On the death of employees falling
under the Employees Provident Fund Organization (EPFO), the limit for the
maximum assurance to their dependents has been increased to 7 lakhs. Now the
Maximum Assurance Benefit under Employees Deposit Linked Insurance (EDLI)
Scheme 1976 will be Rs 7 lakhs, which is still Rs 6 lakhs. The decision was
taken at a meeting of the Central Board of Trustees (CBT), EPF, held on
Wednesday, September 9, 2020, under the chairmanship of Labor Minister Santosh
Gangwar.
What is the EDLI scheme? The EDLI scheme
is essentially provided to all customers of the Employees Provident Fund Scheme
to contribute towards life insurance. EDLI provides for a lump sum payment to
the insured's designated beneficiary in the event of death due to natural
causes, illness or accident. The purpose of this scheme is to provide financial
security to the family member after the death of the employee. This benefit is
given to the employee by the company and the central government. Earlier its
limit was up to Rs 3.60 lakh. However, in September 2015, the EPFO increased
it to Rs 6 lakh.
Who gets the benefit? If an employee
has completed his tenure for 1 year and dies accidentally, then he will get the
benefit of this scheme. It has a lump sum payment. Employees do not have to pay
any amount in EDLI. The company collects the premium in exchange for the
employee.
In the EDLI scheme, the company
deducts the EPF amount from the salary of the employees working in the
contribution organized sector and also collects the same amount as the
employer. At present, EPF accounts for 12% of the basic salary of the employee.
The employer (company) also collects 12 per cent but it is deposited in two parts.
The company deposits 3.67 per cent in EPF and 8.33 per cent in EPS. But, apart
from this, some contribution is made by the employer. Employers contribute 0.50
per cent under the EDLI scheme. In this way, the EPF subscribers' nominee gets
an insurance cover of up to Rs 7 lakh under 0.50 per cent contribution to the
EDLI from the company.
How to claim for insurance money? If
the EPF subscriber dies prematurely, his nominee or legal heir can claim for
insurance cover. At the time of filling his PF form, his nominee or family
member can claim FOR insurance money by filling FORM-5 IF with him and putting
the person's death certificate with him at the EPFO office. The payment is
deposited in the bank account by the EPFO within 30 days. For this, the
insurance company will need to give death certificate, succession certificate
and bank details. If there is no nominee of the PF account, then the legal heir
can claim this amount.
How to calculate EDLI? The sum
insured received to the heir of a deceased member is calculated as 30 times the average monthly salary of the previous 12 months of employment.
If the maximum average monthly salary
of an employee is 15,000. So, 30 times salary is around 30 x 15,000 = 4,50,000. Under this scheme
bonus amount up to 1,50,000 is also paid to the claimant. Thus, the total
amount payable under the scheme to the beneficiary is 6,00,000.
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