Employee Death After Hours: Can Heirs Claim the EDLI Amount?

Dear Seniors,

If the employee died after working hours and the death was not related to employment, can the employee's heirs apply for the EDLI amount?

Prashant
098504011060

Dear Prashant,

First, tell me why you have the doubt. Did somebody tell you about it? Please go through the PF Act to clear your doubts. You people need to understand that this is a forum where we are supposed to give solutions to people's problems and not a business study classroom where somebody would give you a full-fledged lecture on EDLI. Please do some reading on your own rather than asking questions to forum members. It will help you more - believe me.
Please don't mind.

Warm regards

Dear Prashant,

Yes, EDLI is applicable, and the concerned nominee can apply for this.

EDLI - Employees' Deposit linked Insurance (India Death payment Scheme)

What is EDLI?

All employees to whom the Employees' Provident Fund and Miscellaneous Provision Act, 1952 applies have a Statutory liability to subscribe to the Employees' Deposit Linked Insurance Scheme, 1976, to provide for the benefit of Life insurance 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, 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 for 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:

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.

Settlement of the claim is quicker; LIC requires only the death certificate and the Claim Form from the employer.

The 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 5,000 to 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:

Put up notice for the knowledge of the employees that you are going in for LIC's Scheme in lieu of EDLI.

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.

Best Regards,

Sajid Ansari-Delhi

The applicability of EDLI states that the employee will be covered during their employment. Therefore, it does not matter whether the employee died during working hours or not.

Regards,
Bala

Hi everyone, this is the first time I sign in, and I'm looking for some information regarding training and development of HR. Would you help me, please?

P.F. Contribution from the Employee is 12%, whereas actually from the Employer, it is 13.61% (as 3.67% in Employer's contribution, 8.33% in the Pension scheme, and the remaining 1.61% are broken down as follows: 0.5% for E.D.L.I. (Employee Deposit Linked Insurance), 0.01% for administrative charges, and 1.10% for admin charges).

When we cross-check the calculation of the P.F. challan, we can see that we need to have 25.61% of the basic salary to get the approximate figure that has to be paid through the challan.

Hi Amita,

Could you explain what the EDLI benefit would be if an employee with a basic salary of 5800 died? Please explain.

Thanks,
Amita

Dear Prashant,

If an employee who is covered under EPF scheme is liable to receive EDLI amount in any case/condition of death from EPF dept. If exemption is granted to the organization under section-17 2 (A), then the EDLI amount has to be claimed from the insurance agency, not from the EPF dept.

Thank you,
Rajesh Gautam

Yes, of course, whoever is the nominee can do it after following/abiding by the terms and conditions.

Thank you, AWVIK, for your remarks. This is what I have been trying to tell all participants. Please get your basics right first. This forum will be useful only if we keep it uncluttered. The focus should be on specific, unprecedented, or uncommon situations, or where there is ambiguity, or where no solutions are offered in HR textbooks, or where one needs to know the applied aspects or practical solutions/suggestions; or where some sharing of practice is involved; or when you need specific advice on a peculiar issue.

Regards.

Thank you, Sir.

In our organization, the EPF amount (12%) is being deducted on the total basic, DA, VDA, and EPS (8.33%) is being deducted on the ceiling amount, i.e., Rs. 6500/- (basic + DA + VDA) only. On which wages will be taken for EDLI contribution? Whether EPF wages or ceiling wages?

Can anybody please reply?

S.N. SWAMY

Dear S.N. Swamy,

The ceiling of Rs. 6500 is applicable for EDLI. I shall provide a brief overview of EDLI based on the latest amendment.

EDLI Overview

EDLI is the abbreviation for Employees' Deposit Linked Insurance Scheme. Here, "deposit" refers to the average deposit in EPF. In the event of an employee's death while in service, the family will receive compensation based on the employee's deposit. To claim this benefit, the employer must pay 0.5% as the premium.

Determination of Deposit

The average deposit of the last twelve months and the total service will be calculated, and the lesser of the two will be considered for the calculation.

Determination of Compensation

Up to Rs. 50,000, the family will receive the actual amount. Beyond the initial Rs. 50,000, they will receive 40% of the remaining amount, subject to a ceiling of Rs. 100,000.

For example:
- a) Deposit Rs. 100,000:
- First 50,000 - 50,000
- Next 50,000 - 20,000
- Total - Rs. 70,000 (will receive the full amount as it does not exceed Rs. 100,000).

- b) Deposit Rs. 200,000:
- First 50,000 - 50,000
- Next 150,000 - 60,000
- Total - Rs. 110,000 (will receive Rs. 100,000 only as it exceeds Rs. 100,000).

- c) Deposit Rs. 300,000:
- First 50,000 - 50,000
- Next 250,000 - 100,000
- Total - Rs. 150,000 (will receive Rs. 100,000 only as it exceeds Rs. 100,000).

However, there are better insurance schemes available with the same premium, even without considering the deposits. Some organizations are exempted from EDLI as they provide better benefits than EDLI. These alternative schemes specify compensation exceeding Rs. 100,000 for natural death and double benefits for accidental death.

Regards,
Abbas P.S., ITI Ltd, Palakkad 678 623.

Ph. [Phone Number Removed For Privacy Reasons]

In case we have not received the exemption certificate from the PF Commission under Section 2(17) of the PF Act 1952 and deposit the EDLI premium under the LIC scheme, what are our responsibilities?