Heirs of Pvt Sector Employees Killed by COVID Can Claim Insurance up to Rs 7 Lakh

A message doing the rounds on various social media platforms is as follows:

If you know anyone who has passed away due to COVID-19 and was an employee under a private sector, then their nominee/legal heir may be eligible to receive an amount up to Rs 7 lakhs under the Employees Deposit Linked Insurance (EDLI) scheme (sic).

It was first put out by an ISB (Indian School of Business) gold medallist, Sarthak Ahuja, in his LinkedIn profile. We explain how this scheme works and how one can avail of its benefits.

What is the scheme?

The EDLI was introduced in 1976. It is an insurance cover provided by the Employees Provident Fund Organisation (EPFO) for salaried employees from the private sector. In the unfortunate event of death of the employee, the registered nominees will be eligible to receive a lump sum payment.

In an attempt to help families during this COVID-19 pandemic, on 28 April 2021, the EPFO issued a gazette notification, raising the overall maximum assurance benefit under the EDLI scheme to Rs 7 lakh from the existing Rs 6 lakh, for subscribers of its EDLI scheme.

How does it work?

• The insurance cover will be given to the family of the subscriber of the EDLI scheme, if the subscriber dies while still employed.
• All employees who get a basic salary under Rs 15,000 per month are eligible for the EDLI scheme.
• This scheme is applicable to private companies in which there are 20 or more employees.
• To arrive at the amount of money payable, average monthly salary, which includes the basic pay and dearness allowance for the past 12 months, is taken into account.

Things to know:

• Employees only need to make a contribution towards the Employee Provident Fund (EPF), there is no need for employees to contribute to EDLI.
• The average monthly salary of the employee over the last 12 months (capped at Rs 15,000) is multiplied by 30, to which a bonus amount of Rs 2,50,000 is added.
• The maximum pay out under this scheme, therefore will be Rs 7,00,000 lakhs.
• After the submission of the application form, the EPF Commissioner must settle the claim within 30 days from receipt of the claim.
• If not, the claimant is entitled to an interest of 12 per cent per annum on the claim raised, until the date of disbursement.

Important documents:

• Duly completed Form 5 IF. Click here to access the form.
• Death certificate of the insured person.
• Succession certificate in case the legal heir files a claim.
• If a claim is being filed on behalf of a minor by a person other than the natural guardian, then guardianship certificate is needed.
• Cancelled cheque for the amount in which the payment is to be received.

How to raise an insurance claim?

• A claim can be filed by the nominee. In case there is no nominee registered, the family member or legal heirs can file an application.
• At the time of death, the deceased should have been an active contributor to the EPF scheme.
• The EDLI Form 5 IF needs to be completed and submitted.
• In case the signature or stamp of the employer is not available at the time of submission of the form, the following people can attest the document:
  1. Bank manager (in the bank where the account was maintained)
  2. Local Member of Legislative Assembly (MLA) or Member of Parliament (MP)
  3. Gazetted officer
  4. Magistrate
  5. Post master or Sub-postmaster.

(Edited by Yoshita Rao)