Hidden Free Benefit of EPFO: Employee Deposit Linked Insurance

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Employee Deposit Linked Insurance
Employee Deposit Linked Insurance

Are you aware of the hidden benefit of being a member of Employee Provident Fund Organization (EPFO). If not, this article will throw some light into the Employee Deposit Linked Insurance (EDLI) scheme, which is applicable for all members of the EPFO.

Most of the salaried individuals are aware of their monthly contributions being made towards Employee Provident Fund along with employers contribution. This helps in building reasonable amount of corpus over a long period of time, assisting an individual in his/her retirement goal.

On the other hand, Employee Deposit Linked Insurance (EDLI) is a vital social security scheme offered by the Employees’ Provident Fund Organization (EPFO) to provide financial protection and support to the families of EPFO members in the unfortunate event of the member’s demise. Launched with the vision of ensuring the well-being of employees and their loved ones, the EDLI scheme is designed to complement the existing provident fund benefits.

Understanding EDLI

The Employee Deposit Linked Insurance (EDLI) scheme is a life insurance program that is automatically extended to all EPFO members who contribute to the Employees’ Provident Fund (EPF). Unlike other life insurance policies that require separate premium payments, the EDLI scheme is built into the EPF contributions, making it a cost-effective and seamless insurance cover.

Key Features of EDLI

Automatic Coverage

All EPFO members who contribute to the EPF become eligible for the EDLI scheme. There is no separate enrolment process or premium payments required to avail of the insurance coverage. This ensures that a vast majority of the workforce is covered, providing a safety net to employees and their families.

Coverage Amount

Maximum amount which an individual’s nominee or legal heir is eligible for under EDLI is limited to 7 lakh rupees. Minimum amount for the same will be 2.5 lakh.

Below formula is used for calculating the exact amount of compensation under this scheme:

[Average Monthly salary of the employee for the past 12 months(capped at 15,000 PM) X 30 ] + Bonus amount of 2,50,000.

This results in a maximum of 7 lakhs and in case where the average monthly salary is less than 15,000 then it would be as per the above formula.

Note: Salary for this purpose would consist of Basic Salary and Dearness Allowance.

Contributions to EDLI

Employees do not have to make any contribution to receive this benefit and the same will be taken care of my employer contributing either 0.5% of the basic salary or a maximum of Rs. 75 per employee per month, whichever is higher.

If an employer is contributing to some other group insurance scheme where the benefit payable to employee is higher than EDLI scheme, then no contribution is required by employer to EDLI scheme.

No Medical Examination Required

One of the significant advantages of the EDLI scheme is that it does not require any medical examination for availing insurance coverage. As long as an employee contributes to the EPF, they automatically qualify for the life insurance benefit, regardless of their health condition.

Unlike many traditional life insurance policies that may impose exclusions or higher premiums based on health conditions, the EDLI scheme covers all EPFO members, regardless of their health status. This ensures equitable access to insurance benefits.

Please refer the below link from the official website of EPFO to know about the benefits in detail:



Considering the current living expenses and inflation, 7 lakh rupees might not support the nominees of the employee for more than couple of years. Its always advisable to avail a term insurance policy to safeguard the interest of one’s financial dependents.

Having said this, it is a benefit which an employee is receiving without making any additional contribution from his/her pocket. Its better to know your rights and educate your family about the same, so that a claim can be raised for the same in case of an unfortunate event.

If you need any further information, do not hesitate to contact us.

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