EPF Free Life Insurance is a lesser-known but significant benefit available to salaried employees in India. For most working professionals, an Employees’ Provident Fund (EPF) account is primarily viewed as a retirement savings tool or a source of pension in old age. However, in addition to the EPF, employees also receive a valuable benefit that many are unaware of—a free life insurance cover of up to ₹7 lakh.
If you are an EPF member, you are automatically covered under a special scheme of the Employees’ Provident Fund Organization (EPFO), which provides financial security to your family. This scheme is called the Employees’ Deposit Linked Insurance (EDLI). The most significant advantage of this scheme is that employees do not have to pay any premium. The employer bears the entire cost of this insurance.
What Is the EDLI Scheme?
EDLI, or Employees’ Deposit Linked Insurance Scheme, is a life insurance cover provided by EPFO to all eligible members. It is considered the third significant benefit after EPF and EPS. As the name suggests, this insurance is linked to the PF account, and as long as an employee remains an active EPF member, they stay covered under this scheme.
Many employees assume that insurance always involves a premium deduction from salary. However, EDLI works differently. The employee does not contribute anything to this insurance. As per the rules, the employer contributes 0.5% of the employee’s salary each month to the EDLI scheme. Since there is no deduction from the employee’s salary, it is effectively a free insurance cover.
When Does EDLI Insurance Become Active?
The EDLI insurance coverage applies if an employee dies while in service. This means if an employee dies during active employment, the insurance amount is paid to the nominee or family members.
This benefit is crucial for providing immediate financial support to the family during an unexpected crisis. It acts as a social security shield for employees working in the organized sector.
How Much Insurance Amount Is Provided?
Under the EDLI scheme, the minimum insurance amount is ₹2.5 lakh, and the maximum cover is ₹7 lakh. The final amount is calculated based on the employee’s average salary of the last 12 months and the PF balance maintained during that period.
All employees whose PF is deducted are eligible for this benefit. It does not matter whether the employee is permanent or working on a contract basis. If EPF contributions are being made, EDLI coverage automatically applies.
Who Is Not Covered Under EDLI?
While EDLI covers most organized sector employees, it does not apply to workers employed in tea plantations in Assam. Separate provisions exist for such employees under different rules.
Why EDLI Is an Important Benefit?
The EPF Free Life Insurance under EDLI is one of the most valuable yet underutilized benefits for salaried employees. At no extra cost, it provides financial protection for the family in the event of an unfortunate event. Employees should be aware of this facility and ensure that the nominee details in their PF account are kept up to date to avoid complications later.
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