How to Apply for the EDLI Scheme Easily? – SecureNow

The Employee Deposit Linked Insurance (EDLI) Scheme is a vital component of India’s employee benefits framework, designed to provide financial security to the family members of an employee in the event of the employee’s untimely demise. As part of the Employees’ Provident Fund (EPF) structure, this scheme offers life insurance benefits, ensuring peace of mind for employees and their dependents.

Applying for the EDLI Scheme involves understanding its processes, eligibility requirements, and documentation. In this article, we delve deep into the application procedure and provide step-by-step guidance to help you navigate the process smoothly.

The Employee Deposit Linked Insurance (EDLI) Scheme is a group insurance program introduced by the Government of India under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. Designed to provide financial security to the family members of employees in the event of their untimely demise, the EDLI Scheme offers life insurance coverage to employees enrolled under the Employees’ Provident Fund (EPF). The scheme ensures that beneficiaries receive a lump sum payment calculated based on the employee’s salary and contributions, offering a maximum coverage of ₹7 lakh.

Employers are required to register their employees under the scheme, which operates automatically for those enrolled in EPF. The scheme is funded entirely by employers, who contribute 0.5% of the employee’s monthly basic salary plus dearness allowance, ensuring that no financial burden falls on employees.

One of the key benefits of the EDLI Scheme is its wide applicability, covering both private and public sector employees. Claims under the scheme are processed quickly, with minimal paperwork. Family members or legal heirs can apply for the benefit by submitting Form 5(IF) along with necessary documents like a death certificate and proof of relationship. The EDLI Scheme provides vital financial assistance, ensuring peace of mind and security for employees and their families.

What is the EDLI Scheme?

The EDLI Scheme is a government-backed life insurance program introduced under the Employees’ Provident Fund and Miscellaneous Provisions Act, of 1952. It offers a lump-sum payout to the nominee or legal heir of an EPF member upon the member’s demise during their service. Key highlights include:

• Coverage of all employees enrolled in the EPF scheme.
• Insurance benefit linked to the employee’s last drawn salary and the EPF balance.
• No cost to employees, as the contribution is paid by the employer.

Eligibility Criteria for the EDLI Scheme

1. EPF Membership

The scheme is exclusively available to individuals who are members of the Employees’ Provident Fund (EPF). This includes:

• Regular employees covered under the EPF Act.
• Employees working in establishments registered with the Employees’ Provident Fund Organisation (EPFO).

2. Nominee or Legal Heir

In the event of the employee’s demise, the benefits under the EDLI Scheme are payable to:

• The nominee is mentioned in the EPF account.
• In the absence of a nominee, the legal heir of the deceased employee.

Step-by-Step Guide to Apply for the EDLI Scheme

Step 1: Notify the Employer

The first step involves informing the employer about the employee’s demise. The employer plays a crucial role in initiating the claim process by verifying the employee’s details and forwarding the application to the EPFO.

Step 2: Gather the Required Documents

To apply for the EDLI Scheme, the claimant must collect and prepare the following documents:

• Form 5 IF: This is the designated form for claiming EDLI benefits.
• Death Certificate: A certified copy of the deceased employee’s death certificate is mandatory.
• Succession Certificate: Required if there is no nominee mentioned in the EPF records.
• Bank Account Details: A cancelled cheque or a copy of the claimant’s bank passbook.
• ID Proof: Identification documents of the claimant, such as an Aadhaar or PAN card.
• Employer’s Certificate: Verification of employment details by the employer.

Step 3: Complete Form 5 IF

Form 5 IF must be filled out accurately with details such as:

• Name and address of the claimant.
• EPF account number of the deceased employee.
• Nominee details or legal heir information.
• Bank details for receiving the payment.

Step 4: Submit the Application to the Employer

The completed application form, along with the required documents, should be submitted to the employer. The employer is responsible for:

• Verifying the accuracy of the details provided.
• Submitting the claim to the EPFO on behalf of the claimant.

Step 5: Employer’s Submission to the EPFO

The employer forwards the verified application to the EPFO office, along with a covering letter. The EPFO reviews the claim and may contact the employer or claimant for additional details if required.

Step 6: Claim Processing by the EPFO

Once the application is received, the EPFO processes the claim. This includes:

• Verifying the employee’s contribution details.
• Ensuring compliance with the EDLI Scheme’s eligibility criteria.
• Approving the payout amount based on the scheme’s guidelines.

Step 7: Disbursement of Funds

After verification, the EPFO disburses the insured amount directly to the claimant’s bank account. The payout includes:

• A lump-sum amount is calculated as 35 times the average monthly salary (subject to a cap).
• An additional bonus amount as per the scheme guidelines.

Key Features of the EDLI Scheme

1. Coverage Limit

The maximum benefit under the EDLI Scheme is ₹7,00,000, including the bonus component. This ensures substantial financial aid for the family of the deceased employee.

2. Employer Contribution

Employers contribute 0.5% of the employee’s basic salary towards the EDLI Scheme. Employees are not required to make any contributions.

3. No Exclusions

The scheme has no exclusions based on health conditions, age, or other factors, making it universally applicable to EPF members.

Frequently Asked Questions (FAQs)

1. Is the EDLI benefit taxable?

The payout received under the EDLI Scheme is fully tax-free for the claimant under Section 10(10D) of the Income Tax Act, 1961.

2. Can an employee opt out of the EDLI Scheme?

No, membership in the EDLI Scheme is automatic for all EPF-covered employees. However, organizations may offer equivalent or better insurance coverage under an approved group insurance plan.

3. How long does it take to process an EDLI claim?

The EPFO typically processes claims within 30 days of receiving the application, provided all documents are in order.

4. What happens if there is no nominee?

If no nominee is specified, the legal heir(s) must provide a succession certificate to claim the benefits.

Conclusion

The EDLI Scheme serves as a critical financial safety net for the families of employees during unforeseen circumstances. Applying for the scheme involves a well-structured process, beginning with employer notification and culminating in the EPFO’s disbursement of funds. By ensuring all documents are in place and the application is correctly submitted, claimants can secure timely benefits under this invaluable program.