EDLI FAQs answered: How much insurance benefit is paid under the new wage ceiling? Who is not eligible?

Most EPF members know about the retirement savings benefits of the scheme, but many may be unaware that the membership also comes with an insurance benefit at no additional cost. The benefit is available under the Employees’ Deposit Linked Insurance (EDLI) scheme and is fully funded by employers.

Linked to the Employees’ Provident Fund scheme, it provides financial support to the nominee or eligible family member in the event of the employee’s death during service, without requiring any separate premium payment.

How much insurance money will be given now?

Under the earlier wage ceiling of ₹15,000, EDLI provided a maximum insurance benefit of ₹7 lakh to eligible users. With wage ceiling increased to ₹25,000 from September 17, the maximum benefit is also set to rise to ₹10.5 lakh.

Here’s how the calculation changes:

• Earlier: ( ₹15,000 × 35) + ₹1.75 lakh = ₹7 lakh
• New ceiling: ( ₹25,000 × 35) + ₹1.75 lakh = ₹10.5 lakh

The EDLI benefit is based on the employee’s average monthly wages over the preceding 12 months, subject to the applicable wage ceiling, along with an additional amount linked to the average EPF balance.

Employers contribute 0.5% of the basic salary towards the EDLI scheme, with no deduction from employees.

The ₹1.75 lakh component is also important in determining the final payout. If the government raises this amount as part of the EDLI rule changes, the maximum insurance benefit could increase further.

Who is not eligible to receive EDLI payout?

Establishments that have more than 20 employees are required to register for EPF. Therefore, any employee who is covered under EPF membership automatically becomes eligible for the EDLI scheme. So, if your company offers an exempted PF trust, you are not eligible.

However, EDLI benefits are not payable if the EPF member dies after their employment has ended. The member must be in covered employment at the time of death for the insurance benefit to be payable, as per EPFO website.

To ensure smooth settlement of EPF and EDLI benefits, employees should submit a nomination through the EPFO member portal and keep their nominee details updated. Any major life event, such as marriage or a change in family members or nominee details, should be reflected in the nomination records.

How to file a claim for the insurance benefits?

EDLI benefits are paid to the nominee registered by the EPF member. If there is no valid nomination, eligible family members or legal heirs can claim the benefit by following the prescribed procedure.

To receive the payout, the deceased employee must have been an active EPF member at the time of death. The claimant must submit EDLI Form 5 IF, available on the EPFO portal, with the form signed and certified by the employer.

The claimant must also submit some other documents such as the deceased employee’s death certificate, identity proof, address records and bank account details, along with the completed form to the regional EPF Commissioner’s Office for processing of the claim.

Once all the documents are provided and the claim is accepted, the EPF commissioner must settle the claim within 30 days from the receipt of the claim, according to the retirement fund body’s information.