EPFO issues clarification on EDLI insurance claims
Oct 20, 2022
EDLI payments are being paid as a result of such Non-Contributory Period of Service (NCP) days.The EPFO has offered clarity on EDLI insurance claims.
The Employees’ Provident Fund Organisation (EPFO) has said that it has received complaints under Employees' Deposit Linked Insurance Scheme (EDLI) where an employee has passed away while on the job, after which some offices are rejecting the claims on the grounds that the contribution was not received in the prior few days.
Due to this the EDLI benefits are being paid due to such Non-Contributory Period of Service (NCP) days, according to a circular issued by EPFO dated October 18, 2022.
The EPFO has issued a clarification on the insurance claims under EDLI.
As per the EPFO circular issued on October 18, “Due verification shall be done but it should be done within 7 days and the family members should not be harassed. In cases where employer states that the member is on the muster rolls and the E0 says otherwise, the reason why the employer version is not acceptable to us should be clearly listed out and examined at Office.”
“It is also to be noted that when the member dies after leaving employment he/she ceases to be an "employee" as defined in Section 2(f) read in conjunction with Section 6C (1) of the Act in an establishment covered under the Act the condition for release of EDLI benefits ceases to be in operation and the benefits would not be admissible,” EPFO added.
According to the EDLI scheme, “Para 2.2.1 The assurance benefit is payable on death of the member, while in service".
"Para 2.2.7 In cases, where an employee member was on leave without wages (consequently no contribution was payable by the employer) or absent for any other reason and expired during the period, the Assurance benefit is admissible irrespective of the fact that no contribution was paid by the employer, provided he was on the muster rolls of the establishment on the day of death and satisfied the prescribed conditions".
'Further Para 22(3) of EDLI Scheme states" On the death of an employee, who is a member of the Fund or of provident fund exempted under Section 17 of the Act, as the case may be, who was in employment for a continuous period of twelve months, preceding the month in which he died, the persons entitled to receive the provident fund accumulations of the deceased shall in addition to such accumulations to be paid an amount equal to:-
[(I) the average monthly wages drawn (subject to a maximum of fifteen thousand rupees), during the twelve months preceding the month in which he died, multiplied by thirty five times plus fifty percent of the average balance in the account of the deceased in the fund or of a provident fund exempted under Section 17 of the Act or under Paragraph 27 or 27A of the Employees' Provident Funds Scheme, 1952, as the case may be, during the preceding twelve months or during the period of his membership, whichever is less subject to a ceiling of one lakh and seventy five thousand rupees;
provided that the assurance benefit shall not be less than two lakh and fifty thousand rupees, provided further that the assurance benefit shall not exceed seven lakh rupees;]
(ii) the amount of benefit under sub paragraph (1), whichever is higher"
It is to be noted that when the member dies after leaving employment he/she ceases to be an "employee" as defined in Section 2(f) read in conjunction with Section 6C (1) of the Act in an establishment covered under the Act the condition for release of EDLI benefits ceases to be in operation and the benefits would not be admissible.
What is EDLI
The EPFO (Employees' Provident Fund Organisation) offers the EDLI scheme to private sector salaried employees. This system works in tandem with the EPF and the Employees' Pension Scheme (EPS). The benefit amount is determined by the employee's last drawn salary.
5 key features of the EDLI scheme
- A maximum assured benefit of Rs 7 lakh would be paid to the nominee or legal successor of an EPF member who dies while in service.
- The minimum guarantee benefit under the EDLI scheme 1976 is Rs 2.5 lakh if the dead member remained in continuous employment for 12 months prior to his or her death.
- This life insurance benefit provided to EPFO members is provided at no cost to PF/EPF account holders. • Employer contribution is limited to 0.5% of monthly salaries up to Rs 15,000; employee contribution is non-existent.
- PF members are automatically enrolled in the EDLI scheme.
- Benefit is credited straight to the legal heir's or nominee's bank account.
[The Economic Times]