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Employee Deposit Linked Insurance

1. Employees Deposit Linked Insurance Scheme (EDLI) is an insurance cover provided by the EPFO (Employees Provident Fund Organization) for salaried employees. This was introduced by the government in 1976. Under this, the registered nominee receives a lump-sum payment in the event of the insured person’s death, during the period of service.
2. EDLI applies to all organizations registered under the Employees Provident Fund and Miscellaneous Provision Act, 1952. All such organizations must subscribe to this scheme and offer Life Insurance benefits to its employees. This scheme works in combination with Employees Provident Fund (EPF) and Employees Pension Scheme (EPS). The extent of the benefit is decided by the Last Drawn Salary of the Employee.
3. Essential Elements of EDLI:
   1. EDLI applies to all employees with a basic salary under Rs. 15,000 p.m. . If the basic salary goes above Rs. 15,000 p.m., the maximum benefit is capped at Rs. 6,00,000.
   2. Any employee who has an EPF account automatically becomes eligible for the EDLI scheme. Therefore, there is no need for the employee to contribute to the EDLI Scheme separately, there contribution is only required for the EPF. Any Organization that has more than 20 employees needs to register for EPF.
   3. There are no exceptions to the insurance coverage provided by EDLI. It protects the insured person round the clock, all around the world.
   4. An employer can opt for another group insurance scheme, but the benefits offered must be equal to or more than those offered under EDLI.
   5. For all calculations under EDLI, dearness allowance must be added to the basic salary.
   6. As per the provision of the EDLI, the contribution of an employer must be 0.5% of the basic salary or a maximum of Rs. 75 per employee per month. If there is no other group insurance scheme, the maximum contribution is capped at Rs. 15,000 p.m.
   7. There is a bonus of Rs. 1,50,000/- under the EDLI.
4. Calculation of EDLI charge :
5. The registered nominee will receive a lump sum payout in the event of the death of the insured person. If no nominee or beneficiary is registered, then the amount would be paid to the legal heir.

   The Payout will be calculated as:

   [{Average Monthly Salary of the Employee for the last 12 months (capped at Rs. 15,000p.m.)}

   x 30 ] + Bonus Amount (Rs. 1,50,000/-)

6. The Chief Motive of the EDLI Scheme is to offer financial security to the family members of the policyholder (deceased person). Family member means spouse, unmarried daughter or male child upto 25 yrs. of age.

Author: Team Atmoz