The Employees’ Provident Fund (EPF) is widely known as a retirement savings scheme. However, many are not aware that being an EPF member also provides you with a life insurance cover, which offers a financial safety net to your family in the unfortunate event of your death during service. This insurance benefit comes from a scheme that is linked to your PF account. For every EPF member in 2026, it is crucial to know what is an Employee Deposit Linked Insurance (EDLI) scheme. This scheme is an integral part of the social security benefits provided by the Employees’ Provident Fund Organisation (EPFO) and can provide significant financial assistance to your loved ones when they need it the most.
What is the Employee Deposit Linked Insurance (EDLI) Scheme?
The Employee Deposit Linked Insurance (EDLI) Scheme, 1976, is a life insurance scheme that is mandatory for all employers who provide EPF benefits to their employees. Under this scheme, the registered nominee of an active EPF member receives a lump-sum payment in the event of the member’s death while they are still in service. The primary objective of the EDLI scheme is to provide social security and financial assurance to the family members of the deceased employee. The coverage under this scheme is linked to the employee’s service and their PF account balance. The best part is that the employee does not have to contribute any amount towards this scheme; the entire premium is paid by the employer.
Who is Covered Under the EDLI Scheme?
All employees who are members of the Employees’ Provident Fund (EPF) and the Employees’ Pension Scheme (EPS) are automatically covered under the EDLI scheme. There is no separate enrollment required. As long as you are an active member of the EPF, you are covered by this life insurance benefit. Your employer, who is registered under the EPF Act and has a PF Establishment Code, is responsible for paying the EDLI contribution for you.
The Benefits and Payout Under the EDLI Scheme
The EDLI scheme provides a significant life insurance cover. The calculation of the benefit amount is based on the employee’s last drawn salary and their PF account balance.
The Payout Calculation:
The assurance benefit payable to the nominee is calculated as follows:
- 35 times the average monthly salary drawn during the last 12 months of employment, capped at ₹15,000 per month. So, the maximum amount under this part is 35 x ₹15,000 = ₹5,25,000.
- Plus, a bonus of 50% of the average balance in the deceased member’s PF account during the preceding 12 months, up to a maximum bonus of ₹1,75,000.
Maximum and Minimum Benefit:
- The maximum assurance benefit payable under the EDLI scheme is ₹7 lakh (₹5,25,000 + ₹1,75,000).
- The minimum assurance benefit is ₹2.5 lakh, provided the employee was in continuous employment for at least 12 months before their death.
How to Claim the EDLI Benefit
The claim for the EDLI benefit is made by the nominee or the legal heir of the deceased EPF member. The process is integrated with the provident fund claim process.
| Step | Action |
|---|---|
| 1. Fill the Claim Form | The claimant (nominee/legal heir) needs to fill out the ‘Composite Claim Form (Death)’. This is a single form that is used to claim the Provident Fund (PF) balance, the Pension benefit (if applicable), and the EDLI insurance amount. |
| 2. Get the Form Attested | The claim form must be attested by the employer of the deceased member. If that is not possible, it can be attested by a gazetted officer or the manager of the bank where the deceased had their account. |
| 3. Submit the Form | The filled and attested form, along with the required documents, must be submitted to the regional EPFO office where the deceased member’s PF account was maintained. |
| 4. Required Documents | The necessary documents include the death certificate of the member, a succession certificate or guardianship certificate (if the claimant is not the registered nominee), and a cancelled cheque of the claimant’s bank account. |
| 5. Processing and Payment | The EPFO will process the claim and, upon approval, the PF balance, pension, and the EDLI amount will be credited directly to the claimant’s bank account. |
The EDLI scheme is a crucial part of the social security ecosystem for organized sector workers, along with the health benefits provided under the ESI scheme, which is identified by an ESIC IP Number, and the end-of-service Gratuity benefit.
Frequently Asked Questions (FAQs)
1. Does the employee have to pay any premium for the EDLI scheme?
No, the employee does not have to pay any contribution or premium for the EDLI scheme. The entire contribution is made by the employer. The employer contributes 0.5% of the employee’s basic salary (up to the wage ceiling of ₹15,000) to the EDLI fund every month.
2. I have a separate group term life insurance from my company. Am I still covered under EDLI?
An employer can opt out of the EDLI scheme, but only if they provide their employees with another group life insurance scheme that offers benefits that are equal to or better than the EDLI scheme. So, if your employer has a better private group term life plan, they might be exempt from contributing to EDLI.
3. What happens to my EDLI cover if I change jobs?
The EDLI cover is linked to your active EPF membership. When you leave a job and join another company that is covered under the EPF Act, your membership continues, and you remain covered under the EDLI scheme through your new employer. Your service is considered continuous.
4. Is the EDLI claim amount taxable?
No, the lump-sum amount received by the nominee or legal heir under the EDLI scheme is exempt from income tax.
5. Who is considered a ‘nominee’ for the EDLI scheme?
The nominee for the EDLI scheme is the same person(s) that the employee has nominated in their EPF account (in Form 2). It is very important for all EPF members to file their e-nomination on the EPFO portal to ensure that their family can claim the benefits smoothly and without any legal hurdles.