Employee’s Provident Fund or EPF is probably the most popular retirement saving scheme amongst salaried people. The government-run scheme is a savings scheme which is good for people who are looking for risk-free, guaranteed-return plans for retirement. EPFO offers three savings schemes to its subscribers, namely EPF, EPS and EDLI. The first two are savings schemes while Employee’s Deposit Linked Insurance Scheme (EDLI), as the name suggests, is an insurance scheme.

What is EDLI?

The EDLI scheme was launched in 1976, and is available to all employers who provide EPF provision to their employees. The scheme offers life insurance coverage to the employees.

How to subscribe to EDLI?

The scheme is linked to the EPF and EPS savings scheme. All the employees who subscribe to the EPF scheme automatically get enrolled in the EDLI scheme.

EDLI scheme contributions:

The contributions in the EDLI scheme are made indirectly by the employee. It is the employer who actually makes the contribution. The contributions to the scheme are made in accordance with a formula of a fixed percentage of DA and salary.

– EPF contribution by Employee: 12%.

– EPF contribution by Employer: 12% minus EPS contribution.

– EPS contribution by Employee: none.

– EPS contribution by Employer: 8.33% (subject to a maximum of Rs.1,250).

– EDLI contribution by Employee: none.

– EDLI contribution by Employer: 0.50% (subject to a maximum of Rs.75)

EDLI scheme features and benefits:

* The claim amount under the insurance scheme is 30 times the salary, according to a BankBazaar report. Salary is calculated as (DA + Basic Salary)

* There is also a bonus of Rs 1.5 lakh which will also be paid along with the claim amount.

* The quantum of coverage is directly linked to the salary of the employee.

* The premium payable is alike for all employees.

* There is no eligibility criteria of age or other individual factors for the EDLI scheme.

* The employer can opt out of the scheme under Section 17 (2A) only if it has opted for a better insurance policy for its employee.

How to claim EDLI amount?

– The amount can be claimed by the nominee.

– In case the nominee is dead, his/her kin can claim the amount. However, the claims cannot be made by the oldest son, or married daughter with husband alive, the BankBazaar report says.

– To initiate the claim, Form 5 should be filled out and submitted.

NOTE: The EDLI claim is only admissible if the deceased person was in active service at the time of death.

Documents required for a claim under the EDLI scheme:

For a person to successfully file a claim, these are the documents they need to submit along with the form:

* Death certificate of the EDLI member.

* Guardianship Certificate: If the claim is being made on behalf of a minor family member, nominee, or legal heir, the legal guardian must also submit a guardianship certificate.

* Succession certificate: If the claim is being made by a legal heir of the deceased.

Example:

Let us assume person X was employed and was an active contributor in EPF, EPS and EDLI schemes. His monthly salary was Rs 15,000. Mr.X died on duty. Now when his nominee files for the EDLI claim, it will be (30 x Rs 15,000) + (Rs 1,50,000), which is Rs 6,00,000.