COVID-19 Forces EPFO to Hike Maximum Assured for EDLI Scheme

The COVID-19 pandemic is wreaking havoc across India. The country is currently battling the second wave of the pandemic with a steep increase in the cases of coronavirus and the resultant deaths. One of the biggest reason for the rising fatalities is the burdened medical infrastructure and increased demand for oxygen supply. A large population of the salaried class people has also lost their lives due to COVID-19 leaving families with no source of income. To help the families of the private sector employees who have lost lives to coronavirus, the Employees Provident Fund Organization (EPFO) has increased the maximum sum assured available under the EDLI scheme to Rs 7 lakh with immediate effect.

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*Premium starting from ₹110/Employee/Month for ₹1 Lac Sum Insured covering Health & Wellness Needs (excluding GST)
#Premium may vary on the basis of coverage type & add-ons
**All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

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Most people know of EPFO as the organization that regulates EPF or employees’ provident fund. EPF is a savings scheme available to the employees of private organizations with a minimum workforce of 20 people. It ensures that the employees of such companies receive a pension amount after their retirement. Unlike the group health insurance policy, the benefits arising out of the EPF can be accessed only after the retirement of the employee. But besides EPF, EPFO also regulates EDLI or Employees Deposit Linked Insurance scheme available to the active members of EPF.

What is Employees Deposit Linked Insurance (EDLI)?

The Employees Deposit Linked Insurance or (EDLI) is a life insurance scheme available for the salaried employees of the private sector. It was introduced by the Employees Provident Fund Organisation (EPFO) in 1976. Under this scheme, the nominee assigned by the insured employee receives a lump-sum amount or death benefit if the employee dies while still working for his/her employer. In case no nominee was assigned by the deceased employee, the death benefit will be paid to his/her spouse, unmarried daughter or minor sons.

The EDLI scheme covers all the active members of the EPF and the Miscellaneous Provisions Act, 1952. Just like a group health insurance policy, the employee does not have to pay any amount towards the scheme as the contribution is made by the employer.

However, it is not mandatory for every private organization to enrol their salaried employees under the EDLI scheme. A private organization can opt out of the EDLI scheme if they have covered their employees under another group life insurance or group term insurance plan with greater benefits. At present, there are more than 20 lakh EDLI members out of the total 5 crore EPF members.

The death benefit under the EPLI scheme depends on the monthly wages of the employee i.e. the sum of basic salary and dearness allowance. It may also depend on the average balance in the employee’s PF account. While the monthly wage comes with a maximum limit of Rs 15,000, there is also a minimum and maximum limit to the death benefit under the EDLI scheme.

EPFO Increases Maximum Sum Assured Under EDLI Scheme

The Employees Deposit Linked Insurance scheme offers a death benefit to the family members of the deceased employee on behalf of the employer to deal with immediate financial expenses. The death benefit depends on the sum assured limits under the EDLI scheme. The minimum sum assured under the EDLI scheme was increased to Rs 2.5 lakh with effect from 15th February 2020. On the other hand, the maximum sum assured for the scheme was Rs 6 lakh.

But recently, the maximum sum assured under the EDLI scheme was raised to Rs 7 lakh. The EPFO has increased the maximum sum assured amount for the EDLI scheme effective from 28th April 2021. However, the new maximum sum assured amount will be in effect only for a period of three years i.e. till April 2024.

The increase in the maximum death benefit amount under the EDLI scheme comes at a time when the country is struggling to stay afoot amidst the second wave of the COVID-19 pandemic. Although COVID group health insurance plans help employees to deal with the hospitalization expenses arising out of the COVID-19 treatment, it does not provide any financial assistance to the family after the insured  dies fighting the coronavirus.

The second wave of the COVID-19 pandemic in India has proven more deadly than the first one as more lives are being lost with each passing day. As of 6th May 2021, India reported 3980 fatalities, which is the highest since the pandemic set foot in India. With so many lives lost, the EPFO has made the EDLI scheme more accessible in the current times just like a COVID policy for employees. The benefits of the EDLI scheme will be available to the family members of the insured employees if they die due to the pandemic.

Moreover, the increase in the maximum death benefit under the EDLI scheme can help families to cope up with the financial implications of the death of their salaried family members. It is essentially an important decision to support the families who have lost their sole earning member of the family to coronavirus.

Documents Required to File a Claim under EDLI Scheme

The following documents need to be submitted to raise a claim under the EDLI scheme after the demise of the insured employee:

  • Duly filled Form 5 IF
  • A copy of the cancelled cheque of the nominee
  • Death certificate of the deceased employee
  • Succession certificate for the legal heir (if no nominee is assigned)
  • Guardianship certificate if the legal heir is a minor

Summing It Up

The COVID-19 pandemic is claiming lives in India at an alarming rate. While everyone must take all possible measures to keep themselves safe, you should utilize the benefits of a COVID group health insurance policy to deal with the medical cost of treating COVID-19. Besides, the EDLI scheme is another COVID policy for employees that can help their families to deal with finances in case of their demise due to coronavirus. At this hour of need, the hike in the maximum sum assured of the EDLI scheme is definitely a positive step towards easing the suffering of the affected people.

Written By: PolicyBazaar - Updated: 26 August 2021
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