EPFO Free Insurance: Employees Get Up to ₹7 Lakh Life Cover at No Cost, Entire Premium Paid by Employer

Employees working in the organised sector often know about their EPF deposits but remain unaware of an equally important benefit linked to their PF account—free life insurance coverage of up to ₹7 lakh. This coverage is provided under the Employees’ Deposit Linked Insurance (EDLI) Scheme, managed by the Employees’ Provident Fund Organisation (EPFO). Every EPF subscriber is automatically covered under this scheme, without having to pay even a single rupee as premium. The entire contribution comes from the employer, making it one of the most valuable yet lesser-known protections available to salaried individuals.

What the EDLI Scheme Offers

Under the EDLI Scheme, the minimum insurance benefit is ₹2.5 lakh, while the maximum amount payable is ₹7 lakh. This insurance is applicable in the event of the employee’s death—whether due to illness, accident, or natural causes. The claim can be filed by the employee’s nominated family member or legal heir.
The insurance amount is calculated based on the employee’s average basic salary plus dearness allowance (DA) for the last 12 months, along with the balance in the PF account. Notably, the scheme also covers employees who worked in more than one organisation within the 12 months preceding their death.

Employees Pay Nothing for This Cover

One of the biggest advantages of the EDLI scheme is that employees do not contribute any amount toward the insurance premium. The entire premium—calculated as 0.50% of an employee’s basic salary plus DA—is paid by the employer.
However, while calculating this contribution, the maximum salary limit considered is capped at ₹15,000 per month, even if the actual basic salary of the employee is higher. Claims under the EDLI scheme are always settled in a lump sum.

What If No Nominee Is Added?

If an EPF member has not added a nominee, the insurance benefit will be paid to the surviving family members in a defined order. In the absence of a nominee, the amount goes to the employee’s spouse, unmarried daughters, or minor sons.
A crucial condition is that the employee must have been an active contributor to the EPF at the time of death. If PF contributions had stopped, the insurance coverage may not apply.

How EPF Contributions Work

Employees contribute 12% of their basic salary plus DA to the EPF. Employers also contribute 12%, but out of their share, 8.33% goes toward the Employees’ Pension Scheme (EPS), while the remaining portion goes to the EPF. The EDLI premium is paid separately by the employer and does not reduce the employee’s PF contributions.

How to File an Insurance Claim

In the unfortunate event of an employee’s death, the nominee or legal heir can apply for the insurance under the EDLI scheme. If the nominee or heir is a minor, the guardian can submit the claim on their behalf. The required documents typically include:

• Death certificate of the employee

• Succession certificate (if applicable)

• Guardian certificate for minor nominees

• Bank account details of the claimant

Along with the EPF withdrawal forms, claimants must submit Form 5IF for the EDLI insurance. This form must be verified by the employer. If employer verification is not possible, the form can be attested by one of the following:

• Gazetted officer

• Magistrate

• Postmaster or sub-postmaster

• Member of Parliament or Legislative Assembly

• Chairperson of the Gram Panchayat

• Member of CBT or EPF regional committee

• Manager of the bank where the employee held the account

• Chairperson, secretary, or member of local municipal or district board

A Valuable Benefit Many Employees Overlook

The EDLI scheme provides essential security to employees’ families without any financial burden on the employee. With coverage up to ₹7 lakh at no cost, it serves as a strong financial safety net. Employees are therefore encouraged to check their EPF accounts, ensure that a nominee is listed, and inform their families about this important benefit so they can claim it without difficulties if needed.