EPFO: We often view PF (Provident Fund) only as a savings vehicle or a safety net for old age, but few people know that this account also provides free insurance coverage during difficult times. EPFO provides its subscribers not only with a pension or accumulated savings but also free life insurance of up to Rs 7 lakh. This facility is available under the EDLI (Employees’ Deposit-Linked Insurance) scheme.
Insurance Coverage Without Paying a Single Rupee
The most distinctive feature of this scheme is that no rupee is deducted from the employee’s pocket. Your company or employer pays the entire premium for the insurance under the EDLI scheme. As soon as your PF account is opened, you are automatically enrolled in this insurance scheme. You don’t need to complete any separate forms or go through any application process. The main objective of this scheme is to protect employees’ families from sudden financial hardship in the event of an unfortunate incident during employment.
How is the Rs 7 lakh amount determined?
Now, how is the insurance amount determined? This calculation depends entirely on the employee’s salary. According to the rules, the employee’s basic salary and dearness allowance (DA) for the last 12 months are taken as the basis. The insurance cover amount is 35 times the average salary. A bonus of Rs 1.75 lakh is also added to this.
EPFO has set a maximum salary limit of Rs 15,000 for this calculation. This means that if Rs 15,000 is multiplied by 35, the amount becomes Rs 5.25 lakh. Adding the Rs 1.75 lakh bonus brings the total to Rs 7 lakh. This is the maximum benefit available under this scheme.
What to do to claim?
If a PF account holder dies during employment, their nominee or legal heir can claim the funds. The process has now become much easier. To do so, the nominee must complete and submit EDLI Form 5 IF at the EPFO regional office. The claim must be accompanied by documents such as a death certificate, an Aadhaar card, bank account details, and proof of date of birth.
The good news is that the EPFO has relaxed the rules, so claims will not be rejected even if the employee has spent some time without salary (Non-Contributory Period). The department strives to settle the claim within 30 days. If there is a delay, the EPFO has to pay the claimant 12% annual interest.
Who is entitled to the money?
The first right to this money belongs to the nominee registered in the PF account. If there is no nominee, the spouse (husband or wife), sons up to age 25, or unmarried daughters may also claim the money. Therefore, you must complete the e-nomination process for your PF account so that your family does not have to visit government offices after your death and can easily receive their rightful entitlements.
