A screenshot of a LinkedIn post by ISB (Indian School of Business) gold medallist Sarthak Ahuja has recently gone viral on WhatsApp and other social media with a claim that if someone with active employment passes away due to COVID-19, his or her legal heirs are eligible to receive money up to Rs7 lakh under the Employee Deposit Linked Insurance (EDLI) scheme.
"If you know anyone who has passed away due to COVID-19 and was inactive employment, their family and legal heirs may be eligible to receive a minimum of Rs2.5 lakh and max up to Rs7 lakh (updated Sep 2020) under the Employee Deposit Linked Insurance (EDLI) Scheme. If they were covered under PF with the EPFO, they were by default signed up for this life insurance cover. The legal heirs may have to file a Form 5 IF with the EPF Commissioner, countersigned by the employer," the viral message reads.
EDLI is an insurance cover provided by the EPFO for salaried employees from the private sector. The registered nominee receives a lump-sum payment in the unfortunate event of death of the insured person, during the period of the service. Besides being a retirement fund, EPFO offers many other benefits and this is one of them.
In an effort to help support millions of private sector employees affected by COVID, the Employees Provident Fund Organisation (EPFO) on 28 April 2021,
issued a gazette notification, raising the overall maximum assurance benefit under the EDLI scheme to Rs7 lakh from Rs6 lakh, for subscribers of its EDLI scheme. Earlier, in September 2015 the maximum assurance benefit under the EDLI scheme was increased to Rs6 lakh from Rs3.6 lakh, which got notified in June 2016.
“The following proviso shall be inserted and shall be deemed to have been inserted with effect from the 15th day of February 2020... provided that the assurance benefit shall not be less than two lakh and fifty thousand rupees," the notification said.
This means the minimum assurance benefit payable under the EDLI scheme has been fixed at Rs2.5 lakh and will be effective retrospectively from 15 February 2020.
The membership of EDLI is automatically provided to those covered under EPF. The Employees' Deposit-Linked Insurance Scheme, 1976 provides an insurance cover to be paid to the employee's nominee on the death of the employee during employment.
Any organisation that has more than 20 employees needs to register for EPF. Therefore, any employee who has an EPF account automatically becomes eligible for the EDLI scheme.
EDLI applies to all organisations registered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. All such organisations must subscribe to this scheme and offer life insurance benefits to its employees.
This scheme works in combination with employees’ provident fund (EPF) and employees’ pension scheme (EPS). The extent of the benefit is decided by the last drawn salary of the employee.
The benefit payable under EDLI scheme is extended to such beneficiaries where the deceased employee was a member of the fund or a provident fund exempted under Section 17 of the EPF & MP Act aid was in employment for a continuous period of 12 months preceding the month in which he died, irrespective of change of establishment during the said period.
The claim amount is linked to the provident fund account of an employee and is payable to the nominee of the employee. As the EDLI scheme applies to all employees under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, there is no need to add the nominee separately.
There is no need for the employees to contribute to EDLI. Their contribution is required only for EPF. As per the provisions of the EDLI, the contribution of an employer must be 0.5% of the basic salary or a maximum of Rs75 per employee per month. If there is no other group insurance scheme, the maximum contribution is capped at Rs15,000 per month.
There are no exceptions to the insurance coverage provided by EDLI. It protects the insured person 24x7, all around the world. An employer can opt for another group insurance scheme, but the benefits offered must be equal to or more than those offered under EDLI.
The only condition to claim this insurance is that the EPF account-holder should have died when he was still actively employed, i.e., before the retirement. The deceased person should have been an active contributor to the EPF scheme at the time of his/her death. It is immaterial whether he died while on leave or on a vacation or while at work, regardless of how and when he died, the nominee can claim the money.
For this, the nominee needs to submit death certificate, succession certificate, cancelled cheque of bank account where they wish to receive the money and bank details.
If one does not have a nominee, then the legal heir can claim this amount. EDLI Form 5 IF has to be duly completed and submitted by the claimant. The claim form has to be signed and certified by the employer. If there is no employer or the signature of the employer cannot be obtained, the form must be attested by any of the following:
- Bank manager (in whose branch the account was maintained)
- Local MP or MLA
- Gazetted Officer
- Magistrate
- Member/Chairman/Secretary of Local Municipal Board
- Post Master or Sub-Postmaster
- Member of the regional committee of EPF or CBT
The claimant must submit all the documents along with the completed form to the regional EPF commissioner’s office for processing of the claim.
The claimant can also submit Form 20 (for EPF withdrawal claim) as well as Form 10C/D to claim all the benefits under the three schemes, EPF, EPS and EDLI). Once all the documents are provided and the claim is accepted, the EPF commissioner must settle the claim within 30 days from the receipt of the claim. The claimant is entitled to interest at 12%pa (per annum) till the date of actual disbursal.
The chief objective of the EDLI scheme is to offer financial security to the family members of the policyholder (deceased person).
There is a lack of awareness on this benefit offered for EPF subscribers. Most subscribers and the nominees are not aware of this scheme. Hence, very few claims are received every year. Even the EPFO portal does not share much information on its portal about this scheme and the number of claims it receives.
Since so many people are dying during the second COVID wave, this insurance benefit can be a great help in these trying times for the family.
Realising that private sector employees do not enjoy the same social security benefits as public sector employees, the government in 1976, had introduced the EDLI scheme and extended the benefits of life insurance to private sector employees.
Hence, the claim that if someone with active employment and EPF account passes away due to COVID-19 then his or her heirs are eligible to receive money under the EDLI scheme is true.
