EPFO Insurance Scheme – Hassle free: Nominee entitled for benefits, irrespective of cause of death

Here’s all that you should know about the employee deposit linked insurance scheme.

Written by Adhil Shetty | Published:December 11, 2015 2:00 am
epfo-fund The scheme offers life coverage for all employees working with the organised sectors and enrolled in EPF.

Not many investors know that the retirement benefits administration body Employees’ Provident Fund Organisation (EPFO) offers an insurance scheme covering all employees working with organisations as part of the EPF.

Along with the Employee Provident Fund and the Employee Pension Scheme, the Employee Deposit Linked Insurance (EDLI) forms the troika of the social security schemes administered by the Employees Provident Fund Organisation.

Here’s all that you should know about the employee deposit linked insurance scheme.

What is Employee Deposit Linked Insurance?

Employee Deposit Linked Insurance is a term insurance plan offered by the EPFO. The scheme offers life coverage for all employees working with the organised sectors and enrolled in EPF. The scheme is administered by the Employees Provident Fund Organisation and is applicable to all companies who are part of the EPF.

The EDLI scheme works just like a group term insurance plan where if an employee dies during the service period, his family or nominee gets the sum assured up to a certain maximum limit as defined by the rules of the EDLI scheme.

Protection coverage under the EDLI scheme

Being a group term insurance plan, EDLI offers a 24-hour-protection to the employees as part of the scheme. This means the insured does not need to be at their workplace for the scheme to be valid or applicable. The scheme protects them 24×7 irrespective of whether they are at work or not.

The coverage and premium charges under the EDLI scheme are the same for every employee irrespective of any factor including age or gender.

Employees contribute 0.5 per cent of their monthly basic pay and dearness allowance (capped at a maximum of Rs 15,000) as premium for this, and the coverage is linked to the premium.

The family or nominee of the policyholder (employee) under the EDLI scheme will get benefits irrespective of the cause of death including illness, accident, or natural causes.

EDLI earlier had stipulated 12 months of service with the same employer as a mandatory condition for being protected under the insurance scheme. Now, there is no such minimum limit of service and employees are covered under the EDLI scheme as soon as they start working with a company.

Extent of claim available

As per the recently issued EPFO guidelines, the maximum claim amount is capped at 30 times of the last drawn salary of the policy holder. Along with the claim amount, EPFO also offers a bonus of Rs1.5 lakh for each claim.

So the maximum claim amount you can avail under the EDLI scheme is therefore calculated as 30 times Rs 15,000 plus the Rs 1.5 lakh bonus, which comes to Rs 6 lakh. The previous limit was Rs 3.6 lakh only.

How to file for a claim

Before you opt for a claim under the EDLI scheme, make sure that you have all the required documentation in place. You will need:

* Death certificate of the employee as issued by the local municipal corporation.

* Legal heir certification or succession certificate.

* If the employee was working with a company exempted under the EPF Scheme 1952, the employer will need to submit the PF details of last 12 months.

* Once you have all the documents in place, you will need to submit the EDLI claim form. The form is available at: http://www.epfindia.gov.in/site_docs/PDFs/Downloads_PDFs/Form5IF.pdf

You should also submit Form 20 and Form 10D / 10C to claim provident fund dues. Before submitting the claim form, you will need to get it attested by the employer.

 

The writer is CEO and Co-Founder, BankBazaar.com
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