s actual basic salary. Under the EDLI scheme, the claim amount is paid in a lump sum.
If he is not made a nominee then…
If the member employee has not made a nomination under the scheme, the coverage will be available to the deceased employee’s spouse, unmarried daughters, and minor son(s). However, the deceased member employee must be an active EPF contributor, meaning they must continue to contribute to the PF account at the time of their death.
It should be noted that for employees working in the organized sector, 12 percent of their basic salary + DA goes towards the EPF as an employee contribution. The company/employer also contributes 12 percent. However, of the employer’s 12 percent contribution, 8.33 percent goes towards the Employee Pension Scheme (EPS) and the remainder towards the EPF.
How can you claim
If an EPF subscriber, i.e., member employee, dies prematurely, their nominee or legal heir can claim insurance cover. If the claimant is under 18 years of age, their guardian can file a claim on their behalf. For this, the insurance company needs to provide the employee’s death certificate, succession certificate, guardianship certificate if the guardian is claiming on behalf of a minor nominee, and bank details. If there is no nominee for the PF account, the legal heir can file a claim.
To withdraw funds from an EPF account, you must submit Form 5IF, the insurance cover, along with the form submitted to the employer. This form will be verified by the employer. If verification by the employer is not possible, the form will need to be verified by one of the persons mentioned below…
- Gazetted Officer
- Magistrate
- Postmaster or Sub Postmaster
- MP or MLA
- President of the Gram Panchayat
- Member of the Regional Committee of CBT or EPF
- Bank Manager (of the bank in which the account was maintained)
- Chairman/Secretary/Member of Municipality or District Local Board
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