EDLI (Employees’ Deposit Linked Insurance Scheme) is a life insurance benefit available to all employees who receive EPF benefits. Employees do not pay anything for the insurance cover. The employer contributes a small percentage every month, and the employee’s family receives a lump-sum payout if the employee passes away during active employment.
In short:
EDLI gives free life insurance coverage to EPF members.
Official Definition of EDLI (As per the Scheme)
To understand the legal foundation behind EDLI, here are the official definitions included in the scheme:
(a) “Act” refers to the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952).
(b) “Assurance benefit” means a payment linked to the average balance in the Provident Fund account of an employee, payable to the family or a legally entitled person if the employee dies while being a member of the Fund.
(c) All other words and expressions that are not specifically defined in this scheme carry the meaning assigned to them under the Act or the Employees’ Provident Funds Scheme, 1952.
These definitions form the legal backbone of EDLI and help clarify how the scheme is interpreted by EPFO.
Key Features of EDLI
1. Automatic Membership
If your employer deducts EPF, you are automatically covered under EDLI. No separate enrollment or premium payment is required.
2. No Health Checks
You receive coverage without any medical test, making EDLI accessible to all employees regardless of age or pre-existing health conditions.
3. Salary-Linked Payout
The final benefit your family receives is based on your last drawn basic salary plus dearness allowance.
4. Low Employer Contribution
Employers contribute 0.5% of basic salary (capped at ₹75 per month) towards EDLI. Employees contribute zero.
5. Works Alongside Private Insurance
EDLI does not replace term insurance but functions as an additional protection layer.
How Is EDLI Calculated?
The payout is determined by the following formula:
35 × (Last Drawn Monthly Basic Salary + DA) + Bonus (up to ₹1.75 lakh)
The maximum amount payable under EDLI is ₹7 lakh.
EDLI Contribution Structure
| Component | Employee Contribution | Employer Contribution | Notes |
|---|---|---|---|
| EPF | 12% of Basic + DA | 3.67% of Basic + DA | Mandatory retirement benefit |
| EPS | — | 8.33% | Pension contribution |
| EDLI | ₹0 | 0.5% (max ₹75) | Insurance cover |
| Admin Charges | — | 0.01% | Minimum ₹2 per month |
This structure highlights that EDLI truly comes at no cost to employees.
Who Can Claim EDLI Benefits?
If an employee passes away during service, the EDLI amount can be claimed by:
- The nominee listed in EPF records
- Family members, if no nominee is registered
- Legal heirs, in the absence of both
Documents Required for EDLI Claim
To smoothly process an EDLI claim, the following documents are typically needed:
- Form 5IF (EDLI Claim Form)
- Death certificate of the employee
- Bank account details of the claimant
- EPF details of the employee
- Employer certification, or EPFO verification if employer is unavailable
- Succession certificate (if required)
EPFO processes the claim after verifying the submitted documents, ensuring timely support to dependents.
Why EDLI Matters Today
1. Free Protection for All Workers
Many young earners don’t buy life insurance early in their careers. EDLI gives them a safety net without any cost.
2. Offers Immediate Financial Support
In case of an employee’s unexpected death, the payout helps the family manage immediate needs and financial obligations.
3. Hassle-Free Process
Since EDLI is a statutory benefit, the claim process is straightforward and backed by EPFO’s nationwide system.
EDLI vs Term Insurance
While EDLI provides valuable coverage, it should not be seen as a substitute for a private term plan. Term insurance offers higher coverage based on personal financial needs, while EDLI offers an additional, free insurance layer.
Final Thoughts: What is EDLI?
To conclude, What is Employees’ Deposit Linked Insurance Scheme (EDLI)? It is a government-backed life insurance scheme that provides financial protection to the families of employees covered under EPF, without charging the employee anything. Simple, automatic, and reliable, EDLI ensures that your loved ones receive meaningful support during difficult times.
