Understanding the Employees' Deposit Linked Insurance (EDLI) Scheme
EDLI is the abbreviation for the Employees' Deposit Linked Insurance Scheme. Here, "deposit" refers to the average deposit in the EPF. When an employee dies while in service, the family will receive some compensation based on his or her deposit. To claim the compensation, the employer has to pay 0.5% as its premium.
Determination of Deposit
The average deposit of the last twelve months, as well as the total service, will be calculated, and whichever is less will be taken for the calculation.
Determination of Compensation
For deposits up to Rs. 50,000 (as calculated above), the family will receive the actual amount. Beyond the first Rs. 50,000, they will receive 40% of the remaining amount, subject to a ceiling of Rs. 100,000.
For example:
- **Deposit Rs. 100,000**
- For the first Rs. 50,000: Rs. 50,000
- For the next Rs. 50,000: Rs. 20,000
- Total: Rs. 70,000 (full amount received as it does not exceed Rs. 100,000).
- **Deposit Rs. 200,000**
- For the first Rs. 50,000: Rs. 50,000
- For the next Rs. 150,000: Rs. 60,000
- Total: Rs. 110,000 (only Rs. 100,000 received as it exceeds Rs. 100,000).
- **Deposit Rs. 300,000**
- For the first Rs. 50,000: Rs. 50,000
- For the next Rs. 250,000: Rs. 100,000
- Total: Rs. 150,000 (only Rs. 100,000 received 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 and instead provide better benefits in lieu of it. These schemes specify more than Rs. 100,000 for natural death and double benefits for accidental death.
Regards,
Abbas.P.S, ITI Ltd, Palakkad 678 623.
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