EPFO: If you contribute to EPF, there’s good news for you. Most people know that EPF provides financial security after retirement, but few are aware that it also comes with free life insurance coverage.
This coverage is provided under the Employee Deposit Linked Insurance Scheme (EDLI). Under this scheme, if an employee dies while on the job, their family receives a maximum of ₹7 lakh. The employee doesn’t have to pay any extra money for this.
What is EDLI scheme?
Under the EDLI scheme, if an employee dies while in service, their family or nominee receives an insurance benefit of a minimum of ₹2.5 lakh and a maximum of ₹7 lakh. The employee does not have to make any separate contribution. The employer contributes 0.5% of the employee’s salary to this scheme every month.
Who can take advantage of this?
This scheme applies to all EPF-covered employees, meaning that if you contribute to EPF, you become a member of EDLI. This scheme does not apply to tea plantation workers in Assam. It covers both permanent and contract employees.
What are its benefits?
Under the EDLI scheme, the family receives immediate financial assistance in the event of an employee’s death while in service. The nominee or legal heir receives the insurance amount within 20 days. This provides relief to the family from sudden financial hardship.
What if the employer doesn’t contribute?
If the employer fails to make timely contributions, they are subject to a 1% monthly penalty. However, the Board may reduce or waive these penalties in circumstances such as financial hardship or management difficulties.
How to get maximum benefit?
The insurance amount is determined by considering your PF balance and salary for the last 12 months. The maximum benefit is calculated based on 35 times your average monthly salary (up to a maximum of Rs 15,000) + 50% of your PF balance (up to a maximum of Rs 1.75 lakh). Therefore, employees are advised to make regular contributions to their EPF accounts to fully benefit from the EDLI scheme.
