The government's decision to raise the EPF wage ceiling from Rs 15,000 to Rs 25,000 a month has raised expectations of higher social security benefits for salaried employees. It has also sparked speculation over whether the life insurance cover will also be increased under the revised norms.
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Under the EPFO norms, employees are also offered the Employees' Deposit Linked Insurance (EDLI), a government-mandated term life insurance scheme. Any employee who has an active EPF account is automatically enrolled in EDLI from day one of their employment. The existing cover under this scheme remains a maximum of Rs 7 lakh.
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Will EDLI Scheme Cover Increase?
While the EPFO wage ceiling has been increased, resulting in a maximum PF contribution of Rs 3,000 per month, no changes have been announced for the EDLI scheme.
The maximum life insurance cover under the EDLI Scheme remains capped at Rs 7 lakh. The scheme provides financial support to the nominee of an EPF member who dies while in service. Under this, the benefits range from Rs 2.5 lakh to Rs 7 lakh.
How Is EDLI Benefit Calculated?
The EDLI Scheme automatically covers employees with an active EPF account from their first day of employment. It does not require separate applications. The scheme offers life insurance protection without any direct contribution from employees. Instead, employers fund the coverage by contributing 0.5% of an employee's monthly wages, subject to applicable rules.
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Under the scheme, eligible nominees are entitled to a minimum insurance benefit of Rs 2.5 lakh. The final payout is calculated using a formula linked to the employee's average monthly wages during the 12 months preceding their death. The calculation generally provides a benefit of 30 times the average monthly wages, along with the bonus component of up to Rs 2.5 lakh. Overall, the maximum payout in this is limited to Rs 7 lakh.
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