Employees Deposit Linked Insurance Scheme (EDLI)

The Employees Deposit Linked Insurance Scheme (EDLI) scheme was enacted as a part of the benevolent social legislation passed by the Government of India in the year 1976. The EDLI scheme is an insurance scheme promulgated by the Government among other social welfare initiatives for the employees of the organised sector. Under this scheme, a lump sum payment is provided to the beneficiary of the employee in case of he/she dies during the service period. An organisation that is covered under the Employee’s Provident Fund (EPF) and Miscellaneous Provision Act 1952 are liable to subscribe EDLI scheme. In this article, we look at the Employees Deposit Linked Insurance Scheme (EDLI) in detail.

Features of EDLI Scheme

Features of EDLI scheme is explained in detail below:

EDLI scheme is applicable to employees (private organizations) who are registered under EPF.
All eligible employees are automatically covered under EDLI Scheme. No separate application is required for enrolment of this scheme.
EDLI Scheme covers all employees irrespective whether they are working or retired. Only condition is that they should be member of the EPF.
Life Insurance coverage would be based on the employee’s basic salary i.e. Basic Salary plus Dearness Allowance (DA).
Life Insurance coverage is applicable even for new employees once they are enrolled in EPF.
No separate nomination is required for EDLI Scheme
Age or other individual factors do not affect the employee’s eligibility to be covered under EDLI scheme.

Advantages of EDLI Scheme

Main advantages of EDLI scheme is explained in detail below.

Advantages to the Employer

The premium payable by the employer for EDLI scheme is usually less than the total contribution being paid by the employer to other schemes; particularly when the salary level is high and average age of the employee is low.
Settlement of claim is quicker; LIC requires only the death certificate and the Claim application form from the employer.
EDLI Premium paid by the employer is treated as normal business expenses for Income-Tax purpose.

Know more about Tax Free Perquisites

Advantage to the Employee

As per EDLI scheme, monetary benefit known as ‘Assurance benefit’ will be provided to the nominated or eligible dependent family members in the event of death of the employee. This amount is based on his/her last twelve months average salary and average balance in the provident fund account. Know more about PF Balance Check

Contribution by Employer

Employee does not contribute to EDLI scheme directly. Contributions are made by the employer. Contributions to EDLI scheme are done in accordance with a formula of a fixed percentage of DA and salary. Employer contributes for EDLI premium for maximum of 0.5% of Rs 15000 of monthly basic average wage in the last 12 months. Clearly talking that, maximum premium payable by employer is Rs 0.5% of 15000 i.e. Rs 75 per month.

Scheme	Contribution by Employer	Contribution by Employee	Contribution by Government
Employees Provident Fund (EPF)	1.67-3.67%	10-12%	Nil
Employees Pension Scheme (EPS)	8.33%	Nil	1.16%
Employees Deposit Linked Insurance Scheme (EDLI)	0.5%	Nil	Nil

EDLI Calculation

EPF Life Insurance amount is calculated based on the average monthly basic wages drawn, maximum of Rs 15000 per month during the last twelve months (preceding the month in which death of the employee occurs) is multiplied by 30 times and to that 50% addition to the average balance maintained earlier or lowest in their PF account whichever is earlier.