EPF: Due to the uncertainties of modern life, it is essential for every person to obtain sufficient insurance coverage. Employees in the private sector who do not receive the same social security benefits as those in the public sector should pay particular attention to this. The Employees Deposit Linked Insurance Scheme (EDLI) was established by the government in 1976 to provide life insurance coverage to workers in the private sector.
Introduction to EDLI Scheme
For salaried workers in the private sector who are EPFO members, the Employees Deposit Linked Insurance Scheme, or EDLI, is an insurance programme offered by the organisation. In 1976, the EDLI programme was introduced. In the case that the person insured (employee) passes away while the service is being rendered, the registered nominee is entitled to a lump sum payout.
All organisations registered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952, are covered under the EDLI plan. They are required to participate in this programme and offer their staff life insurance coverage. This plan functions in tandem with the Employees’ Provident Fund (EPF) and the Employees’ Pension Scheme (EPS).
Goal of the EDLI Scheme
Ensuring that the family of an EPFO member receives financial support in the event of the employee’s death is the goal of EDLI. There are no exclusions from this plan. The amount of the benefit is determined by the employee’s most recent pay draw.
The characteristics of the Employees Deposit Linked Insurance Plan
- All employees earning less than Rs. 15,000 per month are covered by EDLI. The maximum benefit is limited to Rs. 6,00,000/-if the basic pay exceeds Rs. 15,000 per month. The EPFO has raised the maximum compensation to Rs. 7 lakh as of April 28, 2021.
- Employee contributions to EDLI are not required. Their payment is just necessary for the EPF.
- Under the EDLI, a bonus of Rs. 1,50,000 is given. Commencing on April 28, 2021, the incentive amount has been raised to Rs. 2.5 lakh.
- In February 2018, the Ministry raised the minimum benefit amount to Rs. 2.5 lakh, with a two-year validity period. This Rs. 2.5 lakh minimum sum has been extended by the EPFO, with retroactive effect from February 15, 2020.
- Any company with more than 20 workers must register for Employee Provident Funds (EPF). Consequently, eligibility for the EDLI scheme is automatic for every employee who maintains an EPF account.
- There are no exclusions from the insurance that EDLI offers. The insured individual is protected 24/7, everywhere in the globe.
- Employers may choose to use a different group insurance plan, but the benefits must match or exceed those provided by EDLI.
- Employers are required by the EDLI regulations to contribute 0.5% of the employee’s base wage, up to a maximum of Rs. 75 per month. In the event that no other group insurance plan exists, the monthly maximum contribution is limited to Rs. 15, 000.
- The dearness allowance needs to be added to the base wage in all EDLI computations.
Base Pay Limitation
The base pay for employees is up to Rs. 15,000. The maximum benefit payable under the EDLI will be Rs. 7 lakhs in cases where the employee’s salary exceeds Rs. 15,000. For the employee’s organisation to choose the EDLI scheme, there must be more than 20 employees.
