Under the EDLI scheme of EPFO, even if the basic salary of the Employee is more, due to the maximum limit, it will be considered as 15 thousand rupees and will get a maximum of 7 lakh rupees.
The first and second wave of Corona have caused a lot of damage to the economy of countries around the world including India. Millions of people in the country were forced to face many problems financially. But during this Corona period, the central government started many schemes for the financial help of the people. The Central Government has also increased the limit of sum insured given under the EDLI Scheme i.e. Employee Deposit Linked Insurance Scheme, 1976 from Rs.6 lakh to Rs.7 lakh.
People working in private companies also get the benefit of up to Rs 7 lakh for free. Now the question is, what kind of employed people get this benefit and in what way. So let us tell you that the facility of life insurance is given to the subscribers by EPFO. All the subscribers of EPFO are covered under EDLI Scheme 1976.
Limit increased, government issued notification in April
The maximum amount of insurance cover under this scheme was earlier Rs 6 lakh, which has been increased to Rs 7 lakh. On September 9 last year, the Central Board of Trustees (CBT) of EPFO headed by Labor Minister Santosh Gangwar had decided to increase the maximum insurance claim amount under the EDLI scheme to Rs 7 lakh. The Ministry of Labor and Employment issued a notification on 28 April this year regarding the decision to increase the insurance claim under the EDLI scheme to Rs 7 lakh and from that date the increased limit under this scheme has come into force.
Under what circumstances does it benefit?
Under the EDLI scheme, employed people (employees of the company) make someone in their family a nominee. In case of illness, accident or natural death of the employee, the sum assured can be claimed by the nominee. Under the changes in the rules, now this insurance cover is also available to the aggrieved family of an employee who has worked in more than one establishment within a year immediately before the death.
A lump sum payment is made under this scheme. The special thing is that unlike the EDLI scheme, the employee does not have to pay any amount or any premium. If the employee has not nominated anyone under the scheme, then the spouse of the deceased i.e. spouse, unmarried daughters or minor children will be entitled to get coverage.
The company pays the premium not the employee
As mentioned above, the premium under this scheme does not have to be paid by the employee, but it is paid by the company. 12% of the basic salary + DA of the workers goes to the Employees’ Provident Fund (EPF). At the same time, only 12 percent is contributed by the company i.e. the employer. Out of this 12 percent, 8.33 percent contribution goes to Employee Pension Scheme EPS, while the remaining 3.66 percent goes to EPF. Talking about the EDLI scheme, premium is deposited only on behalf of the employer. It is 0.50 percent of the basic salary and dearness allowance of the employee. However, the maximum limit of basic salary is up to Rs 15,000.
Understand the math of this scheme like this
The claim in the EDLI scheme is calculated on the basis of the basic salary + DA of the employee for the last 12 months. The insurance cover claim used to be 30 times the last basic salary + DA, but now it is 35 times under the latest revision. Along with this, the maximum bonus which was earlier Rs 1.50 lakh has been increased to Rs 1.75 lakh.
This bonus is considered to be half of the average PF balance during the last 12 months. For example, if the basic salary + DA for the last 12 months is Rs 15000 then the insurance claim will be (35 x 15,000) + 1,75,000 = Rs 7 lakh. This is the maximum limit. Even if the basic salary is more, due to the maximum limit, it will be considered as 15 thousand rupees only and under this scheme a maximum of 7 lakh rupees will be available.
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