EDLI: Employees Deposit Linked Insurance Scheme

As a private sector employee, you might be looking for options to get crucial social security benefits in today’s age. The reason for this exploration is simple — non-public sector professionals receive less financial support compared to their government job counterparts.

If this scenario is familiar, the employee deposit linked insurance scheme (EDLI) is worth exploring. The EDLI scheme came into existence in 1976 and is managed by the Employees Provident Fund Organisation (EPFO). 

As a private sector employee, you can avail of such a program to safeguard your family’s financial condition. But, thorough knowledge of EDLI and its technicalities can prove essential for planning purposes.

This article explains topics like EDLI calculation, eligibility, and other vital aspects. So, scroll ahead and get conversant with such a prominent insurance scheme.  

What is EDLI?

In simple words, EDLI stands for employee deposit linked insurance scheme. It focuses on offering benefits to private sector professionals.

The EDLI scheme works on the principle of fund accumulation. It is a blend of the following two facets:

• Employee provident fund
• Employee pension scheme

You can avail yourself of the employee deposit linked insurance scheme at companies that provide an employee provident fund. Notably, you do not need to make separate contributions for this insurance coverage.

The majority of the contribution is from the employer. So, this government-based insurance option's overall returns and feasibility can prove beneficial.

What are the features of EDLI?

The main aspects of this scheme make it lucrative for professionals to consider an EDLI contribution. Here are the important points to consider:

• The family members or nominees are eligible to receive the EDLI scheme benefits
• There is no constraint of a minimum working tenure to receive the benefits
• If you are eligible for an employee’s provident fund, it is easy to get automatic enrolment for EDLI
• The EDLI contribution is the employer’s responsibility
• If an employer offers an alternative life insurance scheme to employees, EDLI is not mandatory

Overall, this insurance cover has the potential to become a pertinent side cover for private sector employees.

EDLI eligibility

To become eligible for the employee deposit linked insurance scheme, you need to satisfy the following requirements:

• You are a private-sector employee
• There is an official enrolment under the employee provident fund /li>
• You mention family members as nominees in the scheme
• There is active employment with a company that offers employee provident fund benefits

So, if you leave a company that offers employee provident fund benefits, it is not possible to claim EDLI benefits.

Benefits of EDLI

Financial security

Public sector professionals receive benefits like retirement funds or gratuities. However, as a private sector employee, you do not have such financial advantages.

If you fall under the category of corporate service, it is vital to avail yourself of profitable schemes. The EDLI scheme is one such program that provides a lump sum amount in case of untimely death. So, this type of term insurance cover offers financial security to your family.

Savings

The coverage amount in the EDLI scheme is higher than the salary value. In addition, you receive the additional bonus as per the EDLI scheme eligibility.

These factors contribute to long-term savings without the requirement of monthly contributions. You only need to contribute towards the employee provident fund account to keep this scheme active.

Comply with legal requirements

The employee provident fund is a government-based scheme. So, the employee deposit linked insurance scheme complies with all legal implications and rules.

In addition, you can avail of the EDLI scheme only by working at an organisation that offers employee provident benefits. These factors make it safe to avail of such benefits without the scrutiny of any legal requirements.

Low-cost insurance

One of the biggest benefits of this scheme is that you do not need to contribute separately to this insurance coverage.

The EDLI contribution for employees is a small portion of the basic salary and dearness allowance. However, this amount is already applicable to the employee provident fund deductions. So, EDLI can serve as an economically viable insurance option.

Provides tax benefits

The claim amount under the EDLI scheme is eligible for exemption under the Income Tax Act. Also, you do not need to contribute separately to keep this insurance coverage active.

Steps to submit a claim for EDLI scheme

Submitting a claim for the employee deposit linked insurance scheme is quite straightforward. You need to keep the below documents ready and follow some simple steps.

Documents required

Here is a list of documents that you need to provide to claim EDLI benefits:

• The EDLI claim form 5IF
• Death certificate of the insured employee
• Succession or guardianship certificate
• Cancelled cheque copy
• Form 20 (if required)

It is crucial to understand that EDLI also enables tax-free returns. Also, form 20 can prove beneficial for claiming benefits from schemes linked to the employee provident fund. So, ensure that you submit this document without fail.

Step by step guide for completing the EDLI claim process

Follow these steps to complete a systematic EDLI procedure:

• Visit the nearby employee provident fund commission office
• Submit forms 5 and 20 to the relevant personnel
• Provide the bank information where you want the funds transferred
• Acquire the date of receipt by the employee provident fund commissioner

When filling in the bank details, you need to ensure attestation from certain professionals. You can connect with the bank manager or sub-postmaster for attestation purposes. Other possible options of individuals that can attest your forms are a member of parliament, a magistrate, or a member of the legislative assembly.

Overall, these four steps are sufficient to complete the employee deposit linked insurance scheme claim process. It is also vital to note that in most cases, you receive the lump sum amount or claim within 30 days of submitting the final documents.

Summing Up

The employee deposit linked insurance scheme is a potential insurance cover that you can acquire. Notably, this program falls under the employee provident fund. You do not need to pay separate premiums to claim EDLI benefits.

An employer can suggest other profitable insurance covers instead of this scheme. So, EDLI is not mandatory for any private organisation.

As a private sector employee, you need to know the basic calculations, documents, and processes to claim the lump sum amount of EDLI. Detailed knowledge of such information can prove crucial to enjoying the benefits of this term insurance option.