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PF New Rule: EPF Account Comes With Rs 7 Lakh Free Insurance Cover. Details Here

·3-min read

To help thousands of people amid the second wave of coronavirus pandemic, the Employees’ Provident Fund Organisation (EPFO) has recently increased the maximum assurance benefit under the Employees’ Deposit Linked Insurance (EDLI) scheme to ₹7 lakh. “Enhanced social security is sought to be provided to the workers without any additional cost to the employer,” the labour ministry said.

The EDLI scheme is a mandatory insurance cover provided to to all subscribers of EPF scheme. A nominee gets a lump sum payment of up to ₹7 lakh in the event of death due to natural causes, illness or accident. All organisations covered under EPF and Miscellaneous Provisions Act, 1952 get enrolled for EDLI automatically.

The retirement body recently said in a notification that the minimum death insurance has been increased to ₹2.5 lakh and the maximum to ₹7 lakh, from the earlier limits of ₹2 lakh and ₹6 lakh, respectively.

The insurance cover depends on the salary drawn in the last 12 months of the employment before death. The employer and central government contribute to EDLI scheme. It must be noted that an employee does not need to contribute to deposit linked insurance scheme to get the benefits. The claim amount under this scheme is 30 times the average monthly salary in the past 12 months subject to a maximum of 7 lakh.

The labour ministry said that the minimum assurance benefit of EDLI will be provided to family members of a deceased employee, who dies while in service, even if he worked in more than one firm in the 12 months preceding his death. “It will benefit contractual/casual labourers were losing out on benefits due to condition of continuous one year in one establishment,” the ministry said.

The benefits under Employees’ Deposit Linked Insurance will applicable for three years, effective from February 15, 2020.

“In coming three years, the actuary has estimated that eligible family members will get an additional benefit of Rs 2,185 crore from EDLI fund in the years 2021-22 to 2023-24,” the labour ministry said.

“Number of claims on account of death under the scheme has been estimated to be about 50,000 families per year including an increase in claims taking into account estimated death of about 10,000 workers, which may occur due to COVID,” it added.

Families of workers enrolled with Employee State Insurance Corporation (ESIC) who have died due to the COVID-19 will also be eligible to receive a pension for two years, labour ministry stated. The dependent family members will get 90 per cent of the average daily wage for a period of two years, starting from 24, 2020.

“The EDLI life cover is a mandatory insurance cover offered by the EPFO, and all employees working in the organisations enrolled under the EPFO are automatically covered under the EDLI scheme. To be eligible for this life cover, an employee must be in service for at least 12 months preceding their death, and a change of employers is allowed in this duration,” said Archit Gupta, founder and chief executive, ClearTax.

“The nominee shall file a claim by submitting the duly filled Form 5IF and other relevant documents to the regional EPF commissioner’s office. Also, it is recommended that the nominee submits Form 20 and Form 10 C/D along with Form 5 IF to claim all the benefits under EPF, EPS and EDLI schemes,” explained Gupta.

“The ongoing COVID-19 pandemic has led to the death of many, leaving the lives of their dependents in jeopardy. The assurance benefit payout of up to Rs 7 lakh is expected to prevent the dependents of a deceased employee from running into an immediate financial crunch. The nominee registered under the EPF account will also apply for the EDLI scheme,” he further added.

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