What is EDLI?
The EDLI full form is Employees’ Deposit Linked Insurance and is popularly known as the EDLI Scheme. It is an insurance cover that is provided by the Employees Provident Fund Organization (EPFO). EDLI means that an insurance scheme provides support for the employees of the private sector who are deprived of the financial and social security that the public sector employees receive. It is based on extending the benefits provided to the private sector employees with respect to life insurance. Further, the government introduced it in 1976.
The scheme is accessible to all the organizations which are registered under the Employees Provident Fund (EPF) as well as the Miscellaneous Provisions Act of 1952. The nominees of the organizations of EPF are provided with a huge amount of money, up to six lakhs, in case of any unfortunate death of the member during his or her service period.
Features of the scheme of EDLI
- The scheme provides a bonus of Rs. 15 thousand.
- The scheme is eligible for each and every employee who has a basic salary of under Rs. 15 thousand. If any employee gets a salary of above 15 thousand a month, can utilize the benefits of EDLI for upto six lakhs.
- Organizations with more than 20 employees need to register for the Employees Provident Fund.
- This makes employees with an EPF account eligible for EDLI. Employees only need to contribute to the EPF and not the EDLI.
- Based on the scheme, an employer’s contribution must be 0.5% of the salary or a maximum amount of Rs. 75 per month per employee. Provided no other group scheme of insurance chosen by the organization, the contribution amount is Rs. 15 thousand per month. If the organization chooses another scheme, the benefits must be more than or at least equal to that offered under the scheme of EDLI.
- Dearness allowance also is included in the basic salary for the EDLI calculations.
EDLI Calculation
The basic calculation of the EDLI Charge is provided below:
Employee’s average monthly salary for the past 12 months (called at Rs. 15 thousand per month) * 30 ] + amount of bonus ( Rs. 1.5 lakhs).
Therefore, the EDLI is called at Rs. 6 lakhs.