‘Employees’ Provident Fund’ (EPF) is one of the most important social security schemes for salaried employees in India. This scheme, run by the ‘Employees’ Provident Fund Organization’ (EPFO), provides financial security to employees after retirement. Under the EPF scheme, employees deposit a part of their basic salary every month in the provident fund account and the employer (company) also deposits the same amount. Over time, interest is earned on this fund, which creates a large fund for the employee at the time of retirement.
Under the changes made in EPFO 3.0, the organization has made the process of withdrawing PF funds easier for employees even before retirement. The main objective of these changes is to promote digitalization and reduce paper work. This is expected to provide many benefits to employees, such as faster claim settlement, better online service, easy account management and faster access to their PF savings. However, many employees do not know that an EPF account also comes with a special insurance cover. As per EPFO rules, eligible EPF members can get insurance cover up to ₹7 lakh under the ‘Employee Deposit Linked Insurance’ (EDLI) scheme. Employees do not have to pay any extra amount for this facility.
Who can avail the benefits of this insurance?
According to EPFO, this insurance is automatically applicable to all EPF members. If an employee dies while on the job, the nominee can claim this insurance amount. According to the EPFO website, in case of death of an employee while on the job, the nominee can get a minimum of ₹ 2.5 lakh and a maximum of ₹ 7 lakh. This amount is decided on the basis of the employee’s salary and the status of his EPF account. Under the EDLI scheme, employers deposit 0.5 percent of the employee’s salary into the insurance fund; Employees do not have to contribute anything to this. Generally, claims under this scheme are tried to be settled within 20 days so that the family can get immediate financial help.
How is the insurance amount decided?
The amount of insurance available under the EDLI scheme is decided on the basis of the employee’s salary and the balance deposited in his EPF account. Insurance benefit can be calculated in two ways: As per the prescribed conditions, based on the average of the employee’s PF balance in the last 12 months. This includes 35 times the average monthly salary of the employee (up to a maximum of ₹ 15,000) and 50 percent of the average PF balance. However, the maximum limit for additional amount linked to PF balance is ₹1.75 lakh.
What is the amount of benefit?
-Minimum insurance benefit: ₹2.5 lakh
-Maximum insurance benefit: ₹7 lakh (including an additional increase of 20 percent)
Thus, EPF is not just a means of saving for retirement; It also provides important insurance protection to employees and their families.