Free ₹7 Lakh Insurance with EPF: Understand the Exact Payout Calculation

EPFO EDLI Scheme: Under the EDLI scheme, the families of EPFO ​​members can receive insurance benefits of up to ₹7 lakh in the event of the member's death during employment. No separate premium is charged to the employee for this.

EPFO EDLI News: If you are employed under EPFO ​​and have PF deductions, this information is crucial for you. Eligible EPFO ​​members receive life insurance coverage under the Employees' Deposit Linked Insurance (EDLI) scheme without paying any separate premium. In the event of an employee's death during service, their nominee or legal heir can receive an insurance amount of up to ₹7 lakh, subject to the scheme's rules.

How is the EDLI insurance amount of up to ₹7 lakh determined?

The insurance amount under EDLI is calculated based on the average monthly salary drawn by the employee during the 12 months immediately preceding their death. However, the calculation is subject to a maximum monthly salary cap of ₹15,000.

The simple formula for EDLI is:

30 times the average monthly salary + ₹2.5 lakh bonus

If an employee's average monthly salary is ₹15,000, then:

15,000 × 30 = ₹4.5 lakh
Bonus = ₹2.5 lakh
Total Benefit = ₹7 lakh
Dearness Allowance (DA) is also included when determining the salary for the EDLI calculation. Additionally, the scheme provides for a minimum benefit amount if eligibility criteria are met.

Who is eligible for EDLI benefits?

If you are an eligible EPF member, you automatically fall under the ambit of the EDLI scheme. You do not need to pay any separate premium for this. The primary objective of the scheme is to provide financial assistance to an employee's family in the event of the employee's death during service. Under certain circumstances, the scheme's coverage may remain valid even while changing jobs, provided you meet the eligibility conditions.

How to claim the EDLI amount?

To avail of EDLI benefits, the nominee or legal heir must file a claim using the relevant form and the necessary documents.
Form 5-IF must be submitted to claim EDLI benefits.
Typically, the form requires verification by the employer.
If verification by the employer is not possible, the form can be verified by a designated competent authority.
The completed form, along with the required documents, must be submitted to the concerned EPFO ​​office.
Depending on eligibility, relevant forms for other benefits linked to EPF and EPS may also be submitted.