Have EPF account number? Those having Provident Fund can avail up to Rs 6 lakh insurance cover for free

The sole reason for letting employees contribute in a provident fund account, is because it will help them secure their finances after retirement. The Employees' Provident Fund (EPF) account is one of the oldest forms of retirement schemes. The EPF is maintained and managed by Employees’ Provident Fund Organisation (EPFO). Among the many benefits of having an EPF account number is that it comes with social security. Interestingly, EPFO provides three types of social security. These are provident fund, pension and insurance cover. Talking about the last security benefit, EPFO has introduced its Employees Deposit Linked Insurance Scheme (EDLI). 

For EPF account number holders one of the best advantages of this EPFO insurance scheme is that it is similar to a normal insurance cover where a nominee gets a lump sum on death of the holder. However, the difference is that, you are not the one who is having to pay premiums on this EPFO insurance cover! 

Here’s how EDLI operates!

The scheme is applicable on every employee who has a basic salary of maximum Rs 15,000 per month. As the maximum salary is capped at Rs 15,000, you will be eligible to avail EDLI benefit of upto Rs 6 lakh. It needs to be noted that, Rs 6 is the maximum benefit one can avail. 

Just like Employees Pension Scheme (EPS), you do not have to contribute any amount in EDLI. Contribution in this insurance cover is done by employer. You employer as per the guidelines is needed to contribute 0.5% of the basic salary or a maximum of Rs 75 per employee per month. Interestingly, this contribution can be capped up to a hefty Rs 15,000 a month, if there are no other group insurance scheme. 

Generally, as per the EPFO norms, any organisation that has 20 or more employees working for them, must register for EPF. That said, if an employee has an EPF account, then they automatically become eligible for EDLI as well. Take note, all you have to do is have an EPF account, you become eligible for both pension insurance cover which needs to be contributed by the employer.

That’s not just the beauty of EDLI, you are also eligible for a bonus Rs 1.5 lakh. However, taking into consideration the Rs 1.5 lakh bonus, your maximum claims in this insurance cover totals to Rs 6 lakh. 

Here’s how EDLI is calculated, explained by ClearTax report. 

The registered nominee will receive a lump-sum payout in the event of the death of the insured person. If no nominee or beneficiary is registered, then the amount would be paid to the legal heir.

The pay-out to be awarded will be calculated as under:

{Average Monthly Salary of the Employee for the last 12 months (capped at 15,000/- p.m.) x 30 } + Bonus Amount (Rs. 1,50,000/-)

Therefore, the maximum payout under EDLI is capped at Rs. 6,00,000/-.

Here’s how a nominee can claim EDLI. 

For claiming insurance benefit by a nominee or beneficiary in case of member’s death while in service - Form 5IF must be filed.

Generally, the claim form has to be signed and certified by the employer. In case, the employer signature cannot be attained then, the form must be attested by a bank manager, local MP or MLA, gazetted officer, member/chairman/secretary of local municipal board, postmaster or member of the regional committee of EPF or CBT. 

Generally, it takes 30 days from the date of receipt, for the claim to be sanctioned.