Understanding EDLI: Eligibility, Application, and Withdrawal Explained

Hi...

EDLI - Employees' Deposit Linked Insurance (India Death Payment Scheme)

What is EDLI?

All employees to whom the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 applies have a statutory liability to subscribe to the Employees' Deposit Linked Insurance Scheme, 1976, to provide life insurance benefits to all their employees. Under the scheme, as amended with effect from 24th June 2000, the insurance benefit is equal to the average balance to the credit of the deceased employee in the Provident Fund during the last 12 months. Provided that where such balance exceeds Rs. 35,000, the insurance cover would be equal to Rs. 35,000 plus 25% of the amount in excess of Rs. 35,000, subject to a maximum of Rs. 60,000. Thus, if the length of service is not adequate and/or the salary is low, the average balance may be substantially less, and as such, the benefit to the employee's family is either inadequate or non-existent.

The contribution at 0.50% of each employee's salary is payable by the employer to the Provident Fund Authorities.

THE BETTER ALTERNATIVE:

However, under Sec. 17(2A) of the act, the employer may be exempted from contributing to this scheme if he/she has provided better insurance benefits through an alternative scheme. LIC's Group Insurance Scheme in lieu of EDLI has been accepted as one such better alternative.

ADVANTAGES TO THE EMPLOYER:
1. The premium payable by the employer is usually less than the total contribution being paid by the employer to R.P.F.C, particularly when the salary level is high and the average age of the group is low.
2. Settlement of claims is quicker; LIC requires only the death certificate and the Claim Form from the employer.
3. Premium paid by the employer is treated as normal business expenses for Income-Tax purposes.

ADVANTAGES TO THE EMPLOYEE:
Each employee is covered for a sum assured ranging between Rs. 5,000 to Rs. 2,00,000 depending upon the current salary and service put in from day one, irrespective of the actual balance in the Provident Fund. Alternatively, every employee/worker can be covered for a uniform sum assured, which will be decided depending upon the group size.

ACCIDENT BENEFIT:
Double accident benefit can be allowed to the extent of the Sum Assured for an extra premium.

STEPS TO INTRODUCE THE SCHEME:
1. Put up notice for the knowledge of the employees that you are going in for LIC's Scheme in lieu of EDLI.
2. Apply to the Regional Provident Fund Commissioner under Sec. 17(2A) of the E.P.F. and M.P. Act, 1952, to exempt you from the EDLI Scheme. The application should be accompanied by the prescribed requirements, including the Rules of the Proposed Group Insurance scheme. The Central PF Commissioner has authorized the R.P.F.C. to grant exemption from the 1st of the month in which the application for relaxation is submitted. LIC also offers necessary guidance to the employers for seeking relaxation.

Regards,

Karthik J

Dear sir, I would like to state that when an organization opts not to pay the EDLI amount through EPF but has taken an exemption from the Central PF Commissioner of the R.P.F.C., and they grant the exemption, the organization can then choose the LIC EDLI scheme. They make their contribution to the LIC department for the EDLI amount and the PF portion to the EPFO organization on a regular basis.

Entitlement to EDLI Claims

In that case, whether the nominees of a deceased member under EPF are entitled to claim EDLI from the EPF department up to Rs 6 Lacs, or are the nominees of deceased members under EPF only allowed to claim EDLI from LIC only, or can the nominees of a deceased member claim the EDLI amount from both the EPFO department and the LIC department?

We are seeking your guidance about the above.