Group Employee Deposit Link Insurance
Employees’ Deposit Linked Insurance scheme provides for a lump sum payment to the insured’s nominated beneficiary in the event of death due to natural causes, illness or accident.
Nowadays, most organisations offer the facility of provident fund (PF). EPF (Employees’ Provident Fund Scheme 1952) and EPS (Employees’ Pension Scheme 1995) are the two different retirement saving schemes under Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, meant for salaried employees. EDLI scheme is applicable to all the factories and establishments to which the EPF & MP Act, 1952 applies.It is mandatory for every employee drawing a basic pay beyond the threshold limit per month to make contribution towards EPF & EPS. The EPF & MP Act, 1952 provided for PF and a family pension scheme for employees from 1971 onwards. However, it was felt that problems arising out of early death of the employee were left unaddressed. In view of this, the Act was amended to incorporate an insurance scheme, called the Employees’ Deposit Linked Insurance (EDLI) Scheme in 1976.
Key Features of Group Employee Deposit Link Insurance
EDLI scheme is applicable to employees (private organizations) who are registered under EPF.
All such employees are automatically covered under EDLI Scheme. No separate application required.
EDLI Scheme covers all employees irrespective whether they are working or retired. They should be a member of the EPF.
EDLI Scheme covers employees at all times i.e. whether they are working or during non-working hours.
The good part is that there is no exclusions in this scheme.
Life Insurance coverage would be based on basic salary (Basic Salary + DA) of the employee and not gender or any tenure.
Life Insurance coverage is applicable even for new employees on day-1 once they are enrolled in EPF.
Minimum Life Insurance coverage is Rs 2.5 Lakhs.
Maximum Life Insurance coverage is Rs 6 Lakhs.
There is no separate nomination required in EDLI Scheme as EPF nomination is applicable to Life Insurance nomination too.
One should note that the average wage referred is basic salary + dearness Allowance (DA) only.
OBJECTIVE of EDLI
The objective of EDLI was to put in place a mechanism to provide employees families with security of Income after the death of the member. It was funded through contributions by the employer and central government with no contribution by the employee. EDLI scheme provides for a lump sum payment to the insured's nominated beneficiary in the event of death due to natural causes, illness or accident.
The scheme has undergone several changes since its introduction. The government no longer contributes to the scheme and the rates of benefits have also been changed many times. The contributions thus come only from the employers. A comprehensive administrative framework was set-up to ensure smooth functioning of the scheme.
According to EDLI scheme, in any organization—where group insurance scheme is not available to the employees—the employer / organisation has to contribute 0.5% of monthly basic pay (capped at maximum Rs. 6,500) as premium for the life insurance cover. All employees who are covered under their organization’s Provident Fund and are actively contributing to their PF account (age group of 18 to 85 years) are eligible for EDLI.
The employer’s contributes 0.5% of basic pay of an employee as insurance premium to the EDLI scheme every month. The benefit under the scheme is given on the basis of the provident fund balance in the subscriber’s account. For EDLI scheme, the insurance cover is variable and it is based on the subscriber’s average balance in his PF account over a period of last 12 months. The insurance cover amount is higher of the two: 20 times the average basic pay of the past 12 months (up to Rs. 6,500 per month), i.e. Rs. 1.3 lakh [Rs. 6,500 X 20] or the full amount in your PF account up to Rs. 50,000 and 40% of the balance amount = Rs. 70,000 [Rs. 50000 + (Rs. 50,000 X 40%)]. Under EDLI, an EPFO (Employees' provident Fund Organisation) subscriber gets insurance cover and gets benefit of up to Rs. 1.3 lakh in case he /he dies before superannuation.
Since the life cover provided under EDLI is comparatively low, the government has provided that against EDLI scheme an employer can approach a life insurance company for better cover to employees. The employer also has the choice to choose a higher sum assured for the employees. In this case the EPFO (Employees’ provident Fund Organisation) exempts an employer / company from EDLI. This scheme is called group insurance scheme
IS EDLI COMPULSORY ?
The government has made it compulsory for every employee who earns a monthly basic salary of INR 6500 and above to enrol in EPS and EPF. Employees' Deposit-linked Insurance (EDLI) gives a default life insurance scheme which is provided by Employees' Provident Fund Organization (EPFO).
WHO IS ELIGIBLE FOR EDLI SCHEME?
All employees who are covered under their organization's Provident Fund and are actively contributing to their PF account (age group of 18 to 85 years) are eligible for EDLI. The employer's contributes 0.5% of basic pay of an employee as insurance premium to the EDLI scheme every month.
ADDITIONAL BENEFITS THROUGH RIDERS.
Group Accidental Death Benefit Rider
Group Accelerated Terminal Illness Rider
Group Critical Illness (Additional Benefit) Rider
Group Total and Permanent Disability (Accident) Premier Rider
All the members of the Employees’ Provident Fund Scheme are covered as members of the Employees’ Deposit Linked Insurance Scheme also.
Under this Scheme, the member does not contribute any amount as
contribution. However, the employer pays an amount equal to 0.5% of the total
wages paid to the members as contribution
The Scheme applies to all the establishments to which the Employees’ Provident Fund Scheme applies.
As regards Administrative charges, the employer is required to pay an amount equal to 0.01% of the wages subject to a minimum of Rs. 2/- per month.
An employer of an establishment exempted from the provisions of the Employees’ Deposit Linked Insurance Scheme is required to pay inspection charges at the rate of 0.005% subject to a minimum of Re.1/- per month.
The benefit provided under the Employees’ Deposit Linked Insurance Scheme is called Assurance Benefit. On the death of the member while in service, the nominee or any other person entitled to receive the Provident Fund benefits will, in addition to the Provident Fund, receive the Assurance Benefit under Employees’ Deposit Linked Insurance Scheme.
From 1-4-93 onwards the amount of Assurance Benefit payable is an amount equal to the average balance in the amount of deceased in the Fund during the preceding 12 months or during the period of his membership whichever is less, except where the average balance exceeds Rs. 25,000/- amount payable shall be Rs. 25,000/- plus 25% of the amount in excess of Rs.25,000/- subject to a selling of Rs. 35,000/-. The Form prescribed for claiming the Assurance Benefits under the Employees’ Deposit Linked Insurance Scheme, 1976 , is Form 5(IF).
The provisions are available as per Section 17(2A) of the Act and para 28(1) and 28(4) of the Employees’ Deposit Linked Insurance Scheme, 1976 for grant of exemption to an establishment or to an employee or to a class of employees as the case may be, from the operation of all or any of the provisions of the Scheme, where the Life Assurance benefit of the Scheme in the establishment is more beneficial than the benefits provided under the statutory Scheme.
Attestation of the Claim:
The application should be gotten attested by the employer under whom the member was last employed. In case the establishment is closed and there is no Authorised Officer to attest the claim form, it can be attested with official seal by any of the following officials:
A Gazetted Officer
President of the Village Panchayat where there is not Union Board,
Chairman/Secretary/Member of Municipal/District Local Board,
Member of Parliament/Legislative Assembly
Member of CBT/Regional Committee EPF
Manager of the Bank in which the Bank Account is maintained
Head of any recognized educational institution
The Insurance Claim Payable Amount:
The claim amount of the EDLI is decided by the last drawn salary of the employee. The claim amount would be the 30 times of the salary. Along with this, you would also get a bonus. This bonus would be 50% of the balance in your EPF account. The maximum bonus would be Rs 1.5 lakh. The maximum sum insured would be Rs 6 lacs. For this calculation salary is ‘basic pay plus DA’.
Procedure To Claim EDLI Amount:
In case of an unfortunate death of the employee, the nominee can claim the insured amount. However, in case there is no nominee, the legal heir can claim the amount. To claim EDLI form5 should be used. It is better to submit the claim form with EPF withdrawal form.
Who is authorized legally to claim EDLI Amount:
Members of family (Nominees) nominated under EPF Scheme.
In case of no nomination, all members of family (except the major son, married daughters having husband alive, and major son, married daughters having husband alive of the deceased son of the deceased member.)
In case of no family, and no nomination, legal heir. 4. Guardian of a minor nominee/family member/legal heir.
Claim Form Instructions:
· The claim under EDLI is admissible only if the deceased person was in active service during the death.
· The EDLI Form should be submitted along with Form 20 and for 10D (for claiming the Provident Fund dues and Pension/Withdrawal Benefit as applicable). It facilitates to process the benefits of the scheme in one go.
· All details should be written in BLOCK LETTERS and there should not be any overwriting.
· In case the deceased member was a married female, her Husband’s name should be mentioned in the column 1 (b) of the form.
· Details of Bank Account for receiving payment: Correct name, branch and address of the Bank where the claimant is maintaining account should be furnished as payment is sent directly to the Bank.
· For ensuring correctness of bank details, a copy of the blank/cancelled cheque should be attached with the claim form.
· The form has to be filled up separately by each claimant.
· In case the claimant is minor it should be filled up by the guardian on his / her behalf.
Documents To Be Enclosed:
Death Certificate of the member
Guardianship certificate if the claim on behalf of a minor family member/nominee/legal heir is by other than the natural guardian.
Succession certificate in case of claim by the legal heir.
Copy of a cancelled/blank cheque of the bank account in which payment is opted.
In case the members were last employed under an establishment exempted under the EPF Scheme 1952, the employer of such establishment should furnish the PF details of last 12 months under the Certificate part and also send an attested copy of the Member’s Nomination Form.