The Employees Deposit Linked Insurance Scheme (EDLI) is an insurance cover provided by the Employees Provident Fund Organisation (EPFO) for private sector salaried employees who are members of EPFO. The scheme was launched in 1976 with the objective of providing social security benefits to employees of the private sector for whom such benefits were not commonly provided by the employer. The registered nominee receives a lump-sum payment in the event of the death of the person insured (employee) during the period of service. The EDLI scheme covers all organizations registered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952, and they must subscribe to this scheme and provide life insurance benefits to their employees.
The EDLI scheme works in combination with EPF (Employees Provident Fund) and EPS (Employees Pension Scheme) . The employee, as well as the employer, contribute to all three schemes run by the EPFO. The contribution made for each scheme is as follows:
- EPF: 12% of Basic + DA by the employee and 3.67% of Basic + DA by the employer
- EPS: Not applicable for the employee and 8.33% of Basic + DA by the employer
- EDLI: Not applicable for the employee and 0.5% (subject to a maximum of Rs. 75) by the employer
The insurance cover depends on the salary drawn in the last 12 months of the employment before death. The maximum insurance cover under the EDLI scheme is Rs. 7 lakh. The chief motive of the EDLI scheme is to offer financial security to the family members of the policyholder (deceased person). Family members mean spouse, unmarried daughter, or male child up to 25 years of age. The employee cannot choose which of the three schemes, EPF, EPS, or EDLI, that he/she wants to opt for, but they are transferable with any change in the job. The new employer will continue to make payment in the existing account.
In summary, EDLI is an insurance cover provided by the EPFO for private sector salaried employees who are members of EPFO. The scheme works in combination with EPF and EPS, and the insurance cover depends on the salary drawn in the last 12 months of the employment before death. The maximum insurance cover under the EDLI scheme is Rs. 7 lakh, and the chief motive of the scheme is to offer financial security to the family members of the policyholder (deceased person).
