Employees with an active Provident Fund (PF) account are entitled to a ₹7 lakh insurance cover under the Employees’ Deposit Linked Insurance (EDLI) scheme. The benefit, provided through the Employees’ Provident Fund Organisation (EPFO), ensures financial security for families in the event of a member’s death during service.
What Is the EDLI Scheme?
The Employees’ Deposit Linked Insurance (EDLI) scheme is a statutory life insurance programme linked to the Employees’ Provident Fund (EPF). It was introduced in 1976 to provide social security to formal sector workers.
Under the scheme, the nominee of a deceased EPF member can receive an insurance payout of up to ₹7 lakh. The minimum assured amount is ₹2.5 lakh, depending on salary and service conditions. Importantly, the insurance premium is borne entirely by the employer, not the employee, according to official EPFO guidelines.
Eligibility for the ₹7 Lakh Cover
To qualify for the maximum insurance benefit:
- The employee must be an active EPF member at the time of death.
- A minimum of 12 months’ continuous service under one or more establishments is generally required, according to the Ministry of Labour and Employment.
- Nomination details must be updated in the EPF account through the Universal Account Number (UAN) portal.
Recent policy proposals from the EPFO suggest easing some conditions, such as allowing claims even with less than 12 months of service or accommodating short job gaps.
How the Insurance Amount Is Calculated
The payout is determined using a specific formula. According to EPFO rules, the benefit is 35 times the employee’s average monthly salary (basic pay plus dearness allowance) over the last 12 months, subject to a maximum of ₹7 lakh.
In addition, a fixed bonus is added to the calculation. This ensures that even workers with modest wages leave a significant financial cushion for their families.
Claiming the Benefit
To claim the insurance cover, the nominee or legal heir must submit:
- Form 5-IF, the designated EDLI claim form.
- The employee’s death certificate.
- Bank account details and identity proof of the claimant.
- Employer’s attestation or relevant documents if the employer is unavailable.
Claims can be filed through the regional EPFO office, and in many cases, through the online EPFO member portal. According to EPFO officials, streamlined claim processing has been introduced to reduce delays.
Why This Matters for Workers and Families
The EDLI scheme is considered a crucial safety net for India’s workforce. With millions of employees in the formal sector covered under EPF, the insurance benefit helps families cope with sudden financial strain.
Labour economists emphasise that the scheme complements other social security initiatives, offering both savings and risk protection. However, experts also note challenges such as lack of awareness among workers and delays in claims settlement.
Recent Developments and Proposed Changes
In 2024, EPFO announced proposals to broaden access to EDLI. Key changes under discussion include:
- Allowing shorter service duration for eligibility.
- Ensuring insurance cover during job transitions, provided the employment gap does not exceed two months.
- Reducing penalties for employers who delay contributions, making compliance easier.
According to Labour and Employment Ministry officials, these reforms aim to extend protection to more workers in India’s changing employment landscape.
Conclusion
The ₹7 lakh insurance cover with PF accounts provides essential financial support for workers’ families in the event of untimely death. While the scheme is automatic for EPF members, awareness, timely nomination updates, and proper documentation remain critical for accessing the benefit.
